The Spanish Foreign Minister, Mr Josep Pique, on an official visit to Argentina, yesterday confirmed Madrid's support for the interim Argentine government which had "every hope of bouncing back" from the current economic crisis.
Mr Pique's words echoed international support for President Adolfo Rodriguez Saa, a regional governor who was sworn into power last Sunday after a week of political and economic upheaval. The disturbances left 27 people dead and 2,000 more in jail.
Spain is the second largest investor in Argentina, after the USA, and will take up the EU presidency on January 1st, a factor which lends particular weight to the current visit.
"It is important that this move is not a quick fix that gets in the way of long-term solutions," Mr Pique cautioned, referring to the argentino, a new currency which will circulate alongside Argentinian pesos and US dollars.
Economic analysts have warned that printing money can lead to inflation but the new government has secured the argentino against government assets to minimise fears. The argentino will replace federal and provincial bonds, used to pay state salaries and pensions, while the one-to-one peso linkage to the dollar will remain in place.
The measure will help fund a million new jobs to tackle unemployment now approaching 20 per cent. Mr Rodriguez Saa announced yesterday that 120,000 jobs had already been created, mainly in the armed forces and in government work programmes paying a meagre $200 per month.
Mr Saa belongs to the Peronist party which enjoys union support. The new administration is reworking the 2002 budget, increasing social spending now that foreign debt payments have been suspended.
The new president has already suspended foreign debt payments, meaning Latin America's number 3 economy is on a direct course to default on its $132 billion public debt. A balanced budget will be crucial to hopes of further support from multinational lenders.
Mr Saa has received support from around the world, including that of the Cuban leader, President Fidel Castro, who congratulated him for "investing the unbearable costs of a colossal foreign debt in social programmes and rebuilding the country's economy."
The populist measures adopted by the new government will help the Peronists win the forthcoming March elections and hold power until the scheduled end of Mr De la Rua's mandate in 2003.