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Unrest in Argentina hits Swiss trade ties

Demonstrators in Buenos Aires throw stones at an armoured vehicle Keystone Archive

The economic turmoil and civil unrest in Argentina has affected Switzerland's trade ties.

The Swiss State Secretariat for Economic Affairs (seco) has reported a 15 per cent drop in Swiss exports to Argentina for the first 10 months of the year. Imports during the same period have shrunk by 20 per cent.

Rioting and looting

Argentinians have taken to the streets to violently protest economic hardship. At least 24 people have died in the worst rioting and looting in more than a decade.

Sinking under a $132 billion public debt, President Fernando de la Rua abandoned ship and resigned on Thursday. Congress still has to discuss who will take over a country sliding towards the biggest debt default in history.

Argentinians are battling a fourth year of recession that has sent unemployment above 16 per cent and crippled consumer spending. Government hopes of easing the crisis were dashed on December 6 when the International Monetary Fund refused to grant Argentina a $1.3 billion loan payment.

Swiss to stay

The social upheaval has not, for the moment, affected the 14,500-strong Swiss community.

Large Swiss corporations in Argentina, like Nestlé and ABB, also say they have no plans to leave, confirmed Paul Seger, consul at the Swiss embassy in Buenos Aires.

“Our business strategy is oriented towards the long term and there’s no question of pulling out employees or reducing our workforce of around 2,000 people in Argentina,” said Francois-Xavier Perroud, a Nestlé spokesman in Switzerland.

Shrinking Swiss investment

Overall Swiss investment in Argentina has dropped significantly over the last decade.

In 1993, Switzerland was the third largest investor in the Latin American country with SFr430 million. By the turn of the century, Switzerland had dropped to 11th place with just SFr121 million of private money invested.

According to analyst Andreas Höfert at UBS-Warburg in Zurich, Argentina is on the brink of defaulting on her debt payments. Buenos Aires is faced with little alternative to devaluing the Peso to fall in line with the United States dollar.

However, this would decimate savings and risks casting the beleagured country further into political and social trouble, Höfert said.

Social and economic strife

“It’s total anarchy,” one shopkeeper told local television as looters ransacked stores and smashed windows. “These people are not hungry. They are just stealing.”

swissinfo with agencies

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR