Argentine President elected on pledge to end economic agony

Eduardo Duhalde, a tough-talking Peronist political boss elected by congress in a desperate effort to halt anarchy in Argentina, took power yesterday after pledging to ditch the free-market policies that had bankrupted the middle classes.

The acrid tang of tear gas still hung in the air but streets in Buenos Aires were calm on the first working day of the new year. There had been violent protests against the cancellation of a presidential election promised next March.

Mr Duhalde is the fifth president in the past two weeks and will name his cabinet today. He announced an end to the "perverse model" that pegs the peso to the dollar and made the Argentine middle class "the victims of the financial system" after a grinding four-year recession. He is determined to last longer in office than his four predecessors, and has given himself a deadline of December 2003 to resolve the crisis. He will not be eligible for re-election after his two-year term.

Government belt-tightening policies under President Fernando de la Rua, who defeated Mr Duhalde in elections two years ago, sparked riots that left 28 dead last month and led to his resignation 12 days ago. Three interim presidents have since been overwhelmed by social unrest caused by the biggest debt default in history. After repeated failures to curb government expenditure, re-payment was suspended on $132bn loans last month, triggering an economic freefall.

Latin America's third- biggest economy has shrunk by 20 per cent. More than 15 million Argentines, 40 per cent, live beneath the poverty line.

But Mr Duhalde, a former vice-president under the free-spending Carlos Menem and a governor of Buenos Aires province, promised to heal Argentina, which he says has become a "rich country populated by the poor". Political opponents object to his links with the élite ruling class.

The 60-year-old donned the pale blue presidential sash with its beaming sun emblem after admitting that there was not enough currency in circulation to jump-start the economy. People were restricted to withdrawing $250 per week from their accounts 30 days ago. Mr Duhalde, a long-time opponent of free-market capitalism, is expected to devalue the peso, reinstall protectionist trade policies and subsidise key businesses. He has the backing of Peronist labour syndicates.

"We need international co-operation and understanding," Mr Duhalde said. "The only way to honour our internal and external commitments is through economic growth, which comes from true human development. The exceptional drop in economic activity has led to a drop in tax collection. This generates a vicious circle that puts our country on the brink of disintegration."