With today marking the exact midpoint of the year 2022 (182 days behind us, 182 still to go) the omens for its second half are hardly better than three years ago. Only 10 days after the end of autumn, “the winter of our discontent” is already well advanced. If 1974 saw the death of the founder of the Peronist movement 48 years ago yesterday, the current head is looking hardly more alive politically – and far more nominal in his authority.
Difficulties abound with most attempts at solution only adding to the problems which already seem to have taken the unity of the ruling coalition past the point of no return. If Vice-President Cristina Fernández de Kirchner used Flag Day to single out a “festival of imports” as the key to the current turbulence (even if that is more another symptom of exchange rate disarray than its cause), the Central Bank started last week by seeking to stem that trend in the form of obliging companies to acquire their dollars elsewhere to pay for their imports in the third quarter of this year. Yet that festival can only continue on the energy front at least with several billion dollars already spent so far this year when winter has barely started and far more to come – the diesel shortages triggering a new farm strike are the most urgent face of that problem but only part of it.
And even where the new restrictions do the trick in slowing imports, this success stands to rebound dangerously – while the pesos hitherto destined for import purchases go chasing the dollars as an end in themselves (as this week’s parallel exchange markets make only too clear) accelerating inflation, less imports also mean less inputs to sustain the continuing economic growth which is the government’s best argument.
It seems indeed paradoxical that a government with the prospect of two consecutive years of growth and a trade surplus should be so much on the defensive on the economic front with a widespread perception of being crisis-stricken but that perception has its logic for reasons more related to the half of the year beginning as from today than the half before it – the balance of trade is sure to suffer as grain harvest exports end while winter fuel imports mount. Nor are a further six months likely to pass without any corrections of relative prices with their inevitable impact on inflation and should such procrastination continue, the result would be the interruption of the programme with the International Monetary Fund along with even bigger problems for the balance of payments, the currency and indeed most economic fronts.
The economic crisis cannot be separated from a crisis of authority in the political sphere, the more so since various key macro-economic indicators remain positive for now. While President Alberto Fernández has been overshadowed by the vice-president who anointed his candidacy during most of his presidency, he is now almost starting to compete with Congress Speaker Sergio Massa for the role of junior partner in the ruling troika. In recent weeks the veep has been widening her circle considerably beyond her most militant loyalists, meeting with traditional Peronist governors, Cabinet ministers previously endorsing presidential re-election and not only Washington’s envoy here, Marc Stanley, but even representatives of the Pentagon, not to mention orthodox economists (Carlos Melconian). The effect of all this has been to increase presidential isolation, virtually ruling out his re-election while offering no certainty that Cristina Fernández de Kirchner will be gunning for a third term – on the one hand, her vocal pessimism as to the results of next year’s voting and on the other hand, perhaps a comparable confidence in a regional swing making victory inevitable should there be a Brazilian confirmation of Colombia’s switch from right to left later this year.
If this editorial has largely taken the government to task, there is no summer for any politician. The opinion poll evolution of the libertarian Javier Milei would suggest that only outsiders can lay claim to positive ratings and only for as long as they remain newcomers. But the politicians cannot hope for any confidence until confidence in the national currency has been restored – something which will require far more fiscal discipline from the government and more clarity from the opposition as to the alternative their future administration might offer.