Argentina’s President Cristina Fernandez de Kirchner announced on Tuesday that the country would nationalize $30 billion in private pension funds to protect retirees from the global financial crisis. Her proposed bill still requires the approval of Congress, in which her center-left Peronist party holds a majority.

The nationalization of the ten funds would signal the end of Argentina’s private pension system, created in 1994 by then-president Carlos Menem. This private alternative to the state pension system currently administers the retirement accounts of 9.5 million depositors (one-fourth of Argentina’s population of 40 million).

The value of the funds’ investments has fallen 40 percent on average this year, and President Kirchner said that the move was necessary to protect retirees and workers. This sentiment was echoed by Amando Boudo, Executive Director of the National Social Security Administration who said that “the government’s only motivation to carry out this measure was to rescue our future and current pensioners from uncertainty.”

But critics say that the government is grabbing for money amid escalating debts, falling commodity prices and tax revenues, and global financial trouble. Argentina has been largely shut out of international capital markets since 2001, when it defaulted on bonds worth $95 billion, the largest sovereign-debt default in history. 2001 was also the last time the government sought to tap workers’ savings to help finance debt payments, freezing savings accounts and converting dollar-deposits into pesos.

In response to President Kirschner’s announcement, Argentina’s main stock index, the Merval, tumbled twenty percent on Tuesday and Wednesday — the biggest two-day drop since 1990.

WIDE  ANGLE surveyed the damage of Argentina’s 2001 economic crisis in The Empty ATM, following one woman’s struggle to recover her savings and a novel television game show that offered contestants a job amid widespread unemployment.