How Argentina plunged into a new crisis
Argentina: the enormity of the inherited public debt, the deaths from Covid, the effects of the Ukrainian war on the financial markets have exasperated and brought out to the point the political differences existing in Peronist populism at the head of a center-left coalition governs Argentina. The in-depth study by Livio Zanotti
A strong internal conflict threatens to fracture the Peronist majority that governs Argentina. Although weakened, the presidency of Alberto Fernandez does not seem to be wavering. So far he has not resorted to any change of ministers, although it is said that Easter will pass. Even the vice-president Cristina Kirchner, the engine and declared reference of dissidence in the institutions, although openly opposed, remains in her place. However, the head of the Minister of Economy, Martin Guzman, asks, because, supported by the President, he preferred an onerous agreement with the IMF to default . For the Frente de Todos , the center-left electoral coalition that hinges on Peronism, it is however a critical turning point. In the hegemonic formation that refers to the late Juan Domingo Peron there are those who see and fear the risk of splitting.
The populist origin of the movement, although settled in seventy years of triumphs, fratricidal conspiracies, coups d'etat, betrayals and bloody reckoning, nevertheless followed by sensational reunions, remains socially and politically heterogeneous. A nature that today, with the proliferation of populisms in every continent and political system, no longer arouses the bewilderment of other times. However, concerns about the effects of attrition they exert on the institutions of modern democracies remain very lively. Without clarifying once and for all whether populisms are the causes or the effects. If, that is, it is not the incompleteness, the unsatisfied needs of democracies that crumble the societies they govern, favoring their tendencies towards political disintermediation and the opportunistic providentialism of a leader .
To ignite the internal conflict within the Argentine government, which has been dormant for some time, was the agreement that after 2 years of negotiations Minister Guzman reached with the International Monetary Fund (IMF), for the repayment of the 44 thousand million dollars obtained in loan from the previous neo-liberal government of Mauricio Macri. Half of which would have vanished across the border, in the complacent archipelago of offshore banks, at the very moment of collection. The agreement actually gives Argentina two years to start paying and a certain flexibility in the Fund's canonical quarterly controls on fiscal policy, especially on the public spending criteria of the large South American country. The exact terms are not known. However, refinancing – of course – is not free of charge.
The radical wing of the movement, at the time of Evita called the descamisados, today lined up behind Cristina in the tendencia La Campora, in fact a party led by his son, Maximo, denies any legitimacy to the agreement. He considers it unacceptable, impossible to pay except at the cost of a recession that would eventually break into default anyway. He believes, as well as other left-wing components of the coalition and some independent economists, that it should be rejected and denounced internationally. This is the largest credit ever granted by the IMF in its long history from World War II to today. It is proven that the procedures followed to grant it violated internal rules and procedures in force in the same Institute. But there are no specific requests or practices to report him.
Faced with the defection of parliamentarians who respond to the radical left, Alberto Fernandez turned to the opposition to obtain the necessary approval of both chambers of the national congress. By managing to put together the favorable vote of a large majority; transversal, however, like him convinced that the break with the Fund would have pushed the country to default , leaving it without access to credit, with skyrocketing inflation and the national currency in free fall. With the state bankrupt and impotent, waiting for some supranational court to recognize them who knows when to reason in any case of impervious collectability. After all, a challenge in which possible de facto constitutional reforms and no less dangerous turbulence in the streets are glimpsed.
Alberto Fernandez does not ignore the risks that threaten Argentina. Nor that in the austral spring of next year, the campaign for the general elections could coincide with a period of severe austerity, high unemployment and reduced social aid. From which in all likelihood there would be a hard defeat for his coalition, provided that it manages to reach the polls together. Worse than that already suffered in similar circumstances with the half-term vote last November and which greatly reduced the parliamentary accessibility of the government. This would in fact be irremediable. Therefore the president avoids the open confrontation both with internal dissidence and with the macrist opposition, convinced that he can thus survive the storm. He seems to think that those who go slow will go far.
Calculate the catastrophic inheritance received by Mauricio Macri's government: priceless public debt, medium and small industry in ruins, wages cut by 20 percent in real purchasing capacity (official data). And also the two years of COVID that hit the country a few weeks after the new government took office, with the consequent health and production crisis. A monster load. He could have been stunned and suspects that this was the opposition's expectation. Instead, in 2021, GDP grew by 10.3 percent and the recovery in the current year exceeds forecasts. All public accounts have improved markedly. The production of iron, concrete and bricks has reached a historical record. Unemployment fell 7 percent. Export gallops. The good news, however, ends there. Diluted in the immediate conjuncture by those of opposite sign.
Consumer prices continue to rise under the eyes of consumers, also pushed in recent weeks by the effects of the war in Ukraine on international finance and inflated by speculation. Poverty has been reduced from 46.6 per cent to 37.3 per cent, but it is still over 10 million people, one quarter of whom are in poverty. The informal economy employs 4 out of 10 workers. And inflation becomes (negatively) the only unifying factor, which, adding up an abundant 50 per cent in the last 12 months, devours all fixed income regardless of wages and pensions. more or less certified origin. So much so that even economists akin to the government wonder if the increase caused by certain productive sectors cannot be concretely explained by the de facto reduction in labor costs.
Although brief, this general economic summary nevertheless suggests that the debt clash is nevertheless only the tip of the iceberg (especially since the agreement with the IMF is now state law). The gap in the government majority stems from different points of view in the redistribution of the profits produced between capital and labor. Recurring problem of reformism at different latitudes. For example, in the immediate Argentine, through one-off bonuses financed by the recent super-profits of the large food industry, in order to alleviate the indisputable difficulties of families to feed themselves sufficiently. And in the long run, creating a fund for the payment of foreign debt through the taxation of the undeclared capital deposited in foreign banks (about 400 billion dollars, according to recent and reliable estimates). Operations not without an ethical and legal logic, but clearly neither simple nor rapid.
In any case, these are proposals which, even when they were more easily practicable, collide with the practice of dialogue with which Alberto Fernandez intends to lead the opposition or at least part of it to a policy of concertation. Which the deputy Cristina and her descamisados , in turn, not without reason consider illusory. Because of the animate extremism of so much Argentine right. But above all because concertation historically constitutes a central axis of the economic policies of Peronism. However, it works for limited periods and always in expansionary economic phases. So much with the first Peron, in the middle of the last century, when the Argentine peso came to premium on the dollar; as well as in the seventies, when the great caudillo returned from a long exile in Francoist Spain to impose himself on the left of Justicialism , on the military right and on inflation, managing to defeat only the former.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/argentina-crisi-politica/ on Sun, 17 Apr 2022 06:20:01 +0000.