Outside looking in

An external focus really says a lot more about home politics

Whoever would have thought that President Cristina Fernández de Kirchner would ever be upstaged by her most servile minister and yet that is precisely what happened last week. Foreign Minister Héctor Timerman was in the centre of the ring from start to finish in a week beginning with disclosure of a controversial agreement with Iran and ending with Malvinas-related fireworks ahead of Timerman’s trip to Britain as from today — CFK’s uninspired presence at a disappointing EU-CELAC summit across the Andes and announcement of the new income tax floor (long predicted and widely rejected) was hardly competition. Dutch Princess Máxima was more queen than CFK last week.

The primacy of Timerman and foreign policy were more apparent than real, of course. Every decision is Cristina’s while the focus on external relations with Britain and Iran really says a lot more about domestic politics.

The latest bout of South Atlantic tension — given a new lease of life after last year’s 30th anniversary of the 1982 Malvinas war — took the form of Timerman refusing to meet the Kelper legislators Dick Sawle and the veteran Jan Cheek together with his British counterpart William Hague, insisting that the dispute was strictly bilateral. But he then went on to mix apples and oranges by saying that this jeopardized multilateral co-operation — over nuclear proliferation, drug-trafficking, terrorism and all the other “problems without passports” which extend so far beyond two countries and two islands.

But in any case the London side of this bilateral dispute insists that it is triangular with the self-determination of the islanders paramount. Timerman leaves them out of the equation at his peril because their fisheries wealth (and oil prospects as from 2017) equips them for a UDI (unilateral declaration of independence or at least something akin to the previous Dominion status of Canada or Australia) at any time, thus wholly undercutting Timerman’s stale rhetoric against “colonialism.”

Last February this column was congratulating CFK for taking the moral high ground by stepping down from the expected trade embargo against the islands to offer Aerolíneas mainland flights instead — no trace of such imagination in Timerman’s confrontational tactics now.

Strict adherence to United Nations resolutions is only for the Malvinas, it seems — the “historic” Iran agreement proceeded via entirely different channels, starting with announcement on Facebook (CFK’s way of preventing Timerman from pulling rank when signing the agreement in Addis Ababa). The agreement sets up a non-binding “truth commission” of five international legal experts picked by the two countries to probe the 1994 AMIA Jewish community centre terrorist bombing, thus retreading 19 years of investigation from scratch. The agreement provides for eight current and former Iranian officials (formally charged in 2006) to be interrogated in Tehran — the main innovation here is that “no” and other expressions of denial will now be translated from Farsi to Spanish (more farce than Farsi).

The Foreign Ministry sought to present the investigation not proceeding on Argentine soil as the chief doubt but this is not the only or main issue — the devil lies in several of the details. All is subject to the approval of both Congress and the families of the AMIA victims but consultation of the latter last week was a formality while ratification in Congress could be simple rubberstamping like so much legislation. CFK told the UN that a Lockerbie solution was being sought when the talks with Iran first started last September but there was no sign of any third country apart from the Ethiopian venue of the signature.

Two bigger questions remain to be answered — firstly, is the deal with Iran bilateral (as the Malvinas dispute is insistently said to be) or is a wider regional logic being followed, and secondly, what does Argentina (or rather CFK gain)? The benefits for Iran are clear enough — it breaks international isolation, neutralizes a nasty skeleton in the closet when pursuing its penetration of Latin America and perhaps even acquires a new anti-Zionist forum ahead of its June elections. But electioneering does not work the same way for CFK — she stands to lose Jewish votes in October as she sacrifices prestige earlier won for her efforts on behalf of probing the AMIA atrocity. While a certain school of thought likes to explain all world events with the single word “oil,” Iran is far from being the only source while high hopes are pinned on the Vaca Muerta shale here — in any case CFK has always valued the political over the commercial. It is hard not to conclude that these new ties with Iran have more to do with the influence of Venezuela’s Hugo Chávez than any Argentine self-interest.

If this agreement with Iran (on UN Holocaust Commemoration Day, of all days) heeds some Bolivarian regional alignment, it certainly has nothing to do with a wider world alarmed by the Iranian nuclear threat — what a note on which to end Argentina’s first month on the UN Security Council but CFK seems entirely oblivious to such factors. Yet while commissions notoriously shelve awkward issues, this agreement with Iran might well end up doing far more to open up than close the AMIA case.

Meanwhile the EU-CELAC summit in Santiago failed to live up to its epic dimensions of 60 countries, 1.1 billion consumer and a combined gross product of 22 trillion dollars. The EU aspiration of an interregional free trade agreement was never on with the two continents divided by mutual suspicions of protectionism — not even here did Argentina stand out despite all last year’s import curbs with Brazil now considered among the world’s top 10 for closed economies. At the same time protectionism divided Latin America between the likes of Argentina and Brazil and the more open economies like Mexico and hosts Chile. The Bolivarian undercurrent possibly leading to the Iran agreement was also at work here — Ecuador proposed a mechanism to resolve international investment disputes involving Latin America within the region while Bolivia’s Evo Morales publicly objected to the EU presence as such. The latter was a homage to Latin American potential among emerging markets (the EU has more invested there than in RICS — Russia, India, China and South Africa) but Europeans were also bemused to see Raúl Castro emerge as the new president of a supposedly democratic community. CFK’s role in all this was marginal — beyond a meeting with her Brazilian colleague Dilma Rousseff, she was largely canvassing support for Malvinas sovereignty claims.

Not too much to report on strictly domestic politics. Any bid for a third CFK term was repeatedly denied. Federal revenue-sharing rumbles continued all week after the national government bypassed governors for funding mayors the previous week (this had always existed via public works and social welfare in particular but has now been generalized). The Buenos Aires provincial government pointed out that the 650 million pesos of the Greater Buenos Aires Reparation Fund (compensation for receiving only half the money paid into revenue-sharing or 19 percent and frozen since 1996) only pays one percent of provincial wage increases today. Meanwhile Buenos Aires Governor Daniel Scioli damned CFK not with faint praise but none at all, extolling her late husband instead. In a sign of the times, Mónica López, erstwhile gubernatorial running-mate of dissident Peronist leader Francisco de Narváez, has switched to Tigre Mayor Sergio Massa, the most popular politician in the country for no particular reason. Other major provinces are also in the wars — Córdoba for closing down three state digital television antennae while Santa Fe continues to receive “narco-socialist” slurs (the new Clarín Group for withdrawing support from the government?)

LABOUR ETC. On Monday CFK’s second nationwide broadcast of the year raised the income tax floor by 20 percent and pensions by 15 percent (the latter in reality an automatic March increase announced several weeks early). The income tax floor was no surprise as part of the government’s 20/20 vision (the same percentage is also the wage increase ceiling for this year although the money supply is expanding twice as fast) but was widely rejected — even the most pro-government trade unionist, the CTA’s Hugo Yasky, wanted 25 percent with others demanding 40-50 percent and threatening strike action sooner rather than later. CFK applied the new floor to last year’s wages to come up with taxation of three pesos at the lowest end but nobody was convinced.

There was nothing on the eight billion pesos income tax supposedly sacrificed (she had previously pumped trade unionists for revenue alternatives) — either there are new tax announcements in the pipeline or she is trusting in new tax traps to pick up the slack (along with IVA value-added taxation on the money released for consumer spending). AFIP tax bureau chief Ricardo Echegaray gleefully announced a tax haul of 65.7 billion pesos for January but perhaps it is worth recalling that the meltdown year of 2001 began with the “impuestazo” massive tax increase of José Luis Machinea.

The “blue” dollar flirted with the eight-peso mark (a 16 percent gain in one month as against 14 percent annual interest rates for bank deposits), raising the question of whether this is a seasonal holiday phenomenon or a deeper crisis with Central Bank reserves now outweighed by Treasury IOUs and only two-thirds of the money supply. Will exports be cashed for an official exchange rate of five pesos when the “blue” gives eight? The disadvantages of devaluation without any of the advantages? Certainly a far cry from any productive model.

In other economic news, the International Monetary Fund censured Argentine statistics, giving a September deadline for corrective action, and non-automatic import licensing was scrapped. A hot week with record energy consumption, power cuts and protests — on the Atlantic coast January tourist business was reported 20 percent down despite all the foreign currency curbs, which did not prevent holiday road deaths from continuing.