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October 23, 2014
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Crime and punishment

Stranded commuters wait for buses on Friday.
By Martín Gambarotta
Herald Staff
Criminality plus inflation can still fuel a crisis

Things in December were moving incredibly fast. Things in January were also hectic. Ask President Cristina Fernández de Kirchner and she will tell you that the pacemaker was a “run on banks,” orchestrated by powerful corporations to weaken the peso and make the Central Bank lose foreign currency reserves.

Have things now slowed down? The peso lost roughly 20 percent of its value in January. But it seems that was enough (along win an increase in interest rates) to stop all that running against the banks — if only for now. And for now only. Inflation in January, according to the brand new IPCNu nationwide consumer price index, clocked in at 3.7 percent.

Domestic Trade Secretary Augusto Costa on Friday told the nation to get ready. February’s inflation rate, he said, will be high because early last month a lot of prices were jacked up out of fear that the peso would further weaken. The inflation rate for February is likely to speed up the pace of Argentina’s volatile politics once more. But analysts agree that inflation could be lower in March and beyond.

Everything has slowed down. But inflation has not. The high inflation rate comes in the middle of difficult wage talks with the teachers’ unions both at a national level and in Buenos Aires province, the nation’s largest electoral district.

Buenos Aires Governor Daniel Scioli, a moderate Kirchnerite who is seen as seeking the presidential nomination without CFK’s endorsement in 2015, reached an agreement with the province’s state workers on Thursday to grant a pay hike of just over 30 percent. But the same offer was rejected by the teachers unions who have also defied a call to a compulsory conciliation. There are plans for a demonstration by teachers for next Friday in Plaza de Mayo.

February’s official inflation rate is scheduled to be released on Monday. It will a stark reminder that the devaluation has altered the economic situation of millions. The CFK administration has launched a “Price Watch” crusade that includes supermarket price accords on specific basic products. Kirchnerite lawmakers have also tabled bills to hand down stiffer punishment to supermarkets that don’t heed the accords. Two supermarkets were effectively shut down in La Plata on Tuesday, a sign that the national government could get more draconian if inflation does not slow down this year.

Was Costa, a young technocrat taking orders from Economy Minister Axel Kicillof, whining at the looming bad news? Maybe. But the new inflation rate replaces the official consumer price index as measured by the INDEC statistics bureau, which has not been credible since 2007. Something has changed. The national government is no longer in denial about inflation.

Maybe the opposition should stop been in denial about the situation gradually improving. The currency exchange controls have been eased by Kicillof. The Central Bank reserves are still dropping, but at a much slower pace. The national government is said to be considering doing away with the costly energy subsidies.

Many opposition leaders have said that all this amounts to orthodox belt-tightening. But as far as the government is concerned the stable situation could mean that Fernández de Kirchner will not leave office ahead of her mandate, which ends in 2015, with her political repuation in tatters.

CFK is scheduled to meet with Pope Francis at the Vatican on Monday, amid speculation in local political circles that the Argentine-born pontiff is not interested in seeing a catastrophic end to the president’s two consecutive mandates.

Hey, maybe Francis is fed up with turmoil. The late Raúl Alfonsín, the former Radical president, was humiliated by the hyperinflation crisis in 1989 that forced him to cut short his last year in office. Fernando de la Rúa, a Radical who headed the Alliance coalition, resigned as president two years into his mandate in 2001 during the infamous economic meltdown that prompted the biggest sovereign debt default in history.

The ultimate question still is, what political fate awaits Fernández de Kirchner? A major crisis is still latent. The CFK presidency was hit by massive anti-government street demonstrations last year, especially in the upscale Buenos Aires City neighbourhoods, amid complaints about rampant crime and accusations that the president wanted to cap the independence of the court system. The teachers are still on the warpath. Crime is still a problem and lawmaker Sergio Massa, the rebel Peronist who defeated the Kirchnerite Victory Front coalition in last year’s midterm elections in Buenos Aires province, has grabbed headlines by criticizing a draft to reform the Penal Code. Massa has claimed that the reform, which included the work of opposition legal experts from the centre-right party PRO, the Radical Party and others, will lower penalties for some very serious crimes.

The murder of a trainee driver during an armed assault on a bus in Greater Buenos Aires on Friday prompted a strike by the UTA transport workers union. The walkout, called in companies based in Greater Buenos Aires that go into Buenos Aires City, left masses of commuters stranded on a wet day in the metropolitan area.

UTA still technically belongs to the pro-government faction of the CGT trade union grouping. But the transport workers union also has good ties with the powerful teamster Hugo Moyano, the leader of the anti-government CGT Azopardo. The government could face turmoil if the transport sector unions, including the teamsters, join forces to call strikes during the collective wage bargaining season, which has only just started with the teachers. The UTA boss on Friday said that the union was “fed up” with the violent crimes endured by its members.

Transport and Interior Minister Florencio Randazzo condemned the strike and formally urged the union to end it. But Randazzo, who is based in Buenos Aires province and has political ambitions, also shifted the issue in the direction of Scioli, because the companies hit by the protest are in his territory.

Scioli is now dealing with the teachers strike and with the fallout from the crippling bus drivers’ strike. The governor has called the teachers refusal of the pay hike offer “suspicioius.”

Many Buenos Aires province teachers’ union leaders are on good terms with the CFK administration. The large CTERA teachers union confederation belongs to a pro-government faction of the CTA grouping. Was Scioli complaining about a little conspiracy against him by rival Kirchnerite sectors?

Scioli administration officials yesterday met with UTA union leaders. Buenos Aires province Security Secretary Alejandro Granados vowed that surveillance cameras will be fitted on cameras. The bus strike shows that crime is a latent issue that can suddenly blow up in the face of the CFK and Scioli administrations.

Who gains from chaos? Massa, that’s who. Meanwhile other non-Peronist opposition outfits, including Macri’s PRO, are trying to get their electioneering right.

Suddenly Macri is accepting that his voters have a liking for Elisa Carrió, the centrist opposition leader who fiercely opposes Fernández de Kirchner (to the point Carrió refused to attend the State of the Nation speech delivered by the president in Congress on March 1). Carrió, who technically is a member of the centrist coalition UNEN, has also said she is in favour of an agreement with Macri. What’s going on? Both Macri and Carrió have now realized that they have a mighty rival in Massa for the anti-Kirchnerite vote. Yet Carrió must also convince the Radical party and the centre-left Socialist Party that an agreement with Macri makes political sense.

Carrió last year run on the same ticket with now Senator Fernando Solanas, the leader of the centre-left party Proyecto Sur who has ruled out any chance of an agreement with Macri. The Carrió-Solanas agreement seems to be falling apart less than a year after they successfully ran together in Buenos Aires City. If the non-Peronist opposition does not get its act together it will be Massa against a Kirchnerite in the presidential runoff next year.

That brings everything back to the question about Fernández de Kirchner’s future. The president is trying to secure a smooth exit for the Kirchnerite decade. A price has been paid for January’s devaluation. Inflation is not slowing down. But it is still not hyperinflation of the 1989 kind. This it is not the meltdown of 2001. The Paris Club of creditor nations on Friday officially invited Argentina to open talks in May to restructure its debt (worth about nine billion dollars). That’s one more piece of news that could make for a softer landing than expected in 2015.

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