Argentinian President Mr Fernando de la Rua struggled to keep his government afloat yesterday after a week of political uncertainty in which four cabinet members resigned and the ruling Alianza coalition collapsed as his centre-left partner Frepaso rejected a $2 billion economic austerity package.
The new measures, which aim to cut spending on education and social security, are a last-ditch effort to kick-start a moribund economy, now entering its 33rd month of recession. Unemployment has reached 16 per cent, while 12 million people - more than 40 per cent of the population - live in poverty.
President De la Rua had appointed Mr Ricardo Lopez Murphy, a conservative economist, to implement the measures this week, after his previous economy minister resigned a fortnight ago. However, Mr Lopez Murphy himself resigned this weekend as it became clear that Mr De La Rua was vacillating on the implementation of these policies in the face of opposition in parliament and on the streets.
While Mr Lopez Murphy's appointment had been warmly greeted by businesspeople and international financiers, Mr de la Rua's congressional allies withdrew from government, provoking a political crisis which appears far from over.
Mr De La Rua responded by calling for a government of national unity, appealing to the Peronist Party (PJ), which controls Argentina's largest provinces, including Buenos Aires. That effort collapsed due to government insistence on cutting rural subsidies, which affect the Peronists' support base.
"I have called on all political forces to subscribe to a national agreement to take this country forward, toward the future it merits," said Mr De La Rua in a national address this week. "Neither the provinces nor the nation-state can bear this situation for much longer," he added. The Peronists control the mainstream union movement, which has called for a general strike in two weeks' time. Students have already occupied three universities this week while teacher unions have called for an indefinite strike when classes restart in April.
Mr De La Rua then turned to Mr Domingo Cavallo, architect of Argentina's convertibility plan, which pegged the peso to the dollar, taming hyperinflation under the previous regime. Mr Cavallo, defeated by Mr De La Rua in the 1999 presidential elections, agreed to join the Alliance this week, demanding control of the economic emergency plan. This precipitated the departure of Mr Lopez Murphy.
Mr De la Rua now plans to ask Congress for "special emergency powers" to force through legislation to help cope with the crisis, saying Argentina's chronic budget deficit must be reduced to revive investment.
When Mr De La Rua took office in December 1999, he first tried tax increases, which failed. Then he implemented public-spending cuts, worth over $900m, in May 2000, which also failed.
In December, as rumours mounted that Argentina would default on its external debt payments former economy minister Mr Jose Luis Machinea was obliged to negotiate a $39.7 billion credit line with the IMF.
Argentina's military, which seized power during lesser crises in past decades, is experiencing its own internal difficulties, as revelations of crimes against humanity during military rule (1976-83) and budget cuts have sapped morale.
The economic crisis coincided with the annulment of the laws of "Due Obedience and Full Stop" (1989) which halted trials against those who "disappeared" 30,000 people during military rule between 1976 and 1983.
This historic legal decision opens the way for relatives of the victims to mount a legal challenge against those responsible, many of whom now occupy important positions in public life.