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Saturday, March 1, 2014

Trying to explain the opposition

By Marcelo Falak
Ámbito Financiero

For better or worse, 10 years after its advent, we all know pretty well what to expect from Kirchnerism. But its time is almost up, so to understand what the opposition really is becomes mandatory.

The opposition is still a conglomerate very hard to define. A puzzle because of its own doubts when the moment to take clear stances arrives and (why not?) because of the idealized image we all construct of it, needing as we do some clues to the future.

Thus, it is kind of surprising to read that the huddle of leaders (some of them really minor or in the best of cases local) who form the Socialist-pan-Radical coalition are “progressive”, as if politicians like Ernesto Sanz, Julio Cobos or Elisa Carrió could easily be considered centre-left. Even Argentine socialism has questionable leftist credentials — its own origins make it more of a radical liberalism.

On the other hand, pan-Peronist candidates like Sergio Massa or Daniel Scioli are not clearly identifiable yet as such or post-Kirchnerite.

In this confusing political environment, the current economic crisis, expressed in a familiar and dangerous battle over the exchange rate, inflation and wage levels, reinforces the doubtful, shaky image of the opposition. What should it say in this context? Is it a good idea openly to defend austerity measures or a better one to leave the government to carry the cost of applying them? What should predominate, opportunistic attitudes thinking of 2015 or responsibility toward a country which could then be more difficult to run than expected?

What is going on in Argentina will at least halt, and in the worst case reverse, the indisputable social advances of the last decade. But the facts behind the cycle are not precisely new — inflation and insufficient investment heralded for a long time a period of declining growth and (why not?) of economic stagnation, a period which will last at least until 2015.

“A man is himself and his circumstances,” said José Ortega y Gasset. And so is a political leader, we might add. So, it may not be difficult to anticipate some aspects of a future leadership by seeking reality from some clues or, in other words, by guessing what the times demand. Despite the lack of definition the opposition shows today, we can form a preliminary profile of the next president.

If inflation and lack of investment are key problems for the Argentine economy, we may presume that those will be the main focuses of a future administration. But let us be clear on this — a given situation does not exclude ideology because any problem may be faced with a different approach, from right to left, with more or less inclination to please or confront the powers that be in economy and society.

Nevertheless, and history supports that assumption, we can imagine that wages will be running behind prices and the exchange rate in the upcoming Argentina, a process which Kirchnerism itself is starting. We will know for sure when the word “productivity” starts to come to our ears.

If we add to the latter the need to reactivate an economy very dependent on importing industrial goods and parts and the need to improve relations with neighbouring countries, some kind of trade opening could be on the horizon. This objective will obviously depend on what exchange rate the Argentine economy will consolidate (probably not extreme in the medium term) and dollar availability. That is why opposition personalities with presidential hopes insist so much on changing the political expectations in 2015, which would lead to a restoration of credit conditions.

But what will be the medium-term effects of those policies? According to the dose of drugs which will be given to the patient, the social impact will be more or less heavy. A key social policy adviser to a prominent opposition leader, with minister-level expectations, admitted to the Herald that he is working with an estimate of a higher unemployment rate for the next few years.

According to him, the Kirchnerite social assistance programme will be in general maintained because an important percentage of the poor in Argentina will find it difficult to go back to the labour market, mainly because of their lack of skills. For the rest, policies should point to second-generation plans, from programmes to help youth finish school to drug prevention, all aimed at stimulating exactly that — job creation for young and the long-term unemployed.

Let us go back to the issue of ideology at this point. Will that goal be achieved, as in the 90s, with temporary, trash labour contracts or only through temporary lower employer pension contributions? The ideology will rest on the answers to questions like that one.

Most of the main candidates have deep territorial roots: municipal (Massa) or provincial (Scioli, Hermes Binner, Mauricio Macri and even Cobos and Sanz). They all know full well that every great crisis starts at the weakest link in the chain. If social containment will be so important in the next few years, it is unthinkable to abandon the outskirts of the main cities to their own fate, which will also force the national leadership to pay attention to provinces in acute need.

Many provincial states have insufficiently cloaked in the last years their financial problems, with some of them even assuming debt to cover current expenses.

Buenos Aires province, roughly 40 percent of the Argentine population and forming a burning periphery around the national capital, is one of them. Before the sharp peso devaluation of the beginning of the year, Scioli’s government was already paying school food suppliers with state bonds. What should be expected after the dollar stampede, which made currency-linked provincial debts 25-55 percent more expensive?

A lot of hints suggest a weaker political leadership vis-à-vis financial markets and capital interests. This is, perhaps, the more general feature of the next president’s identikit.

* Marcelo Falak is a political scientist and international news editor at the daily Ámbito Financiero.

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