December 19, 2014
Supreme crisis V
One frequent opposition critique is that an administration now close to its last 500 days is trying to pass the current problems with creditors onto the next government, burdening it with the debt overhang — nor did such criticism begin this month because when the Cristina Fernández de Kirchner administration was previously seeking a return to global capital markets amid relative stability, the opposition often argued that this was a “live now, pay later” pursuit of new credits with all the gain for CFK and all the pain for the next presidency (even though the debt/GDP ratio would remain at an exceptionally low level by Argentine standards. Yet it would be unfair to accuse Argentine president of creating a poisoned chalice — several decades of governments all contributed to the foreign debt even if the 1976-83 military dictatorship (which quadrupled it) and the 1989-99 Carlos Menem presidency (when the convertibility illusion permitted dollars to be borrowed as if they were pesos) stand out. But perhaps the main point here is that if all the consequences of the debt crisis are basically going to fall on the next government, it then becomes even more important to learn what alternatives those likely to form that government propose.
As for the main alternatives, they all seem to have something to hide or to explain. If Deputy Federico Sturzenegger (Banco Ciudad president before winning his Lower House seat last year) is probably the PRO centre-right party’s most articulate economic voice, his personal track record on debt issues is more than slightly tainted by his role in the 2001 megaswap (also involving then United States Deputy Secretary of the Treasury David Mulford) for which he was on trial until two weeks ago when an appeals court dropped charges due to the statute of limitations. Added to track record problems of its own (since various of its members formed part of the Alliance government presiding over that megaswap and immediately preceding the 2001 default), the UNEN-Broad Front coalition has severe problems of consistency — between the extremes of total debt repudiation urged by Senator Fernando “Pino” Solanas and the insistence of Radicals Ernesto Sanz and Julio Cobos that not paying the holdouts by the end of this month would be catastrophic, various stances (mostly favouring a vague renegotiation) can be found. It is harder to criticize Renewal Front leader Sergio Massa — simply because he had almost nothing to say on this issue until this month’s crisis and now favours consensus — but it would be surprising if his team of former economic heavyweights all trod the same line.
All these comments could be deepened but perhaps we should allow the opposition to starting explaining themselves before expanding further.