By Martin Gambarotta     

By now you know Argentine politics, there’s never a dull moment — literally. Not even Friday evening is dull. Come off it. Friday evening, when it comes to political news, should be a bore. Even hacks need to take a breather. Try telling that to Martín Redrado, the — suspended? fired? former? — chief of the Central Bank. Redrado held a press conference on Friday night and called it quits. “My time,” Redrado said, “is up.” It was a theatrical end to an ugly row between Redrado and President Cristina Fernández de Kirchner over the use of 6.57 billion dollars of Central Bank reserves to service debt this year.
But did the President sigh in relief after watching Redrado throw in the towel on television? No. Cabinet Chief Aníbal Fernández, even as Redrado was fielding questions from reporters in the plush hotel where he held the press conference, said that “for us the resignation does not exist, we must await the resolution of Congress.”
Did you get that straight? Yes, the President is refusing to accept Redrado’s resignation. Things are never simple when they aren’t dull.
The Central Bank case is a legal and political wrangle. Fernández de Kirchner fired Redrado by decree on January 7 purportedly after he voiced objections in private about the legal consequences of moving 6.57 billion dollars in Central Bank money to a Bicentennial Fund managed by the Treasury.
The opposition also complained loudly that Fernández de Kirchner did not first submit her decision to sack Redrado to a congressional advisory commission as required by the Central Bank statutes. The CFK administration pressed charges against Redrado after the decree to fire him was issued accusing him of malfeseance. But Redrado also took his case to court (and is still fighting it there) arguing that his dismissal was unconstitutional and breached the Central Bank’s independence. A judge ruled in Redrado’s favour and froze proceedings for the courts to consider the case. But an appeals court later ruled that Redrado could be suspended by the President if the case was assessed by the congressional commission. The commission’s advice to the President is non-binding. Fernández de Kirchner, sensing that she had found an opening, announced after the appeals court ruling that she had decided to ask the commission to meet to consider the Redrado case and issue its non-binding counsel.
Congress is currently in recess. But Fernández de Kirchner wrote to Vice-President Julio Cobos urging him to establish the commission along with two Lower House deputies: Gustavo Marconato of the ruling party (the head of the Budget Committee), and Alfonso Prat Gay of the opposition Civic Coalition (the head of the Finance Committee). The commission met for the first time on Tuesday and things started to move fast.
Redrado appeared before the commission, that held its meetings behind closed doors, on Wednesday and Thursday. He urged the commission to issue its advice “without political pressures.”
On Friday night after his two long appearances in Congress, Redrado called it quits accusing the CFK administration of trying to “overrun” the institutions.
By then Redrado was politically cornered. Reports said that Cobos, a dissident Radical who made a name for himself by voting with the opposition in the Senate debate on the increase of soybean export duties in 2008, this time planned to back the President’s decision to sack Redrado.
Cobos’ tie-breaking vote in 2008 turned him into a sensation overnight and made him very popular. The Vice-President is expected to run for president in 2011 for the Radical Party. But the Redrado case has put the Vice-President in a tight spot — and at least part of his popularity at risk.
The President, before the commission met and the row still raged, had accused Cobos of being a conspirator who “wanted to be president before 2011.” Cobos has denied the allegation saying that his aim is to mediate when political conflict breaks out. But Elisa Carrió, the leader of the centrist Civic Coalition known for fiercely criticizing the President, said that Fernández de Kirchner was right in not trusting Cobos. “In the eyes of the world,” Carrió has said, “Cobos is a conspirator.”
Polls show that Cobos is still the most popular politician in the country. But polls also show that his negative rating has increased due to his exposure during the Redrado row.
What should Cobos do when the time comes for the commission to vote? Vote in favour of sacking Redrado and his reputation will be harmed with those who see him as the hero that stood up to the Kirchners during their bruising standoff with the farmers in 2008. Vote against sacking Redrado and the President will have another excuse to call him a coup-monger.
Cobos, speaking for the first time as head of the commission before Redrado suddenly quit on Friday, said that the commission will hand down its non-binding — but much-awaited — advice to the President next Tuesday. Marconato, the ruling party’s man on the commission, is obviously all for sacking Redrado. But Prat Gay, like Cobos, is also in a tight spot. Prat Gay was head of the Central Bank between 2002-2004 and was replaced by Redrado when his mandate ended. Reports said that Prat Gay was in favour of sacking Redrado not for refusing to use the reserves, but for being game to the administration’s manipulation of the inflation rate. Yet Prat Gay was reportedly under pressure from his party’s leader, Carrió, to vote against dismissing Redrado.
All the speculation sounds pointless now that Redrado has slammed the Central Bank’s heavy frontdoor behind him. But the Cabinet chief on Friday argued that the appeals court ruling has already suspended Redrado and that he can’t resign before the commission speaks. Redrado on Tuesday, a day before he was scheduled to appear before the commission for the first time, sent Cobos a letter telling him that the President must first quash the decree that originally sacked him before he could face the commission. But according to the Cabinet chief the appeals court ruled that the conflict over the decree should be sorted out between Congress and the Executive while Redrado is suspended and the Central Bank is managed by the caretaker chief Miguel Pesce (loyal to President and her husband and predecessor Néstor Kirchner).
Redrado on Friday admitted that public opinion, in a month when most people take a holiday, was clearly fed up with the Central Bank issue. Still, he portrayed himself as an institutional champion who had “drawn the line” many times in the past when the Kirchners, for example, tried to use the reserves to purchase part of the oil company YPF.
But when Friday night was over all eyes were no longer on Redrado. Cobos must now decide how the commission will deal with his  resignation.
Senator Ernesto Sanz, the chairman of the Radical Party, on Friday night said that after the resignation the Redrado case was a “secondary matter.” What really matters, Sanz and other opposition leaders said, is the Bicentennial Fund that the President established via an emergency decree in December and which has also been frozen by an appeals court ruling. The appeals court has ruled that the President cannot touch the foreign currency reserves by decree without first going through Congress, which is scheduled to begin ordinary sessions on March 1. The appeals court also questioned the notion that the President can issue a decree (known as “decrees of urgency and necessity” or by its initials in Spanish: DNU) by simply stating that there is an emergency.
Congress will thus most likely debate not only the use of the Central Bank reserves to service debt, but also the very nature of the emergency decrees.
So what of Redrado? What of the man international news agencies describe as the US-educated banker “once called the “Golden Boy” because of prestigious posts he held at a young age?” (He is a former head of the Argentina’s Securities and Exchange Commission and helped found the Buenos Aires-based Fundación Capital think-tank.) Redrado will most likely want to take a holiday, find work abroad and, who knows, maybe one day he will be back in the country serving as economy minister or again as Central Bank head — if the political wind blows in the right direction for him.
But for now most political parties seem to be chirping the same tune: Goodbye Golden Boy, you are no longer the issue. The issue, if you ask the opposition, is the Bicentennial Fund. The issue is also the tricky legal position of an upcoming debt swap worth 20 billion dollars engineered by Economy Minister Amado Boudou. The issue is also Boudou himself after the legal row has made the markets — and the three private global banks involved in the debt swap — jittery. Boudou, a relatively obscure economist in his 40s named after the ruling party’s midterm election defeat in June last year, will most likely lose his job if the debt swap flunks.
Kirchner restructured most of Argentina’s debt in 2005. But a group of creditors with 20 billion dollars in defaulted bonds are still holding out, which means that Argentina is technically in default and a financial pariah that cannot borrow money from international lenders. Before things went awry Boudou planned, in his words, to “return to voluntary capital markets” after the swap.
Boudou’s challenge is to make the swap work now that the weather has turned foul (and a US judge is still considering the case of the holdouts). Argentina on Thursday filed a new debt swap report before the US Security and Exchange Commission admitting controversy over the inflation rate and a ruling by a New York judge freezing Central Bank assets in favour of the holdouts. The new report was filed after the SEC asked for more information when the original one was filed a week ago before approving the swap.
The Economy Ministry admitted in the new report that “private analysts object” to the official inflation rate as reported by the state-run INDEC statistics bureau after it underwent “a process of institutional reform” in 2007.
Boudou is busy doing the SEC paperwork that might still save him his job. But the President (when not trying to be amusing by comparing pork meat to Viagra as she did on Wednesday) is still mostly on the attack. Yet, in a sign that the administration needed a scapegoat for the legal errors it made when it originally issued the two decrees, Treasury prosecutor Osvaldo Guglielmino quit on Wednesday (the speculation was that he was taking the rap for the mistakes made by the President’s Legal and Technical Secretary Carlos Zannini, a member of Kirchner’s inner circle).