Roundup: Greek crisis reminds Argentineans of past economic debacle

Greece's economic and financial troubles are stirring up special feelings among Argentineans, whose country underwent a similar woeful episode 12 years ago.

The public in the South American country has been closely following events in Greece, where a referendum on Sunday ended with a resounding No to an austerity-driven bailout proposal.

Argentinean media have been making comparisons and issuing warnings, especially since economist Santiago Carbo published an article in conservative Spanish daily El Pais that basically claims that "Greece is Europe's Argentina."

The Greek government has declared that all banks and stock exchanges will remain closed until Monday to avoid capital flight. Greeks have been lining up at ATMs recently to withdraw the daily limit of 60 euros (66.8 U.S. dollars).

Similar scenes took place in Argentina at the end of 2001 during successive "bank holidays" that were essentially designed by the government to prevent account holders from making withdrawals.

"The panorama is without doubt bleak and recalls the Argentina of 2001, when the government couldn't maintain" the peso-dollar parity it had pledged, the latest issue of Argentinean business magazine Fortuna reported.

"Looting supermarkets soon followed," the magazine recalled. "Millions of families couldn't access their savings, which sparked massive social unrest and the subsequent resignation of the president."

Following Fernando de la Rua's exit, the Peronist party's Adolfo Rodriguez Saa took office, but just for a week, leaving Argentina in default to the tune of 102 billion U.S. dollars.

His successor, Eduardo Duhalde, passed an emergency law to end peso-dollar parity, leading to a 30-percent devaluation of the currency, and decreed loans to be peso-denominated.

"History ... threatens to repeat itself in the euro zone, with the first link in the chain being Greece," Fortuna warned.

In a radio interview, Jorge Remes Lenicov, who served as Duhalde's former economy minister in 2002, said "what's happening in Greece is very similar to the De la Rua government."

In 1999, the creditors "said we had to make the labor market flexible and maintain parity, while we said we had to maintain the (economic) model and renegotiate the debt," said Remes.

"In those years, the economy fell 20 percent with a similar unemployment rate. Greece is doing what Argentina did, and its gross domestic product has fallen 25 percent," Remes said.

Economic analyst Alejandro Bianchi warned of regionwide repercussions.

"Greece is on the brink of a more serious default than Argentina's in 2002, with (restrictions on banking) that could in turn cause a domino effect throughout the euro zone," said Bianchi. Endi