April 24, 2014
Sunday, December 8, 2013

Supermarket bargain-hunters

Looting in Córdoba, its causes as fragmented as politics or society.
By Michael Soltys / Senior Editor / Economic Outlook

Capitanich v. Córdoba leaves governors’ league at crossroads

Argentina has the reputation for being unpredictable but some of the past week’s main news items were all too predictable — what could be more obvious than open season against Córdoba supermarkets if the police are on strike or upping the credit card surcharge if tourist outlay abroad is heading into 11 digits? What makes Argentina different, perhaps, is that the reactions to events fail to follow the obvious lines, not the events themselves.

The usual blame game between national and provincial government immediately kicked in as soon as the Córdoba looting proliferated but this column would argue that the impact could be worse for Cabinet Chief Jorge Capitanich than for Governor José Manuel de la Sota — not because Capitanich is more to blame but because he is a rising star while De la Sota is pretty much dead meat after two mediocre electoral performances this year (an already opaque 31 percent in the August PASO primaries slid to 24 percent in the real thing in the October midterms). For that reason those pundits who interpreted the national government holding back the Border Guards until Friday as a bid to sabotage De la Sota (a leading dissident Peronist at least since the 2008-9 farm dispute) were probably misreading the strategy — if the aim was indeed malicious, then surely the message was directed to all governors nationwide, many of them with a brighter electoral future than De la Sota.

But here is where the problems start for Capitanich — his rise to virtual premier was supposed to be a case of traditional Peronism reasserting itself on the back of the governors’ league after the Kirchnerite Victory Front’s October defeat but what governors’ league are we talking about if the Chaco governor on leave is making life difficult for his Córdoba colleague? In his first three weeks Capitanich has shown an ability to talk the talk (his smooth meetings last week with City Mayor Macri and Santa Fe Governor Antonio Bonfatti) and perhaps even walk the walk but what use is that if he is perceived as flunking his first moment of truth? And what was the point of changing the Security Ministry helm at the start of the week if it stands helplessly by?

Yet despite this inaction and De la Sota’s incredibly poor anticipation of a screamingly obvious crisis in the making, perhaps the blame should not be pinned on either national or provincial politicians so much as on the Córdoba police — so often in Argentina the security forces are the problem rather than the solution. Widespread suspicions of the police being in collusion with organized crime became hard fact in late September when the provincial police chief was belatedly fired for drug-trafficking links — this week there were persistent reports that striking policemen were vacating the city to criminal associates with their eyes open in an extreme form of the “liberated zone.”

Apart from political or police pathologies, there are those would see this outburst as a social protest. Last year’s pre-Christmas looting in Bariloche seems a clearer example of this but there were social factors involved — not so much the proletariat or even lumpenproletariat as a whole but definitely elements from the destitute, the jobless, the famous youth who “neither study nor work” (apparently the most vandalistic) as well as the purely criminal.

Anyway what started on Tuesday evening (the day after a tornado devastated much of the province) with the looting of nine supermarkets dovetailed into over 40 hours of chaos with over 1,000 retail outlets ransacked before De la Sota returned hastily from a regional jaunt to meet police pay demands and restore order to the streets. Although this might well only lead to new problems — improving police pay by around a third (as against a national guideline of 15-20 percent) only prompted teachers and hospitals to demand parity.

Yet the problem neither began in Córdoba nor remains there. The first rumblings of pre-Christmas looting were actually in Rosario when a supermarket was assaulted on November 28 and a shopkeeper was slain in the Greater Buenos Aires suburb of Glew last week — Buenos Aires Governor Daniel Scioli and his new Security Minister Alejandro Granados are very much on the alert. Squatters blocked the Illia highway in this metropolis at the start of the week while at the end there was copycat unrest in various provincial police forces (Catamarca, La Rioja, Neuquén and Río Negro). Not to mention the student violence at the election of the new University of Buenos Aires (UBA) chancellor — not giving democracy a chance just one day after three Trotskyist deputies were sworn in.

As potential trouble looms, one has to wonder whether the army troops deployed around needy neighbourhoods since the La Plata floods in April are there for the declared social purposes only. And the new Security Minister María Cecilia Rodríguez fits very much into this context because not only is she a humanitarian emergency expert who has worked with the Defence Ministry in her extensive experience both at home and abroad but she is seen as no more on top of her immediate subordinate, Security Secretary Sergio Berni (an army lieutenant-colonel on leave), than her predecessor Arturo Puricelli — indeed probably the only reason why Berni is not also nominally in charge is that a military officer as a minister of the Cristina Fernández de Kirchner administration would be “too much” (a pet CFK phrase) for its progressive wing. Berni thus looks set to remain the hatchet man for everything from looting to drug-trafficking (a main priority of late) while Rodríguez provides the human face for security in general and Father Juan Carlos Molina (manning Sedronar after a nine-month vacancy) for drugs with a focus on addiction.

Meanwhile the sluggish Puricelli (who perhaps confused his successive defence and security portfolios too much) has not been reassigned — a common enough fate in recent Cabinet changes (Capitanich’s predecessor Juan Manuel Abal Medina, former Central Bank governor Mercedes Marcó del Pont and former agriculture minister Norberto Yahuar).

Beyond the social upheavals, last week’s main political news items were last Sunday’s gubernatorial election in Santiago del Estero and swearing in the new deputies from October’s voting. Outgoing Santiago del Estero Governor Gerardo Zamora installed his wife with 64 percent (as against 73 percent in October and 85 percent in his own 2009 re-election) and moves to the Senate — although Zamora is a pro-Kirchner Radical with Peronist allies, his wife encountered feeble opposition from Radical (14 percent), Peronist (11 percent) and Victory Front (four percent) rivals in a turnout of around three-quarters of the province’s 650,000 voters.

Around the provinces in general, the Christmas bonus is becoming an issue for governors with unrest brewing. The federal revenue-sharing system seems to make the provincial governments dependent on the central yet the tail can wag the dog when governors with scant revenues have even less responsibility (like De la Sota with his pay increase).

In Congress only 36 of the 127 deputies from 2009 were re-elected. Sergio Massa’s Renewal Front managed to nail the third deputy Speaker under the Victory Front and the Radicals (all three are women for the first time) even though it is only a provincial party, strictly speaking — even if for the biggest, Buenos Aires province.

LABOUR, ECONOMY, ETC. Not much labour news even though the collective bargaining season is starting and workers are at least as sensitive to inflation as anybody.

As said above, the credit card surcharge being taken to its 35 percent limit was not surprising with tourist spending abroad heading towards 10 billion dollars according to the new Central Bank governor Juan Carlos Fábrega (approved by a 56-1 Senate vote on Wednesday).

Until that surcharge (along with Christmas demand coming ever nearer) the gap between official and parallel exchange rates was narrowing with accelerating devaluation of the former and pressures against the latter but at a price. Accelerating devaluation gives hoarders more reason to wait and also feeds inflation, thus ending up chasing its own tail, while a daily nine digits of Central Bank reserves are needed to force the “blue” down (although also for import bills). Soy hoarding was made an issue by Capitanich (who floated a figure of 6.3 billion dollars), warning farmers that prices were likely to fall but the latter need to stagger sales at the current pace of inflation.

But the root problem of the exchange rate is extremely simple — there are too many pesos (printed to finance the deficit) and too few dollars. That deficit will not be helped by the November tax figures — up 21 percent or behind inflation (which seems reflected by the 30 percent rise in IVA value-added taxation). Falling export duties and the midyear income tax relief for electoral purposes seem the main culprit.

But there is bad news for the new economic course from the Brazilian economy contracting in the third quarter (despite yet another friendly Capitanich chat with Brazilian Trade Minister Fernando Pimentel) — car output was already 20 percent down in November.

Last but not least, the dismal PISA education ratings (see editorial on opposite page) — perhaps not surprising with a secondary school dropout rate of nearly half. And if you want to see a more concrete result of that, look at Córdoba.

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