Monday, February 26, 2024

OP-ED | 04-03-2022 21:13

Look back in anger

The main reproach for Tuesday’s words to open Congress is not the almost 100 minutes of soft soap, clichés and wishful thinking – the reproach is rather that the softest soap was reserved for the situation in Ukraine.

If President Alberto Fernández needed any reminder that state-of-the-nation speeches are supposed to offer some kind of road map for the immediate future, at least alongside the parliamentary agenda of this year’s bills, the increasingly brutal Russian invasion of Ukraine totally disrupting the international scenario for perhaps years to come should have served as the rudest awakening. The main reproach for Tuesday’s words to open Congress is thus not that they were almost 100 minutes of soft soap, clichés and wishful thinking, because that is the stuff of which such addresses are almost invariably made around the world – the reproach is rather that the softest soap was reserved for his lukewarm regrets of the situation in Ukraine with no thought of resetting his speech in this terrifying new light while gearing his smugly self-congratulatory rhetoric to the immediate past, not future, throwing all the blame for all the issues on his predecessor Mauricio Macri and the coronavirus pandemic.

If diagnosing the past instead of projecting the future were indeed the main task of a state-of-the-nation speech, a more honest effort would have been to admit and define all the structural problems building up over the last half-century at least with the logical consequence of offering structural reforms to resolve them – instead President Fernández boasted of having eluded any such thing in his negotiations with the International Monetary Fund (“There will be no pension reform. There will be no labour reform.”).

Talking of the IMF, the president is not the only observer failing to give the war in Ukraine and its implications the pride of place they deserve, even when it comes to local analysis – much attention is absorbed by the final stages of the IMF agreement with the next major payment deadline now only a fortnight away while Tuesday’s walkout by the PRO wing of the Juntos por el Cambio opposition coalition grabbed many headlines on the day.

Neither aspect should be considered central. The walkout was mildly reprehensible – however indignant the PRO deputies may have felt over President Fernández simplistically limiting the blame for Argentina’s insolvency to Macri’s IMF stand-by while ignoring the fiscal (and even more quasi-fiscal) deficits of his own administration, they should have paid greater heed to their much-vaunted respect for the republic and its institutions on this formal occasion of inaugurating the 2022 Congress. They might also have considered that the biased presidential take on the debt was at least partially aimed at appeasing his own Frente de Todos deputies most hostile to an IMF agreement, which the opposition should presumably prefer to default. But in any case even the harshest view of their intolerance should take a back seat to the decision by former Frente de Todos lower house caucus chief Máximo Kirchner not to even show up.

As for the IMF agreement, which has been such a dominant issue this year until now, it should take second place, not only because further details are still pending (the 31.9 billion special drawing rights in the Extended Fund Facility arrangement was the only number appearing in the eight paragraphs of Thursday’s statement announcing a staff-level agreement) but even more because those details have already been overtaken by the events in faraway Ukraine.

One very specific example of this is the crucial issue of public service billing. In Tuesday’s speech President Fernández at least discontinued the freeze of most of this century, announcing segmented billing (i.e. ferocious increases for upper-income sectors) while pledging hikes well below real wage raises for most people – this offers little to update utility pricing from the enormous lags from almost two decades of freezing although even this could be too much for Vice-President Cristina Fernández de Kirchner (extremely mindful of the negative impact of unpopular gas and electricity bill increases on elections in general and on her Greater Buenos Aires stronghold in particular). The massive disincentives from extended energy price freezing have needlessly turned Argentina into a net fuel importer – a vulnerability brutally exposed by the invasion of Ukraine, which has jacked up world gas prices sevenfold almost overnight. Liquefied natural gas imports alone have thus abruptly risen 50 percent to an estimated US$5.5 billion, way beyond Central Bank reserves. This example alone shows that the Ukrainian crisis is not just a terrifying spectre vaguely looming for the future.

Yet bad as this new world is, it could be worse if an already precarious parliamentary approval (perhaps further complicated as the staff-level agreement announced last Thursday starts being painted by numbers) fails to come through and Argentina falls into default. All eyes will remain on Congress for now.

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