December 17, 2017

This week

Sunday, January 19, 2014

Blue in the face

Dollar: is it green or is it blue?
Dollar: is it green or is it blue?
Dollar: is it green or is it blue?
By Martín Gambarotta
Herald Staff

CFK’s challenge is to avoid an economic collapse

Argentina, like probably any other country, is most of the time dominated by the economy. This nation has a difficult economic history. Two examples of recent history should suffice to show this: the hyperinflation crisis of 1989 and the financial meltdown of 2001, which prompted the biggest sovereign debt default in the history of mankind. Scary stuff? You bet. With hyperinflation you had prices going up by the minute. With default you had restrictions to withdraw money from banks. It’s a fortunate thing you can fast forward to 2014 then. Or is it? Yes, it is.

All right. Foreign currency reserves, which the administration of President Cristina Fernández de Kirchner using them to service debt, are dropping fast. On Wednesday the foreign currency reserves dropped below the mark of 30 billion dollars.

Wednesday was a significant day for the economy. The black market dollar, also called the “blue” dollar, traded for 11.21 pesos. The blue dollar has broken the 10 peso mark. Is there any turning back? Who knows. The peso, with newly appointed Economy Minister Axel Kicillof now running things, continues to weaken. Yet are we in 1989? No. Are we in 2001? No. Not yet, anyway.

Until a major crisis does not happen then the benefit of the doubt is with Kicillof’s new team of Keynesians. Some independent economists are now admitting that the price of the black market dollar sounds crazy. But crazy is the Argentine economy’s middle name.

Fernández de Kirchner reshuffled her Cabinet in November after the ruling party coalition lost the midterm elections in all major districts.

The president resurfaced in November after undergoing surgery to drain a clot lodged in her skull the month before (only days before the midterm vote). Fernández de Kirchner has recovered. She headed celebrations to mark 30 years of democracy on December 10, but the president has practically not been seen since then.

The president went to her Government House office on January 7 for the first time in 19 days. Fernández de Kirchner again went to Government House late in the afternoon on Friday, without an official schedule being released.

The reason for the president’s decision to lie low is once again personal. The president’s 84 year-old-mother mother, Olga Wilhelm, has undergone surgery to remove her uterus. Fernández de Kirchner has been at her mother’s bedside to the point that on Thursday she discussed policies with Kicillof at the hospital.

The change is stark. Fernández de Kirchner, like her late husband and predecessor Néstor Kirchner who died of a heart attack in 2010, used to play a bruising game of politics at breakneck speed. She behaved like a politician permanently on the campaign trail. She headed public ceremonies in Government House almost on a daily basis, and used her speeches to pick arguments with the opposition and much of the press. Many of the president’s appearances were carried live on television across all channels as national broadcasts. All that is in the past.

Jorge Capitanich, the new Cabinet chief, holds daily press conferences in the morning. But critics say he is too talkative and does not have any real information to release.

Fernández de Kirchner has rarely uttered a word, significantly at a time Argentina could be heading for more difficult economic times. But this is not 1989 or 2001, or indeed 1975, just yet.

The clock is ticking. The Central Bank reserves are going down. The price of a dollar is going up.

Yet the new Cabinet ministers are still trying to quash any prospect of a collapse. At issue is Fernández de Kirchner’s future reputation. The defeat last year means that there is no room for the president to seek re-election. But what kind of an exit awaits her in 2015? Will she be humiliated like Raúl Alfonsín, the Radical who was forced out of the presidency in 1989 during the hyperinflation crash? Will she be ridiculed like Fernando de la Rúa, the Radical president forced to resign in 2001 two years into his mandate as the default was looming?

The opposition is showing no mercy. The criticism of the president’s absence is relentless. Practically all opposition leaders are asking who is in charge. Capitanich? Kicillof?

The teamster Hugo Moyano, the leader of an anti-government faction of the CGT trade union grouping, has predicted that the trade unions will demand wage increases of at least 30 percent when the collective wage bargaining season opens. Moyano, who commands clout because he has a strong influence over the transport sector unions, was once a key ally of the Kirchnerite administration. But Moyano’s alliance broke down after Kirchner died and his widow refused to accept his political demands to have more trade union candidates on the Kirchnerite congressional tickets ahead of the presidential elections of 2011.

Moyano has now joined forces with restaurant worker Luis Barrionuevo, a veteran rightwing Peronist who fiercely opposed the Kirchnerite administration right from the start.

Moyano and Barrionuevo, who commands clout in the PAMI pensioners health care scheme, now fancy themselves as kingmakers in the Peronist party like the rightwing trade union leaders of yore.

Fernández de Kirchner’s Victory Front coalition includes the Peronist party. But the Peronist rebel Sergio Massa, the mayor of the northern Greater Buenos Aires district of Tigre, defeated the Victory Front in last year’s midterm elections in Buenos Aires province. Moyano and Barrionuevo has called a “barbecue summit” in Mar del Plata scheduled for tomorrow.

They have invited Massa, Buenos Aires Governor Daniel Scioli (a Peronist who belongs to the Victory Front) and Córdoba Governor José Manuel de la Sota.

Yet Massa yesterday said that he will not attend because now is not the time to behave like a presidential candidate. Scioli is also not going.

All three (De la Sota to a lesser extent especially after the police strike in Córdoba) are potential presidential candidates in 2015. But Scioli and Massa are considered rivals in the presidential race.

It’s not clear whether Massa will agree to face Scioli in a Peronist party presidential primary controlled by the Kirchnerite Victory Front.

The situation looks chaotic. Scioli and Massa were photographed together at the opening of a casino in Mar del Plata housed in a hotel owned by Barrionuevo’s trade union on Friday. Scioli and Massa were also photographed with Barrionuevo, who is considered a bitter rival by the Kirchnerites.

And where was De la Sota? De la Sota spent all week dealing with another potential police revolt in Córdoba. The national government sent a thousand Border Guard troops to Córdoba on Thursday after a small group of provincial police officers and their spouses launched a new wave of agitation over pay. The reaction from the national government was much faster than in early December when the police strikes prompted ugly waves of looting.

Other trade union leaders, especially those who back Massa, are not chuffed with the idea of attending an asado hosted by Moyano and Barrionuevo.

The old school trade union leaders like Moyano and Barrionuevo were the kingmakers in the Peronist party ahead of the presidential elections of 1983.

But the Peronist party famously lost the presidential election of 1983 against Alfonsín and the trade union leaders had to take responsibility for the upset defeat. The trade unions lost the control of the party to the political wing after 1983. Now Barrionuevo and Moyano are trying to play kingmakers again. But Peronist politicians like Scioli and Massa are far more popular than the trade union leaders.

Massa yesterday snubbed the two old school Peronists, who are not exactly popular according to polls.

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