January 23, 2018

Another View

Saturday, August 30, 2014

Cristina wants to become more orthodox, they just won’t let her

President Cristina Fernández de Kirchner talks about the country’s debt in a recent speech from Government House.
By Nicolás Tereschuk
Guest columnist

Accusations of ‘populism’ ignore president has pursued market-friendly policies

You may think or read every now and then that President Cristina Fernández de Kirchner is a “populist” leader. Too fond of “unorthodox” policies. Another chapter of the “leftist” or even “red” experiences of Latin American history. Just a new friend of Marxist Cuba and a Chávez-style leader.

In a way, you may be right. That is because her government is similar to others in South America over the last 10 years or at least in one way: most of her opposition is to her “right” and it is mainly outside political parties.

Throughout this continent, the real leaders of the opposition are business leaders, usually media moguls. The theory is not mine, former Brazilian president Lula Da Silva repeats it almost every day. These governments also face small amounts of opposition to their “left” — a few social movements, little leftist parties, anti-system militants.

This is part of the truth. The other is that all of these governments — Argentina and Brazil, but also Ecuador, Bolivia, Venezuela, not to mention Chile and Uruguay — take smaller or bigger doses of pragmatism. Yes: sometimes even “orthodox” and pro-market policies. These are not the seventies, you know.

Now let’s listen again to the president’s last speech to the nation, when she announced the government is sending a bill to Congress to offer Argentina’s creditors a chance to reroute their interest payments on debt. After explaining how external debt rose dramatically since the last dictatorship (1976) until 2001 and then started to fall after the bond swaps of 2005 and 2010 she remembered some of the last measures her government took.

— Settlement of the debt with the Paris Club.

— Settlement with Repsol for the expropriation of YPF shares.

— Settlement with companies that had sued the country at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID).

She didn’t say, but you have to add to these measures the decision to issue a new official price index because the IMF asked for it.

Some of these issues had been part of the talks between Cristina and US President Barack Obama in November 2011 at Cannes. A State Department spokesman said then that Washington was in favour of a settlement with all of Argentina’s creditors, public or private.

Now, if you follow Argentina’s measures you will notice that since that summit in 2011 Argentina has solved almost all of the issues Obama asked for.

Does this look like a “recalcitrant debtor” to you? Is this the image of a “red” country? A sort of irrational “populist” government? Cristina took steps to get a little more “orthodox.” It seems like some folks abroad — and surely some quite powerful business groups at home and their lobbyists and spokesmen — won’t let her.

Cristina did this when the country was suddenly faced with a scenario that has been seen in the past: an “external restriction.” With its “fundamentals” intact — levels of debt, a solid banking system, healthy companies’ balance sheets, low unemployment — and after more than a decade of not taking new foreign credits, the country is lacking dollars, something quite common for an economy that still needs to import parts, pieces, machinery for its industrial sector. Not a huge issue, not a new issue for the country’s history — anyone can tell you that.

The funny thing is the only issue for which Argentina needed some help from US officials has become a sort of Vietnam swamp for the country: the vulture funds conflict, where the whole American judiciary system has come out with an irrational, extravagant, never-seen-before decision.

“Pay now, pay in full, pay first to the vulture funds, or no other creditors can get their cash.” The Obama administration, weak in comparison with Wall Street’s “Masters of the Universe,” has become an accomplice to this situation or simply has not had enough courage to stop this mess.

The situation unfolded by US officials — judges and the Executive branch — is so absurd that Cristina’s “revolutionary” government had to come up with a plan that no country has ever had to do before — rerouting of payments — in order to accomplish a task as “rebel” and “populist” as allowing its international creditors to collect what is rightfully theirs.

The Argentine government is being accused of a “Malvinization” of the “holdouts” issue. Of inflaming patriotic sentiments. But, what a strange “Malvinization” this is. Contrary to what happened when dictator Leopoldo Galtieri’s regime decided to disembark in Malvinas in 1982, the ones breaking the status quo now are the vulture funds led by Paul Singer and some US judges.

I wonder if now Cristina, who, as I said, took firm steps to settle with international creditors here and there during the last two years, in order also to meet Washington’s expectations and to be taken seriously by international markets, is being forced to become an “Iron Lady.”

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