Argentina is heading for a total lockdown, in a bid to limit the spread of the novel coronavirus. Seven provinces had already closed their borders at the time of writing, but the situation is fast moving, with an announcement imminent.
Alberto Fernández, the Peronist leader heading the left-leaning Frente de Todos coalition, is relying heavily on a panel of experts to make his decisions. The president is following doctors’ orders without hesitation, especially because the virus is ravaging Italy and Spain, the ancestral lands of millions of Argentine families. The shape of things to come in Latin America could be what is now going on in Europe.
The coronavirus emergency has wiped out practically all other political issues here. The president had plans to table an abortion bill and launch a sweeping reform of the court system before all this. But the political conversation has been consumed by the coronavirus.
The only other issue still standing is Argentina’s effort to reschedule nearly US$70 billion in debt. On top of that there are pending talks to roll over US$44 billion of a loan granted by the International Monetary Fund (IMF). The global desperation for hard cash has hammered the value of regional currencies in Brazil, Chile and Mexico against the dollar. Economy Minister Martín Guzmán is still aiming to convince bondholders that they should accept a big haircut, but the context has changed dramatically and the looming debt obligations mean that the republic can still slip into selective default. (Mind you, Lebanon’s recent decision to default on euro-bonds did not make too many headlines, did it?)
Argentina’s political landscape has a tendency to shift drastically. Imagine what the coronavirus alert has done. The president last Sunday gathered with officials, including his key ally, Buenos Aires Province Governor Axel Kicillof, a progressive Kirchnerite. More significantly, the hectic round of meetings at the Olivos presidential residence included talks with Buenos Aires City Mayor Horacio Rodriguez Larreta, a prominent member of the centre-right opposition coalition headed by former president Maurico Macri. Fernández then held an evening press conference to announce that schools were shutting down at least until March 31 flanked by Kicillof and Rodriguez Larreta, a very unusual show of political civility that resonated with public opinion after almost two decades of harsh polarisation.
Only weeks ago, the national government was locked in a hushed tussle with Rodriguez Larreta over a plan to reduce the amount of federal revenue that Buenos Aires City (a neoconservative bastion) receives. That simmering argument has also been wiped out by the virus. Rodriguez Larreta was always going to be a prominent opposition figure – and a potential centre-right presidential candidate in 2023 – because he is, unlike Macri, in office after winning reelection as mayor. The Peronist administration has no choice but to interact with him. Rodriguez Larreta avoided a direct public argument about federal revenue-sharing when the president announced plans to cut what the affluent Buenos Aires City gets.
The president, who cut his teeth as an old school Peronist operative in backroom negotiations, is also seeking parliamentary consensus for the lockdown. Lower House Speaker Sergio Massa held talks with opposition lawmakers to rally parliamentary support for the lockdown plans. The opposition has voiced backing in Congress for the drastic measures that lie ahead to flatten the curve. Still, Massa was forced to fend off criticism about special subsidy funds granted to each of the 257 lawmakers that will now be donated to state health agencies to fight the virus. The president also held a meeting with the provincial governors to discuss the lockdown amid concern that much of the population was not heeding the call to self-isolate.
The ultimate fear in Argentina, apart from the health consequences, is that a lockdown will definitively break the back of an economy that was already bleeding badly and burdened with debt. The government has announced a series of breaks including a special bonus for retirees on the minimum pension and child benefits. Price controls will also be enforced, the government said. It is the return of state regulation. In the middle of the tumble the United States is printing dollars. Europe is printing euros. All Argentina can do is print billions of weak pesos and hope that they will not be rendered absolutely worthless by the ferocity of this natural disaster in a context of high poverty and inflation.
Humans are prone to confrontation and ideological rifts around the globe. But the price-gouging and the hoarding of toilet paper triggered by this crisis seems to be a universal trend. The compulsive emptying of supermarket shelves as the number of coronavirus cases increases is happening here just as it is in the rest of the world. Authorities have assured consumers that shortages should not be feared – after all, Argentina is in the middle of a recession with plenty of stock to sell.
The collapse of the supply chain seems far off. But the nation must also avoid the collapse of its healthcare system. The country’s unique system – which includes union-controlled healthcare funded by compulsory employee contributions – will be put to the test. Private health insurance and free state-run hospitals are also part of the equation, but millions of workers rely on the union-managed healthcare. The trade unions are already offering up hotels they own to treat those coronavirus patients that will not require intensive care.
Effectively, the treatment of severe health cases in Argentina is bankrolled by a state fund that gets its money from the union-controlled healthcare scheme contributions made by employees and employers (even when the treatment in some cases is provided by private insurance). The brawls about the management of these funds – which include Peronist trade union bosses and powerful private insurance lobbies – is generally stressful. This tension could increase during the coronavirus emergency.
Still, 40 percent of the Argentine economy is off the books and enjoys no access to such trade union healthcare schemes or private insurance. A significant slice of the population, which is paid under the counter and will suffer as the informal economy is drained of hard cash in a lockdown, depends on nominally universal free state-run healthcare. The backbone of the system is public and both the trade union schemes and private insurance rely on the state for the treatment of severe cases. Coronavirus testing is currently carried out by a state-run institute.
The new government’s initial response to the novel coronavirus spread came under fire when the health minister predicted earlier this year that it would not reach the country fast. The minister, Ginés González García, a senior doctor respected across the political board, was proved wrong and his credibility was dented at a crucial moment. Now the challenge for President Fernández is to avoid the collapse of the country’s singular healthcare system and emerge from a lockdown as a builder of consensus, with a steady hand in extremely difficult times.