Argentine president: Expect 'devalued' peso

President Eduardo Duhalde talks about his economic recovery plan Friday on Argentinian TV.

By Lucia Newman
CNN

BUENOS AIRES, Argentina (CNN) -- Argentine President Eduardo Duhalde said Friday it is a "given" that the Argentine peso will be devalued.

In a televised speech to the nation, Duhalde gave no specifics about his recovery plan but also signaled he will move to protect Argentine industries as he tries to right what he admitted is a "bankrupt" economy.

Argentina is in default on its $141 billion public debt.

Until now, the Argentine peso has been tied to the value of the U.S. dollar and Argentina has had the highest standard of living in South America. By unhooking the peso from the dollar, the peso will drop in value.

Duhalde has been negotiating with farmers, supermarket owners, energy producers and others to get them to accept price freezes on basic commodities such as food and fuel.

VIDEO CNN's Lucia Newman reports on how politicians hope to stop Argentinia's downward economic slide (January 4) Play video (QuickTime, Real or Windows Media)

He appealed to the country's business leaders not to raise prices, which would trigger a spiral of inflation and further lower the Argentine standard of living.

Duhalde, who said he will present his plan for economic reforms to the Argentine parliament soon, said he will seek an alliance between the state and producers, who he said need protection.

Part of Argentina's problems are the result of the state forming an alliance with the country's financial sector rather than its producers, he said.

Under his new alliance, Duhalde said, protections for Argentina's basic industries will be implemented much like the protections used by the United States to protect its basic industries.

Duhalde's Peronist party imposed protections during the 1940s and '50s, but Duhalde said his plan "is not to be the protection of the past but rather protecting what is ours."

In an unusual move, Duhalde blamed the entire country and its leaders for Argentina's current crisis.

"We are bankrupt. We are in a dire situation. Why have we come to this point in Argentina? Who is to blame?" asked Duhalde. "It has been the Argentinians and our national leaders who have led our country to these dire circumstances."

Duhalde also said his first duty is "to guarantee social peace," a clear signal he will not tolerate demonstrations that have degenerated into riots in recent weeks as the economic crisis has worsened.

"Argentina cannot tolerate anarchy," he said.

Offering an olive branch to opposition political parties, Duhalde said he sees himself as a "transitional president" allied to all the people of Argentina and not to any party. As a result, he said, he would resign his long-time membership in the Peronist party.

The International Monetary Fund has harshly criticized the Argentine government for spending beyond its means while going further and further into debt.

Argentina was forced to declare itself in default on its public debt after the IMF refused to reschedule or renegotiate its debt.