May 22, 2013
Out of sight, into mind
If last Sunday’s column started by saying that Argentina and Venezuela had a new point in common for the coming week with vice-presidents running the show, it must be said that there were very different levels of intensity in their stewardship last week — acting president Amado Boudou barely went beyond receiving the credentials of half a dozen ambassadors and the usual spot of media-bashing.
There is both an upside and a downside to the presidential absence in Asia. The latter is the team left behind who vaguely evoke the famous wartime broadcast of J.B. Priestley that it was not so much the Nazis he feared as the kind of Englishman who would come to the fore if they ever conquered Britain — for all her tendency to remind people of their least favourite teacher from their schooldays, Cristina Fernández de Kirchner at least has more brains than the mediocrities she likes to surround herself with (and, unfortunately, also more than the most visible rival alternatives).
The upside is that without CFK setting her own idiosyncratic agenda everyday — a sterile dialectic of thesis and antithesis reacting to provocation without any real synthesis at the end — people suddenly seemed to be talking about the real problems as a first step toward the alternative which has been so long wanting. To be sure, we were treated to presidential opinion from afar but even in the Twitter age it was too distant and too virtual to set the agenda. Instead political debate was dominated by such mundane issues as incomes policy, transport, the exchange rate, inflation, etc. — probably not your idea of beachside reading but extremely vital.
LABOUR, ETC. Collective wage bargaining presupposes at least a few weeks of negotiation and going on strike in a deserted city would be pointless but the signs are ominous for a labour year fraught with conflict. The government’s problems start with its own trade union allies, who met Labour Minister Carlos Tomada last week — pro-government CGT leader Antonio Caló wants a 25 percent wage increase floor with no ceiling and the income tax floor raised by 57 percent while the government offers 20 percent for both.
Along the lines of the brainless idea of exporting the same value as any imports (which simply leads to existing exports being subcontracted to importers often ignorant of the sector), trade unions have been offered a more generous income tax floor if they can supply revenue alternatives. The trade unionists made the rather obvious suggestions of the banking, mining and farming sectors as the main beneficiaries of the last decade’s boom (also judges) but these do not seem so obvious to the government.
It would be simplistic to put dissident CGT leader Hugo Moyano’s cohorts in the same bracket as pro-government trade unionists — while dissident CTA grouping leader Pablo Micheli’s ATE state workers want a 48 percent increase, pro-government CTA leader Hugo Yasky considers 25 percent fine for his teachers (although Buenos Aires province teachers demand 60 percent) — but there is tension across the board. Toward the end of the week bank clerks flouted the 20 percent guideline by reaching agreement on 24 percent, pending Labour Ministry reactions as from tomorrow.
Transport policy was at least the ostensible subject of the last presidential nationwide broadcast before departing to Asia.
Plenty of buzz here with hot debate on the prospective subway token increase to 3.50 pesos and the temporary closure of A line for an overhaul; the announcement of 6,900 new kilometres of railway track and the trial of last February’s 51-death Once tragedy now looming. In theory, a 3.50-peso subway token should be City Mayor Mauricio Macri’s problem after so much national government insistence last year on City Hall taking over the underground without subsidies but Interior and Transport Minister Florencio Randazzo projects integrated metropolitan transport (along the lines of London’s Oyster Card as a magic solution to dodge or at least disguise fare increases while removing subsidies), demanding price co-ordination from national, provincial and municipal governments — a Friday meeting to that end was shunned by both Macri and Buenos Aires Governor Daniel Scioli. Macri pleads that he cannot print money to replace subsidies like the national government — last week City highway tolls went up 12.5 percent toward funding the subway.
As for all those thousands of kilometres of new railway track, it could be yet another announcement — but it could also be for real as the government moves to undercut the teamster Moyano (who has ensured that 80-85 percent of Argentina’s freight is trucked, economically and ecologically inefficient). And do not rule out railway renationalization in an election year.
All eyes were on the “blue” informal dollar, which in midweek topped the 7.50-peso mark, more than 50 percent ahead of the official exchange rate (it was 10 percent only a year ago) — 30-40 percent is normally enough to make the parallel dollar a permanent (and inflationary) benchmark, a kind of new country risk. The government has plenty of firepower to call the market’s bluff and nip all this in the bud — Central Bank reserves house some 1,428 dollars for every “blue” equivalent sold daily or else they could simply print less pesos. But instead the government dismisses this “blue” wave as seasonal and marginal, persisting in counterproductive currency curbs to give the greenback an artificial scarcity value. As a result the housing market is a paradox of low activity and high prices. When you have a seller’s market where nobody wants to sell, something must be wrong.
The gap between the official and private inflation estimates trebles the difference between official and parallel exchange rates even if the latter was more of a talking-point last week. Six years after political activists replaced technical staff in INDEC statistics bureau, INDEC finally reported a double-digit annual inflation rate — 10.8 percent for 2012 (as against the 25.6 percent average of private estimates). December inflation of one percent (the highest in 31 months) was held back by posting 0.2 percent increases for food and beverages to counter transport and health care (3.8 percent and 2.2 percent, respectively) — a monthly family shopping-basket costs 719 pesos, according to INDEC, while 522 pesos keeps an individual above the poverty line. Argentina now has the highest inflation in the region (pipping Venezuela to the post), thanks to a 40 percent annual expansion of money supply while even the success of controls against capital flight just puts more pesos in circulation. Public spending is unlikely to slacken in an election year. The government apparently continues to see inflation as a win-win situation — or “wine-wine” (whine-whine?), as CFK once said — because it boosts revenue while forcing people to keep on spending to sustain a consumer boom.
Argentine Industrial Union (UIA) President José Ignacio de Mendi-guren is so nervous about a wage-price race that he fears a new “Rodrigazo” (that 1975 inflationary outbreak after then economy minister Celestino Rodrigo reversed two years of rigid price controls with a maxi-devaluation and steep utility rate increases — the parallel exchange rate then more than doubled the official). This comparison with the prelude to the 1976 military coup was widely rejected but the UIA insists that 25 percent wage increases are incompatible with a competitive industry.
POLITICS, ETC. At the end of the week Bariloche Mayor Omar Goye was suspended by a 10-1 town council vote — taking the rap for the pre-Christmas looting of local supermarkets by a picket “co-operative” suspected of responding to Social Welfare Minister Alicia Kirchner. But at least other reasons were found for his ouster, which proceeded according to institutional channels rather than presidential whim. Yet there are reasons for alarm over the possibility of a government subsidizing the very people working against the established order when the cupboard is looking bare for an administration accustomed to throwing money at problems.
Talking of Alicia Kirchner, the presidential favourite to top the ruling Victory Front’s Buenos Aires provincial slate in October’s midterm elections, her uncertain prospects in that arena create a huge temptation for the opposition and the week’s main political rumours centred on CFK’s two most heavyweight rivals, Scioli and Macri, taking her on (with Córdoba Governor José Manuel de la Sota and Tigre Mayor Sergio Massa mentioned on the fringes to team up). Scioli’s Lower House candidacy would probably be seen as another “wine-wine” situation by CFK — if he took up his seat, the country’s most important province would then accrue to ultra-loyalist Lieutenant-Governor Gabriel Mariotto while if his candidacy were to prove “testimonial,” some zealot for a third CFK term would fill his seat. But Scioli (who is hanging onto his dollars in order to fund the treatment of his reimplanted arm abroad) continues to profess loyalty, describing CFK and himself as “different but complementary.” This did not prevent him from seeking improvements in the federal revenue-sharing system (his province puts in approximately twice as much as it receives) — last week there was also an internal shuffle of revenue-sharing among the province’s municipalities.
Meanwhile the recent pacifism displayed by the Liaison Board of farming lobbies is a fairly telltale sign that Scioli is now their man. Yet the farmers do not rule out protests against tax and other burdens, claiming that there are now 60,000 less farmers than a decade ago in which period they paid some 60 billion dollars in grain export duties. But apart from the fertile pampas, keep an eye this year on regional economies (hit by higher inflation, transport costs and taxes while the exchange rate continues to lag) since 79 of the 127 seats (69.5 percent) in October’s voting are outside the Buenos Aires half of the country (city and province).
And CFK’s Asian trip? Since it is still in progress, we plan to offer a complete summary next Sunday.