November 26, 2014
This weekSunday, May 25, 2014
Dark horse Florencio?
Argentina’s plight, as the decades go by, always seems to revolve around the same words. Words like “inflation,” “dollar,” and “instability.” The country is currently battling with one of the highest inflation rates in the world. The black market dollar is once again going up. There’s always instability in the air. So what’s new?
Ultimately what could be a novelty is that, compared with other situations before this one, President Cristina Fernández de Kirchner is making a bid to end her mandate next year with her reputation relatively intact. It won’t be easy. Artificial or not a black market dollar was trading for 12 pesos come Wednesday. Rumours spread that Economy Minister Axel Kicillof and Central Bank head Juan Carlos Fábrega were having bitter arguments about what to do about the stagnant economy. President Cristina Fernández de Kirchner reportedly was forced to call a meeting to mediate between Kicillof, the academic with “unconventional” economic ideas, and Fábrega, an experienced banker who has favoured jacking up interest rates to control both inflation and the black market dollar.
The Central Bank was forced to issue a statement denying a confrontation with the Economy Ministry. It is the president, according to the Central Bank, who has the last word on Argentina’s economic policies. Argentina, of course, has gone through this before.
Yet Fábrega and Kicillof are in this together. The peso was drastically devalued by approximately 20 percent in January. And now there’s a pile of economic observers who are saying that a similar devaluation will eventually have to be allowed (possibly by the end of this year). The dollar has been practically pegged at eight pesos for about 100 days. But now a gradual devaluation has been allowed. A dollar traded for 8.08 pesos on Friday. The peso will grow weaker, not stronger. The question is at what speed and if Fábrega and Kicillof will still control it.
You could start calling this another mini-crisis. But with a history of hyperinflation and massive sovereign debt defaults, the current situation pales by comparison. Another problem for the critics is that Fernández de Kirchner is now clearly relying on both Fábrega and Kicillof to manage an exit strategy. Most economists are not expecting a massive crash before the end of Fernández de Kirchner’s mandate next year.
Fábrega especially has everything to lose if he forces a massive argument with Kicillof, because the mandate of the Central Bank governor has been approved by the Senate. Kicillof meanwhile needs to be audacious because he will leave the Economy Minister no later than when Fernández de Kirchner formally ends her mandate.
The economy is contracting and on the verge of a recession. But clearly the strategy is for better economic times to return next year. It could be too late for the president’s Victory Front coalition. But then the president still has many options because she has yet to personally anoint a Kirchnerite presidential candidate.
It’s not even clear if there will be such a thing as a Kirchnerite president candidate next year. Fernández de Kirchner has so far refused to back Buenos Aires Governor Daniel Scioli, the moderate Kirchnerite who has already declared that he will run in the Victory Front’s presidential primaries.
The president has instead made a series of high-profile appearances with Interior and Transport Minister Florencio Randazzo, who is also a presidential hopeful with relatively few chances of defeating Scioli. Fernández de Kirchner and Randazzo appeared together to unveil new trains for the Sarmiento line on Thursday.
The Sarmiento line, which runs through Greater Buenos Aires and shuttles the working-class into this metropolis, is in disrepute since a train rammed into the Once Station buffers in 2012, killing 51 people. The transport portfolio was placed under Randazzo’s wing after that terrible crash. Another Sarmiento line train crash killed three people in 2013 with Randazzo already in charge of the transport portfolio. But despite the bad start polls show that Randazzo is the minister whose management is most appreciated by the public.
What is turning into a bit of surprise is that Randazzo, a Peronist from the inland Buenos Aires province town of Chivilcoy, suddenly looks competitive. Presumably those voting in the Victory Front primary will be Kirchnerites, meaning that if the president does not endorse Scioli this could have a negative effect on the governor’s chances.
Entre Ríos Governor Sergio Urribarri is also a hopeful and he is wooing the ultra-Kirchnerite vote. Yet polls show that Randazzo, practically out of nowhere, is suddenly ahead of Urribarri.
Randazzo has also confronted with the militant leftwing trade unionists who currently control the Sarmiento line and have launched a crippling strike to demand compensation for management changes. Randazzo has talked tough against the union leaders and it seems to be working, according to public opinion polls.
The Transport and Interior minister is not an ultra-Kirchnerite, but he has fiercely criticized Sergio Massa, the centre-right Peronist lawmaker who last year defeated the Victory Front in Buenos Aires province. Randazzo was briefly a potential congressional candidate, last year, but then that Sarmiento line train crashed in Castelar. Somehow Randazzo has managed to reinvent himself.
Is Fernández de Kirchner then suddenly considering the option of endorsing Randazzo or is she just looking to collect on the attention the new trains for the Sarmiento line are getting? Time suddenly seems to be on the president’s side because the opposition hopefuls are already anxious for the presidential race to begin. However the canvassing that is going on at the moment looks a bit senseless with the presidential election so far away.
It also doesn’t seem to make much sense to pay that much attention to the potential Victory Front candidates. According to the former caretaker president Eduardo Duhalde (a former Peronist party kingmaker who fiercely opposes the CFK administration) a Peronist has little chance of winning the presidency next year because Scioli and Masse will cancel each other out. Duhalde has been forced to deny that he had printed the posters carrying his name, and showing Scioli and Massa under the slogan “together.”
Massa’s camp was not happy with Duhalde, who has been practically forced into retirement (again) after he performed dismally as a presidential candidate in 2011.
Duhalde reportedly favours the idea of Scioli running for president with Massa as his gubernatorial candidate in Buenos Aires province. But it doesn’t look like this is going to happen.
The former caretaker president has lost much of his influence. Duhalde has confessed that he hasn’t spoken with Scioli or Massa for a long time.
Yet Massa’s camp has accused Duhalde of “working for Scioli.” Duhalde also irked Carlos Reutemann, a Peronist bigwig from Santa Fe province who is endorsing Massa. Reutemann, who famously turned down Duhalde’s offer to run for president in 2002, reacted angrily when the former caretaker said he was backing Masse out of personal ambition.
Duhalde, according to Reutemann, “has either lost his marbles or is a son of a bitch.”
The Peronist party infighting is always colourful. But perhaps it will soon make more sense to pay attention to what happens in the Frente Amplio-UNEN, a centrist coalition of eight political parties that potentially has five presidential hopefuls: lawmaker Hermes Binner (Socialist), lawmaker Elisa Carrió (Civic Coalition), lawmaker Julio Cobos (Radical), Senator Ernesto Sanz (Radical), and Senator Fernando Solanas (Proyecto Sur).
Many Frente Amplio-UNEN officials are especially confident because those five contenders are likely to face each other in a primary next year. Frente Amplio-UNEN includes the Radical party, which has a nationwide political machine second only to that of the Peronist party. The Radical vote could be crucial and polls already show that Cobos (a former vice-president to Fernández de Kirchner who has returned to the party) is only just behind Binner, the former governor of Santa Fe province.