June 18, 2013
Facing the saucepan music
Argentine economy ministers are known to be creative accountants. If you, say, underreport inflation in a budget, then those extra pesos fabricated by the revenue coming from the real price hikes, in a country with an annual inflation rate of at least 23 percent, will be there available to do some extra spending. Does next year’s budget, formally submitted to Congress on Thursday by Economy Minister Hernán Lorenzino, also include some creative accounting? The brand-new budget bill says that Argentina has earmarked 7.97 billion dollars that will go to a special fund to service debt next year. But because about four billion dollars in debt money, due to be paid in December of next year, is tied to Argentina’s economic performance this year, there’s speculation that, like in years before, President Cristina Fernández de Kirchner will have some extra cash to spend. That extra four billion dollars in growth-linked bonds will only be paid if Argentina grows more than 3.26 percent this year. Lorenzino’s budget says Argentina will grow 3.4 percent in 2012, meaning that technically the hefty payment on December 13 will have to be made. Lorenzino has also told a pro-government newspaper that there are no plans to pocket some of the 7.9 billion dollars in 2013, which in case you had not noticed is the year of the midterm elections. Yet analysts are not so sure. The midterm elections, like all such elections before it, looks crucial. The outcome of the 2013 vote could decide whether Fernández de Kirchner is popular enough (and powerful enough) to make a bid to reform the Constitution in order to seek a third consecutive term that is currently banned.
Fernández de Kirchner, judging by her landslide re-election victory last year, is pretty good at electioneering. The close look the opposition is taking at the budget bill shows that there is a lot of anxiety about next year’s election showdown.
The opposition, of course, had a lot of say about this year’s budget. Until recently that same opposition could do something about the budget after winning the midterm elections in 2009. The opposition felt so much in control of Congress that the government’s budget bill 2011 was not approved when submitted in 2010.
Argentina has a shifting political landscape. It had no budget in 2011. Budget 2013 could give CFK the cash to throw an election bash just in time for a crucial vote. That’s the way it goes. Other things are also constantly shifting.
The President was hugely unpopular in 2008 after the fierce standoff with farmers over soybean export duties. That’s why the ruling Victory Front performed badly in the midterm elections of 2009. That year Néstor Kirchner, the President’s late husband and predecessor, lost the midterm election in Buenos Aires province, which is supposed to be a Kirchnerite bastion. Yet come 2010, after Kirchner died suddenly of a heart attack on October 27, the President was popular once again, riding a wave of sympathy over her loss.
Now we are in 2012 and according to one poll published in the conservative daily La Nación recently Fernández de Kirchner’s administration has an approval rating of 51 percent. Yet at least in Buenos Aires and other big cities the President’s policies, including the draconian foreign currency exchange controls and inflation (as noted in an International Monetary Fund warning issued on Tuesday), are the subject of controversy.
Thousands of anti-government demonstrators marched through the streets of Buenos Aires on September 13. The protest rally had been organized through social media networks and was not formally endorsed by the country’s main opposition parties. Polls show that much of the public is frustrated at the opposition because at times it comes across as hapless while the President pushes through her policies at breakneck speed. The blinding speed at which Kirchnerism moves has been one of its main features since Kirchner took office in 2003.
The pot-bashers of September 13 probably saw that there was no stopping CFK if they didn’t personally start making a din with their saucepans. Three other such protests had been called this year. But they had been lame. The September 13 protest was loud all right. Fierce opposition presidential candidates, such as the Civic Coalition leader Elisa Carrió, performed dismally in last year’s elections. Carrió won less than two percent of the vote last October. But has the mood shifted? Are more people now willing to hear out the Carriós of Argentine politics? The protesters of September 13 certainly are. But the opposition has been here before. Massive protests, larger than the September 13 pot-bashing, were staged in 2008 in support of the farmers. Yet Fernández de Kirchner did not lose political control of the country.
The President has not talked about last week’s protest in public. Cabinet Chief Juan Manuel Abal Medina dismissed it as an upper middle class fad. The protest was staged by people “more interested in the events of Miami,” Abal Medina said.
On Wednesday, the President made her first public appearance since the September 13 protests and said not a word about them. Instead, the President concentrated on announcing policies for “the majority of Argentines” (on Wednesday she trumpeted changes to ART labour risk coverage agreed on by business leaders and the trade unions).
Also on the menu was a sliding-scale duty on biodiesel exports. The new sliding-scale was introduced after Deputy Economy Minister Axel Kicillof last month announced export duties on biodiesel exports had increased to 32 percent. The sliding-scale, which will be updated every 15 days, effectively lowers the duty to about 19 percent.
The standoff of 2008 was also about a sliding-scale, remember? Back in 2008 the national government wanted to slap a sliding-scale duty on soybean exports (the higher the price, the higher the duty). The soybean sliding-scale was not approved by Congress in 2008. But this new sliding-scale for biodiesel was swiftly rubber-stamped after the industry asked the President for it.
It should come as no surprise that CFK didn’t talk about the pot-bashers directly. It would have been out of character. The President (and her husband when alive) rarely makes any reference to her political rivals by name. The question is if the September 13 protests, and other demonstrations like it that will follow, will force Fernández de Kirchner to alter her strategy. Carlos Kunkel, the ultra-Kirchnerite lawmaker and once a member of Kirchner’s inner circle, stated after the protest that the President has no plans to reform the Constitution to then seek a third consecutive term in office.
Expect Fernández de Kirchner to send out little signals in a bid to control the damage after September 13. On Thursday, Fernández de Kirchner (in yet another public appearance to plug the state-funding housing plan) urged the wealthier sectors of Argentine society to show “solidarity.” The noise of bashing saucepans was especially loud in the upmarket Buenos Aires neighbourhoods on September 13. The President on Thursday implied that the upper middle class has no interest in others doing well.
Fernández de Kirchner was also referring to complaints about new housing projects going up near residential neighbourhoods in the suburbs. But the President also on Thursday said her confrontation with the Buenos Aires City government should be “shifted down a gear” because talks will be required for the state-owned land in this city to be used to build housing. It was a message directed at Buenos Aires City Mayor Mauricio Macri, the leader of the centre-right opposition party PRO.
Practically all political contacts between Fernández de Kirchner and Macri broke down after the mayor rejected the terms of a preliminary agreement signed in January to transfer the private concession of the city’s subway system from the national government to the municipality. Will the national government’s housing plan serve as an excuse for Fernández de Kirchner and Macri to resume talks?
It could be. But the subway conflict is far from over. Macri administration officials have confirmed that there will be no municipal subsidies for the city’s subways. The decision could mean another increase in subway fares. Macri hiked the subway fares 127 percent when the original transfer accord was signed in January. There’s speculation that a new hike will be required soon to keep the subways running without subsidies.
Argentina now lives in a state of agitation. Much of that agitation is over the confrontation between the national government and the giant media group Clarín. The Media Law will go into full effect on December 7 when an injunction filed by Grupo Clarín will expire, CFK argues. According to the CFK administration, on December 7 Grupo Clarín will thus be forced to downsize to meet new regulations.
The President on Monday nominated Martín Sabbatella, the leftwing lawmaker and former mayor of Morón, to head the AFSCA media watchdog that is in charge of enacting the Media Law. Sabbatella will clinch the position after going through a routine screening process expected to last 10 days. Sabbatella is not a media expert but very much a politician. Morón is a district in Greater Buenos Aires that was once a Peronist bastion. But Sabbatella, who is not a Peronist but a former leader of the centre-left coalition FREPASO, was elected mayor of Morón in 1999 vowing to clamp down on corruption. Sabbatella is also considered a rival of Buenos Aires Governor Daniel Scioli, a moderate Kirchnerite. Scioli is considered by many Kirchnerites a political rival because he recently declared that he will run for president in 2015 if the Constitution is not reformed to allow the President a shot at another re-election.
The national government and Grupo Clarín are waging a propaganda war. Sabbatella has been made general just ahead of another crucial battle in an Argentina that is in a state of agitation.