December 9, 2013
Even the wildest optimist would probably like to see the social pact launch accompanying today’s award of a multi-billion hydro-electric dam tender in Santa Cruz, turning out to be the start of any genuine dialogue before believing it but precisely because the expectations are so low, President Cristina Fernández de Kirchner has a golden opportunity to trigger the kind of “confidence shock” which could permit her to re-invent her economic model. Her fiery speech proposing that pact last Wednesday was widely criticized — for being a bad loser in demoting the August 11 primary victors to “proxies” of vested interests and for being “corporativist” in agreeing to talk only to these socio-economic interests, at odds with the government pledge to “democraticize” justice in particular and national life in general. Yet last Friday’s editorial suggested that this could also be a politically correct way of opening the door to talks with a business world so often demonized by her administration and CFK has every chance to prove us right today. Given the context of today’s event and the audience (mostly restricted to the most pro-government socio-economic representatives), the expectations could hardly be lower but all the more chance for CFK to break free and turn the usual monologue into something resembling dialogue.
If anybody is expecting anything today beyond a continuation of last Wednesday’s speech, it would be some announcements to sweeten the electorate for October’s midterm elections but no specific measure could have the same mood-swinging impact to change the agenda as making the business world genuine partners, at least for dialogue. The most widely expected announcement would be finally updating the income tax floor to inflation but while this would doubtless be electorally beneficial, it would also carry both political and fiscal risks. Politically, it could look too much like running behind Tigre Mayor Sergio Massa and other electoral rivals pressing this demand (something a president already up against the “lame duck” tag would be anxious to avoid). And fiscally, it would add to the Treasury’s red ink, slashing revenues at a time when spending in general and the subsidy mountain in particular continue to escalate — voters might thus well find any gains on the tax front offset by higher prices from the withdrawal of subsidies.
Today the ball is in CFK’s court — whether she wants to inject genuine content into her call for a social pact or stay at the level of empty rhetoric is entirely up to her.