September 19, 2014
Francisco and François
The timing of President Cristina Fernández de Kirchner’s visit to Rome and Paris this week can be equally praised or questioned, according to various standpoints. Brilliantly timed because she lunched with Pope Francis yesterday just four days after his first anniversary in the shoes of the fisherman had kept him in the limelight as a world figure. But also unfortunately timed because in France she will be seeking to draw attention to the stale issue of Paris Club debt (unresolved for the last 13 years, even after a settlement was announced in 2008 but derailed days later by the global financial crisis) when the world has eyes only for the Crimea — especially after Sunday’s referendum when the peninsula’s Russian-speaking majority asserted their self-determination in a way curiously parallel to the Malvinas plebiscite last March, even if the scale and the global impact of the two votes was vastly different.
In terms of domestic agenda, the timing of this visit could also be argued both ways. From the perspective of the post-devaluation crisis earlier this year, this seems a safe time to leave home — exchange market balance looks assured for some months to come from a combination of improved greenback inflow (first by reducing the percentages of the banking system’s dollar holdings and in future months from cashing the soy harvest) and of the various “sterilization” policies (including higher interest rates) to dry up excess peso liquidity. But the presidential absence is not ideal at a crucial stage in collective bargaining — especially when entering the second half of March without school classes starting in most of the country. There are hopes of inducing unions other than the teachers to accept a 25-percent wage increase ceiling below this year’s inflation forecasts by offering lump sum bonuses, a higher income tax floor, the payment of arrears to union-run health care schemes, etc. but the government is still suffering the consequences of unleashing a major devaluation ahead of this year’s collective wage bargaining season.
Yet irrespective of the timing, CFK should not be discouraged from keeping in touch with the outside world. Few enough people would argue that she should not be tackling Paris Club debt as a key step towards ending Argentina’s capital market isolation ever since the 2001 default and fewer still would urge her to shun Pope Francis. But the concrete results of her visit still remain to be judged.