Between the lines

By Michael Soltys

Buenos Aires Herald Senior Editor

The French Radical Party so central to the Third Republic were nicknamed “radishes” (a sobriquet later shared by their Argentine namesakes) because they were described as red outside, white inside with “their hearts on the left side of their bodies but their pockets on the right” — is the Cristina Fernández de Kirchner administration following suit with its leftist populism being supplanted by pragmatism in ideological camouflage? CFK may have given the game away in her Wednesday speech to welcome home the naval frigate Libertad when she said: “We‘ll fight and if we have nothing left, we’ll fight naked like our Indian brethren” — fiery nationalistic rhetoric which nevertheless hints at austerity ahead.

Yet the shift runs deeper than the familiar pattern of rulers saying one thing and doing another. Thus if fuel prices are abruptly trending upwards after the populist pricing of a decade, the reason is not so much smoke and mirrors to lure overseas investors as the state now being the beneficiary of higher prices after last April’s YPF expropriation. And if the government is reportedly poised to re-open the 2005 and 2010 debt bond swaps despite the “padlock” law (which supposedly threw away the key in order to make bond swap closure irreversible), this is not so much a reluctant surrender of ideology to necessity as a recent conviction that Argentina can join battle with its creditors and win — that far from being the victim of an international conspiracy, the CFK administration can count on most of the world as its allies against the “vulture funds” in order to preserve the haircut option as a solution for insolvency crises in Europe and elsewhere (not to mention Washington’s anxieties about New York as a financial centre if its court rulings are too inflexible). It is perhaps significant that while furious invective against the “vulture funds” peppered CFK’s speech to welcome home the Libertad, she no longer spoke of not paying them a cent — all Argentina needs to do to be seen as seeking to comply with New York judge Thomas Griesa’s pari passu ruling is to offer holdout creditors the same terms as all others although a Thursday appeals court ruling in Manhattan indicated that Griesa’s pro-holdout ruling might not be so easily bypassed nor a technical default averted — payment of Paris Club debt and more respect for international arbitration rulings could smooth this path.

Meanwhile the question remains how such pragmatism can be squared with anti-imperialist rhetoric but history suggests that the latter is perhaps the best way to sneak through the former.