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Britain, Brazil Support Argentina's Austerity Plan - 2001-08-01

The leaders of Britain and Brazil have pledged their support for the latest economic austerity measures taken by Argentina's embattled President, Fernando de la Rua, who is struggling to pull his country out of a deep economic crisis. The pledges of support came Wednesday when the three leaders met in southern Brazil.

The meeting in the southern Brazilian city of Foz do Iguacu came at the end of Prime Minister Tony Blair's three-day visit to Brazil. After touring the huge Iguazu waterfalls with Brazilian President Fernando Henrique Cardoso at his side, the two leaders had lunch with President de la Rua to discuss the situation in Argentina.

On Monday, the Argentine Senate approved a government-sponsored economic austerity package which cuts public sector wages and pensions by 13 percent and imposes other measures aimed at reducing the country's huge public debt. The austerity program is the latest effort by the de la Rua government to avoid defaulting on Argentina's $128 billion debt while trying to pull the country out of a deep recession.

Mr. de la Rua's economic policies have provoked increasing social unrest - with the latest such outbreak ocurring Tuesday when tens of thousands of unemployed workers blocked Argentina's roads and highways in a coordinated protest. At the same time, many international investors are expressing skepticism about the government measures, saying the budget cuts have not gone far enough.

It is in this context that Prime Minister Blair and President Cardoso voiced their strong support Wednesday for Mr. de la Rua's policies. In a brief statement, Mr. Blair underscored the importance of the Argentine Senate vote Monday approving the government's latest austerity package. "This is a moment where it is important that we show support and solidarity with Argentina and the difficult circumstances that it faces," Mr. Blair said, "and the vote the other evening and the reform program are big steps of progress and I hope they will be recognized as such by the world."

In response, President de la Rua expressed his gratitude at the words of support, describing them as "extremely valuable." He said Argentina is passing through what he called a "transitory" period, in which its current difficulties will be overcome.

Following the luncheon in Foz de Iguacu, Prime Minister Blair crossed the border into Argentina to hold a second meeting with President de la Rua. The visit marks the first time a British leader has stepped on Argentine soil since the two countries fought against each other in the 1982 war over the Falklands Islands.

Prime Minister Blair winds up his trip to Latin America and the Caribbean later this week in Mexico.