Saturday, April 13, 2024

OPINION AND ANALYSIS | 15-01-2022 03:00

Hypocrisy rules!

The heatwave that hit the Southern Hemisphere and Argentina with particular virulence this week seems to have fried the circuits of more than just the systems controlling the energy grid in the Metropolitan Area of Buenos Aires

The heatwave that hit the Southern Hemisphere and Argentina with particular virulence this week seems to have fried the circuits of more than just the systems controlling the energy grid in the Metropolitan Area of Buenos Aires, leaving hundreds of thousands without electricity in the midst of record high temperatures. It’s as if most political actors in the country are so burnt out that they can only focus on the immediate present, leading almost all of them to hypocritical and even idiotic positions on issues including the deplorable state the grid, negotiations with the International Monetary Fund, inflation, and even the unexpectedly publicised overseas vacations of the executive director and her second in command at the PAMI reitree agency to beautiful Holbox in Mexico’s Yucatán Peninsula.

Argentina, of course, remains marred in a socio-political-economic crisis with no apparent exit in sight. The opposition’s recent victory in the midterm elections seemed to give a very short-lasted breath of fresh air, suggesting both leading coalitions would tend to a moderation that would allow for agreements on key issues including, for example, the necessary (but insufficient) agreement with the IMF. Economy Minister Martín Guzmán was brought in specifically for that reason, and appears to have been toying with the idea of closing a quick deal, yet always seems to find a reason to push it back. 

Ultimately, an ideological battle of sorts was being played out between President Alberto Fernández and Vice-President Cristina Fernández de Kirchner, with Guzmán caught in the middle like a child looking at his parents fighting in the kitchen. Yet, with the ruling Frente de Todos coalition defeated in the midterms but scoring a decent comeback in the Province of Buenos Aires, Cristina is said to have given her blessing for an agreement. Immediately, we witnessed a showdown in Congress over the Budget that resulted in the opposition coalition, Juntos por el Cambio, leaving the session and later rejecting a political invitation to participate in a presentation event by Guzmán about the negotiations. Bad political calculations on both sides means it’s looking increasingly unlikely that Juntos, supposedly led by Buenos Aires City Mayor Horacio Rodríguez Larreta but currently in the midst of trench warfare between inner factions, will lend its support. It was interesting to see several economists and commentators blast Guzmán and Fernández this week for failing to reach a deal with the IMF, almost suggesting the Fund’s austerity plans will work this time around. The Fund has a long history of making problems worse than they were with unrealistic economic plans that end up helping private creditors get out. Just look at the agreement they signed with Mauricio Macri!

The biggest economic problem Argentina has is arguably inflation (most of the major macroeconomic imbalances are interconnected), and we finally got 2021’s last reading: 3.8 percent in December and an accumulated 50.9 percent for the year. Horrible whichever way you look at it. President Fernández celebrated that it was lower than last December’s rate. Whoopty Doo! Former Buenos Aires Province governor María Eugenia Vidal lashed out on Twitter, accusing the government of not being able to bring inflation down below 50 percent while indebting the sovereign at a rate faster than both Macri and Fernández de Kirchner. Huh? Her selective amnesia was picked up by ruling coalition deputy Leandro Santoro who reminded Vidal that the governing coalition she formed a part of clocked in 53 percent inflation its last year in office (2019), after having run to the IMF to get bailed out with the largest emergency loan in history, which in turn helped to fuel capital flight. Good comeback, bro! Hopefully he remembers the ruinous last mandate of a certain Mrs. Cristina Fernández de Kirchner who left a bankrupt nation with no reserves in the Central Bank, a fiscal deficit estimated around five percent, locked out of international debt markets and with a huge increase in intra-government debt, a manipulated statistics agency and currency controls that artificially masked inflation, and a mountain of energy subsidies, among others.

Which leads us to this week’s blackouts. With some of the hottest temperatures on record, Argentina’s electricity network was unable to cope with demand, leading to massive blackouts, particularly in the City and Province of Buenos Aires. The prime suspects are the utility firms charged with distributing electricity, namely Edesur (owned by Italian energy giant Enel) and Edenor (recently acquired by Daniel Vila, José Luis Manzano, and Mauricio Filiberti), but also the national government and a history that goes back at least 20 years since the Kirchner administrations ramped up energy subsidies to win over the middle class. The Macri administration, through then-energy minister Juan José Aranguren, sought to tackle the issue by cutting subsidies and hiking rates, but ended up alienating the middle class who saw the price of electricity skyrocket. They ended up freezing rates as the peso plummeted, a policy that was extended by this government. According to journalist Roberto Bellato, writing in EconoJournal, the government’s tactical mistakes put it in a position of lacking the fuel supplies and the installed capacity to face an expected situation given the incompetence of Electric Energy Subsecretary Federico Basualdo, a hardcore Kirchnerite.

Another hardcore Kirchnerite is Luana Volnovich, director of the PAMI health agency, as is her partner Martín Rodríguez, the subdirector of the same organisation. Volnovich found herself in the eye of the storm this week when a video of her and Martínez hanging out at a tiki bar in Holbox made the rounds on social media. Volnovich, whose last post on social media was about how happy she was to see retiree Yolanda and her friends hanging out in the hot springs of Colón (nice!), has been a lifelong public servant who belongs to a government that prohibited the use of payment installments to buy airline tickets overseas in order to save on scarce foreign reserves (a middle-class resource). While everyone should be free to vacation where they want, Volnovich and Rodríguez’s romantic trip the state of Quintana Roo couldn’t have come at a worse time, with a surge in Covid-19 cases due to Omicron, a violent heatwave, an economy in shambles and a crisis for many retirees with a minimal income of nearly 30,000 pesos, which is nearly 19 times less than the amount Volnovich makes working for the state. Her problem was one of forms or aesthetics, if you will, but in the opposition they jumped at the opportunity to pounce, asking for her resignation while forgetting their political leader, Macri, took a whopping 1,426 days of vacations during his term (may be an exaggeration, but doesn’t feel like one). Not sure which one looks worse.

All of these circumstances remind us of how mediocre our political leaders really are. Every debate is about winning an immediate Twitter battle over whether the Peronists or their antagonists are worse. There never seem to be any serious policy proposals, or even attempts at a bipartisan agreement over structural issues that would help move Argentina forward. Instead, they all seem to be holding their cards until we’re closer to 2023.

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Agustino Fontevecchia

Agustino Fontevecchia


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