The weekFriday, February 10, 2017
Who says samba and zamba are the same?
Some summits between South America’s two traditional heavyweights are more important than others and this week’s encounter between President Mauricio Macri and his Brazilian counterpart Michel Temer might well end up leaving the smallest footprint of all.
With no concrete steps to take any revival of Mercosur beyond the purely verbal, today’s trampled (Trumpled?) trade world leaves the two presidents with little solace beyond the improved prospects with a Mexico facing NAFTA collapse. But a strong Mexican presence would only demote Argentina (already overtaken by Colombia a quarter-century ago as South America’s second-largest population) to a distant third in a regional podium.
Six months ago when Temer displaced Dilma Rousseff in the Brazilian presidency, this week’s meeting seemed to promise far more — not only were Macri and Temer on a similar ideological wave-length but also to the Pacific Alliance. Yet enter Donald Trump without any exit for the Odebrecht scandal and all those prospects were smashed. Trump has put paid to the Trans-Pacific Partnership (now ensured Asian leadership if it survives at all) while Odebrecht fallout is closer than ever to Temer — with Macri far from immune since his intelligence chief is also in the firing-line.
Brazil’s change of government was a factor in Macri’s “second half” optimism last year but the more positive 2017 expectations in both countries continue to be postponed. Meanwhile the seemingly endless economic stagnation in both countries has pulverised their bilateral trade whose volume has almost halved — from 39.6 billion dollars in 2011 to 22.5 billion last year (with a 4.3-billion surplus for Brazil). None of the five agreements signed on Tuesday tackled the trade controversies which the industrial lobbies of Sao Paulo and Greater Buenos Aires have been very adept at constructing over the years.
Foreign Minister Susana Malcorra implicitly admitted to an unsatisfactory relationship the next day when she blamed the previous governments for shortfalls.
No wonder Macri minimised his stay in Brazil to hasten back home for his 58th birthday celebrations in San Martín de los Andes. Macri and his predecessor Cristina Fernández de Kirchner already have birthdays in the year’s shortest month as one of their few points in common — do they now also share preferring Patagonia for leisure?
COURTS BACK TO WORK
AND NOW CONGRESS TOO
Prior to Macri’s trip, AFI intelligence chief Gustavo Arribas submitted documentation to clarify payments received from an Odebrecht financial operator but in some ways this only added to the confusion. Accused of having been paid almost 600,000 dollars in 2013 at the time Odebrecht and IECSA (headed by Macri’s cousin Angelo Calcaterra) entered into partnership for the Sarmiento rail underpass contract, Arribas was only prepared to admit to receiving 70,000 dollars for a Sao Paulo apartment — but that transaction was dated 2015, not 2013, and the value of the apartment was fivefold that sum (leading Arribas to change his alleged sale to furniture).
But the mainstream media were far more interested in reproducing juicy tidbits from bugged conversations between CFK and Arribas’ predecessor Oscar Parrilli. Yet these highly printable (and also unprintable) excerpts should not obscure the rather more central issue of how these tapes were obtained in the first place — a very dubious legality. Moreover, these tapes do far more to discredit CFK than to shed any light on the case in question — namely whether Parrilli as AFI chief was shielding suspected 2008 General Rodríguez triple murder mastermind Ibar Pérez Corradi. Parrilli was formally indicted in that case last Monday and prosecutor Guillermo Marijuan wants him remanded in custody. Yet right at the end of last year Federal Judge María Romilda Servini de Cubria ruled that there was insufficient evidence to link Pérez Corradi to the triple murder so that the charge against Parrilli is protecting a technically innocent man (even if Pérez Corradi is still being held as a drug-dealer).
Meanwhile the prosecutor in the dollar futures trial has called for CFK to be sent to trial — this case is probably most in her comfort zone because whereas all other trials would convict her for corruption if found guilty, the dollar futures can always be defended as an economic policy decision beyond judicial scrutiny.
But on Macri’s birthday it was the critical media who were handed a present — the 70-billion-peso debt pardon granted by the government to the Post Office whose main shareholder is Franco Macri’s Socma (did the birthday boy himself receive any presents, as a matter of curiosity?). Even allowing for the fact that post offices everywhere are doomed in the age of email, the timing seems singularly unfortunate.
CFK outbursts serve to fill a political vacuum in the absence of Congress but that will not continue much longer — Macri was forced to call extraordinary sessions of Congress after his emergency decree short cut to cost-reducing changes in industrial accident litigation failed to work. Anxious to avoid the risk of exposing his parliamentary minority to a hostile Congress in an election year, Macri had little choice after Congress refused to be sidelined and condone the decree. But with the support of all caucuses except Kirchnerism and the left, the bill should go through — otherwise Macri would never have run the risk.
CLASSES NOT WORKING
Last Friday’s column made the mistake of calling the labour front on the basis of 2016 trends rather than this electoral year’s. That column written before the conclusion of the year’s first CGT board meeting last Thursday forecast that the union umbrella would limit itself to announcing a protest and shy away from a general strike. As it was, the CGT not only announced a March 7 protest march but also a general strike without a date (even if Argentina’s long labour history should tell us that a general strike without a date is not a strike at all but rather pressure to negotiate). Labour relations in 2016 were improbably smooth given such an adverse economic year but now October’s midterm elections are moving closer and two of the three CGT secretaries-general are opposition deputies (for Sergio Massa’s Renewal Front).
Evidently as of this month there is a new tension in the Macri government’s relationship with organised labour. Last week the CGT gave mostly private-sector dismissals as the main reason for their protest but could it be that the talk of administrative reform (see editorial on page 15) is the real reason for their rage in anticipation of state sector cuts to come.If last Friday’s column was over-optimistic in expecting more softball from the CGT, there were no such illusions with teachers. Here the provincial governors are on their own for now with the national government resolved to stay out after Education Minister Esteban Bullrich’s rash generosity last year (although in midweek the teachers called a strike for the first day of classes on March 6 unless the national government returned to the bargaining-table). Since the teachers traditionally kick off the collective bargaining season, a bad start to the labour year is promised.
In Buenos Aires province Governor María Eugenia Vidal offered a package which has already been accepted by most provincial employees — 18 percent with the option of re-opening bargaining if that figure falls short of inflation. The problem is that teachers are almost half of the provincial workforce and are pushing for almost double Vidal’s offer — 35 percent. The governor’s response has been to threaten to dock strike days.
And the economy? The dollar is having trouble reaching a sweet 16 pesos — there are too many export, whitewashed and borrowed dollars around, posing the threat of an overvalued currency.
Meanwhile money supply expansion has accelerated from a 2016 average of 26 percent to 41 percent in the last three months. But attributing this to electioneering might be simplistic — the dollar influx, a bulging budget deficit and even more demand for pesos with pick-up (or at least decelerating deceleration) might all be factors.
Talk of pick-up might seem premature with bad consumer figures continuing into 2017 — minus 2.5 percent in January (and consumer durables -3.8 percent, perhaps due to so much bargain shopping in Chile etc.). But at least below the 2016 annual figure of 4.7 percent (over seven percent during much of the second half). This continuing downturn plus shopping abroad in cheaper neighbours might well account for more price reductions than the government’s “transparency” drive to distinguish between cash and credit prices.
Last but not least, soaring lemon prices should put paid to the theory that discouraging exports makes food cheaper by increasing the supply — the industry simply seeks from the domestic market what it is losing abroad (thanks to Donald Trump in this case).