The year 2020 is upon you and in political terms for Argentina you must know this: it is not an election year.
The last year was one long electoral haul in the middle of an economic depression that saw Mauricio Macri, leader of the Cambiemos centreright coalition, dismissed from the presidency. Yet even after Alberto Fernández, a Peronist, took office on December 10 the frantic pace of the electoral slog did not let up. Only now that 2019 is gone is there some respite. But before the bottles of bubbly were uncorked, there was political effervescence right down to the wire.
In the closing days of 2019 attention shifted to the new governor of Buenos Aires Province, Axel Kicillof, and his tax plans. Kicillof, a former economy minister who served under Cristina Fernández de Kirchner known for deriding neoliberalism, is a member of the new ruling Peronist coalition. Arguably, he is the most left-leaning official to rule Argentina’s biggest province since the return of democracy in 1983. His huge victory, over the incumbent pro-Macri governor María Eugenia Vidal, was not considered a possibility a year ago. But Kicillof, who was anointed by CFK herself, embarked on a memorable campaign riding a little-used Renault and routed Vidal, the darling of centre-right voters.
Now, as the uproar surrounding his plans to update provincial taxes in line with inflation (running at an annual rate of at least 50 percent) grows, Kicillof is trying to find his footing as governor.
A section of the press is even stoking speculation that Kicillof is taking his orders directly from Vice-President Fernández de Kirchner and not President Fernández. The Peronist coalition controls the provincial Lower House, but the Senate is controlled by Macri’s coalition. The tax plan has yet to be approved. It has been bogged down by loud criticism about farm and property tax increases which, in some cases, for the big owners, hit as high as 75 percent. Already some angry farmers have the engines of their tractors running in preparation for what could be a protest by the agricultural sector.
It might be the sea son to be merry, but Kicillof didn’t have the time to take a night o f f b e f o r e Ne w Ye a r ’s Eve. Instead, h e g r a n t e d a much-commented-upon television interview to one station, during which he explained why the rich must make a bigger effort amid the crisis facing Argentina. He also told the opposition to “stop mucking about” and sit down at the table to negotiate an agreement.
Arguments like these in the first days of a government are usually won by the party in office, which can easily accuse the opposition of sour-grape-tinted sabotage if it does not approve the policies of those who won the election. But the question is if the tax hikes have granted the opposition something to work with and an unexpected chance to dent Kicillof’s credibility with his voters at such an early stage.
The controversy also revealed that part of the press is all too eager to target Kicillof, who has the backing of the Kirchnerite wing of the ruling coalition and the task of delivering to its electoral base in Greater Buenos Aires. During the interview, Kicillof at times sounded like a candidate about to go on another tour in his Renault and not the actual governor. He must get used to holding office fast because the message from the conservative opposition and the big landowners affected by his tax plan is that they will show no mercy. Yet at such an early stage the opposition has no choice but to give Kicillof his tax plan, albeit with some amendments from the upcoming debate in the provincial legislature.
The interaction between President Fernández and Governor Kicillof will be watched closely. The ruling party can’t afford to see its popularity drop in its giant bastion before its federal fiscal policies have a chance to kick in.
The president has also spent a lot of energy granting interviews to defend his decision to suspend automatic pension increases. He has argued that the increases will be granted by decree for 180 days, while the government can come up with a reform of the pension system. It is not a freeze of pension increases, if you ask President Fernández. But what will pensioners, and public opinion in general, make of the changes once the extent of the reform is clear? The president says the automatic pension increases (based on an index that combines inflation and salary hikes) designed by Macri are “unpayable.”
Ultimately the government’s plan is to hit sensible fiscal targets and at the same time freeze utility rates in an effort to drop inflation and anticipate private-sector wage hikes by decree. A five-percent fuel hike about to be announced by the state-run oil company YPF was quashed by the president at the last minute. Critics are also making loud calls for politicians to also tighten their belts and Congress has frozen salaries also for 180 days.
President Fernández is moving fast. The
pension issue will resurface when the time
comes to decree an increase in March. He knows
2020 is not an election year –
but 2021 is.