What you sow, you reap (or garner)

Is the CFK government running ahead of or behind events?

At least the naval training frigate Libertad stranded in Ghana knows where it stands — who can say where Argentina is heading after last Monday’s announcements? The eternal problem of pinning down the ideology and strategy of a Peronist administration recurs — what started as a plan for the insurance sector dovetailed into an all-out state takeover of capital markets with the lurking suspicion that a cash cow hunt for electioneering purposes might be the true aim rather than any revolution.

State control of the economy presupposes the existence of a state and this basic ingredient seems missing in today’s Argentina — an overcentralized and overpersonalized presidency whose best shot is dedicated to almost daily speeches rather than administrative drudgery (unlike the late, lamented Néstor Kirchner who died two years ago yesterday) and a civil service colonized by La Cámpora youth activists and Patagonian “penguins” does not provide the basic machinery for a Soviet state, even if Deputy Economy Minister Axel Kicillof is as Marxist as his harshest critics claim.

The Cristina Fernández de Kirchner administration has simply been too error-prone in recent months — whether Border and Coast Guard pay, the Eva Perón banknotes, a gratuitous financial panic caused by a quarter million dollars of provincial bonds, bio-diesel export duties or the demented flirtation with Iran, not to mention the Libertad — as well as erroneously obsessed with media control. And where CFK’s aspirations to enlightened despotism include rational aims such as national health, they clash with Peronism’s trade union base. Perhaps the state needs to reform itself rather than the Constitution.

Rather than a long-term blueprint for a Gosplan society, Monday’s announcements could easily be a spasmodic reaction to the government running out of money with the elections now less than a year away. The original planning of transferring the mountainous subsidies for utility bills and transport fares to the public works budget seems to have died with the Once rail tragedy, last April’s YPF nationalization has not brought down a monstrous fuel import bill and money obviously cannot be raised abroad (as the Libertad’s plight underlines) so why not tag the private sector with the public works and other electioneering bills which the state cannot pay?

So what exactly was announced on Monday? CFK (who had been meeting with Mexican crooner Luis Miguel and the Grandmothers of Plaza de Mayo almost simultaneously beforehand) did not help to clarify the issue — she lashed out at the “vulture funds” over the Libertad (they can “take away our frigate but not our liberty, sovereignty or dignity”) and her favourite target of international rating agencies, as well as restating her disbelief in United States inflation figures (which yield two percent with or without seasonal and commodity prices since the US economy is fighting to stave off deflation).

Behind the presidential rhetoric a 160-clause bill is headed for Congress. This essentially transfers control from the Bolsa Stock Exchange (founded in 1854, the year of the Crimean War) to the CNV National Securities Commission. The market’s traditional self-regulation is thus ended (and stockbrokers need no longer be Bolsa shareholders), perhaps to be replaced by self-evaluation via the CNV (and universities — will Argentina be setting its own country risk?) As for the insurance sector, it will be obliged to invest seven billion pesos into public works under the guidance of Kicillof and Domestic Trade Secretary Guillermo Moreno.

How should these changes be assessed? In many ways they are in line with other countries (Brazil and even Wall Street) and with modern times since 1854. Even the compulsory productive investments for the insurance sector are not necessarily hostile — the government plans to almost double insurance from 2.7 percent of Gross Domestic Product to over five percent by 2020 (CFK is always enjoining farmers to insure against natural hazards and risks instead of expecting any breaks from her government). But the control mechanisms are usually decisive in any Kirchnerite legislation and these are definitely in the direction of state intervention. Perhaps Tuesday’s MerVal share index down 3.5 percent — negative but not dramatically so — is the most apt verdict.

LIBERTAD

Meanwhile the government is determined to present the Libertad mess as some kind of moral victory yet Argentina’s international isolation has not only been deepened but stands exposed. The CFK administration has painted itself into a corner where it cannot negotiate with “vulture funds” and indeed now would certainly not be a good time with the economy crippled by currency and import curbs but it could all have been settled much earlier and so much more easily.

Having announced the evacuation of the crew from Ghana (281 of the 325 returned several hours late in the small hours of Thursday) last weekend, Foreign Minister Héctor Timerman immediately flew to the United Nations where he made a futile bid to convince the Security Council that the Libertad issue was more urgent than Syria — if it is “piracy,” then Africa has much worse piracy on its east coast than west. Timerman then came home where he cited nearly 30 cases of attempted but frustrated Argentine asset seizures at the hands of creditors in the last decade. There was talk about the 281 crew members returning in an Air France jet for fear that an Aerolíneas Argentinas plane would also be impounded by creditors although Aerolíneas president Mariano Recalde said that all his aircraft are leased for precisely that reason.

Meanwhile the diplomacy seems to have been mishandled by Timerman’s ministry quite apart from being excessively politicized elsewhere. Argentina has appealed too much to its own Latin American neighbours instead of seeking support in Africa — a continent it does not seem to understand. Apart from little effort among Ghana’s friends in the area, Ghana itself has not been treated in the most diplomatic way — as a naive and even corrupt puppet of the “vulture funds” instead of the erstwhile rogue state of Kwame Nkrumah and Jerry Rawlings now going straight (and rewarded with 13.6 percent growth last year and more foreign direct investment than Argentina) and determined to respect the ground rules.

Perhaps the most laudable action from a government official came from Defence Minister Arturo Puricelli with his “buoy stops here” assumption of responsibility. But the personal merit of the gesture does not imply any real sacrifice for the administration as a whole — Puricelli is a politician with more past than future plugging the gap left by Nilda Garré’s move to the Security Ministry.

TRIPLE M

Apart from the financial sector announcements, the first day of the week was the most significant because of the meeting of three Ms — City Mayor Mauricio Macri, anti-government CGT secretary-general Hugo Moyano and “Momo” or farm hand union leader Gerónimo Venegas (but not Pablo Micheli heading up the anti-government wing of the CTA labour grouping). Not that any opposition alliance was born, even if the likes of Francisco de Narváez dream of reviving the Unión-Pro list which defeated the Kirchnerite Victory Front in Buenos Aires province in 2009. Within two days Lower House passage of ART industrial accidents legislation found Macri’s PRO centre-right party and the protesting supporters of Moyano (here he was joined by Micheli) on opposite sides. A Macri-Moyano ticket (or vice versa) would thus be an even worse mismatch than the Democratic Union (Radicals, Socialists, Communists and conservatives) opposing Peronism back in 1946.

Perhaps Argentina’s political crisis can be summed up by the two polarized sides having the opposite problem — while the government is run by an overcentralized and apparently irreplaceable presidential leadership almost to the point of being dysfunctional, the opposition seems incapable of finding a leadership to place at the head of so much discontent. Ever since last month’s pot-bashing, some voices say that the people will make the choice if the political class is incapable but this is precisely what the people failed to do in the 2003 elections after the “begone with them all” crisis — no clear choice (24 percent for Carlos Menem and 22 percent for Néstor Kirchner) and the eventual return of the political class.

The passage of the ART bill (by a 139-82 vote) has to be hailed as a positive development despite the multiple political contradictions — between Macri and Moyano just two days after smiling together over a rose (between two thorns?) and also by CFK throwing business a bone just two days after laying the heavy hand of the state on capital markets, not to mention Lower House Labour Committee chairman Héctor Recalde (father of the Aerolíneas president) who after spending much of his life building up the “trial industry” of labour litigation in alliance with Moyano has turned against both his old friend and his own creation (he abstained in the Congress vote) in the same month.

The bill works against the “trial industry” by forcing industrial accident victims to choose between compensation (to be increased 20 percent, paid immediately and updated) or going to court.. And good riddance — the “trial industry” led to 70,000 lawsuits (thus swelling the legal case backlog) costing 21 billion dollars (according to Ámbito Financiero) and especially penalizing the more labour-intensive PyME small and medium-sized businesses. At last something to make business more competitive after so much erosion in recent years.

In other labour news, veteran power workers leader Oscar Lescano of the pro-government CGT gave the administration 40 days to meet labour demands (such as raising the income tax floor) while there were teacher strikes.

MISCELLANY

On the Media Law front, the per saltum bill to fast-track its implementation started leaping through Congress (ditto the 2013 budget) and the Senate approved 16 new surrogate judges but the Magistrates Council was stalled.

On the crime front the Santa Fe provincial police chief dismissed last week and on the run last weekend on suspicion of complicity with drug-trafficking turned himself in — the national government is politicizing this case (via Federal Planning Minister Julio De Vido, quite inappropriately) in order to make Socialist-ruled Santa Fe look like a mafia haven. Meanwhile in Chaco the murder of Tatiana Kolodziez at the hands of a paroled recidivist rapist raised the issue of judicial negligence.