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. Last Updated: 07/27/2016

Riots Break Out as Argentine Collapse Looms

BUENOS AIRES, Argentina -- Argentina teetered on the brink of economic collapse after anti-government protests and looting prompted the president to declare a state of siege and the powerful economy minister to resign. Nine people died in violence that extended into a second day Thursday with new protests outside the seat of power.

More than 200 demonstrators, some beating drums and waving the Argentine flag, chanted anti-government slogans outside the president's offices in downtown Plaza de Mayo. Riot police then swept across the square, detaining at least seven of the protesters, who were dragged to police vans, some kicking and resisting.

Noisy protests continued to grow in downtown Buenos Aires as Argentines, angry over the steps taken by President Fernando de la Rua to quell widespread social unrest, defiantly gathered on street corners, and motorists honked horns in repudiation of his administration.

Banks and businesses reopened Thursday and people went to work. But many small shops remained shuttered for fear of further unrest.

Domingo Cavallo, the economy minister widely blamed for failing to halt the nation's slide into economic ruin, tendered his resignation earlier Thursday. The state news agency TELAM said De la Rua had accepted the resignation. It would be the third time an Argentine economy minister has quit this year alone.

"We're fed up with corruption, hunger and the poverty we're living in," said Ana Arce, a 75-year-old doctor, outside the government house late Wednesday. "I think that if they don't go, the people will kick them out."

Unemployment has topped 18 percent in South America's second-largest economy. Mired in a four-year recession, the nation is near default on its staggering $132 billion public debt.

On Wednesday, thousands of Argentines looted stores and supermarkets in poor neighborhoods, saying they were going hungry. Riot police responded with tear gas and rubber bullets. The violence left nine dead and at least 109 injured. Police made 328 arrests.

"This is not our fault, this is the government's fault, the president's and Cavallo's," said Sandra Guttierez, a 28-year-old unemployed mother of two who left one ransacked supermarket loaded with bags of food Wednesday. "We feel we've got no future, for us or for our kids."

Austerity measures introduced by Cavallo, including a partial freeze on bank withdrawals designed to prop up the financial system, have sparked widespread anger, especially in poorer areas.

In a televised address Wednesday night, De la Rua said he was imposing a 30-day state of siege to guarantee order.

"I urge those who are exercising violence to cease such acts," De la Rua said. "With violence and illegality, we will not solve our problems."

Wednesday's decree marked the first time in 11 years an Argentine president has seized special powers that effectively grant security forces greater powers of arrest and allow them to ban public gatherings.

Such measures were last used by Carlos Menem -- De la Rua's Peronist predecessor -- in 1990 to quash an uprising by a right-wing anti-democratic militia group. A year earlier, a state of siege failed to stop widespread looting and social chaos that eventually forced then-president Raul Alfonsin out of office.

But De la Rua's emergency measures only provoked more anger. As the protests swelled around Government House -- the Casa Rosada -- where De la Rua's cabinet was meeting, the government's future appeared to hang in the balance.

Outside the residence, crowds of thousands gathered shouting "Cavallo out," also calling for De la Rua's resignation. Others rallied outside Cavallo's home on the swanky Libertador Avenue.

"It's great that Cavallo's gone," said Elena Sicilia, an actress rushing toward Government House after hearing about the minister's resignation on television. "But they all have to go, we don't want De la Rua and we don't want Menem back. We want a fair government of the people."

Sick for years, the economy has nose-dived during De la Rua's two years in office.

His government has tried to fix the economy with nine different economic plans and has faced eight general strikes.

Until Tuesday, Cavallo had been working on enacting another punishing austerity plan, pushing a belt-tightening 2002 budget through Congress and staving off a default on Argentina's staggering debt.

Rising social tensions are expected to make it more difficult for De la Rua to push 2002's austerity budget, which slashes an extra $4 billion in public spending, through Congress.

Agreement on the budget is seen as key in persuading the International Monetary Fund to release $1.3 billion of emergency funds that cash-strapped Argentina needs to keep up payments on its debt.

Failure to secure IMF funding could lead to a default, which would probably spark more chaos and social unrest.

In his speech, De la Rua called for a broad political consensus to assume the "historic responsibility" of pulling Argentina back from the brink of economic and political collapse.