Friday, February 23, 2024

OPINION AND ANALYSIS | 28-01-2022 18:24

Make or break for Argentina

Most serious economists think that what Cristina and her supporters want is utter folly, that telling the IMF where to get off would have a devastating effect on the country.

If recent opinion polls are to be trusted, a huge majority of the population, including well over 80 percent of the people who voted for the ruling Peronist coalition last November, want the government to cut a deal with the International Monetary Fund. They fear that without one Argentina could suffer a meltdown much like Venezuela’s which has made six million people flee a once relatively prosperous country its rulers have changed into a murderous, poverty-stricken and disease-ridden backwater. Exactly what kind of deal they have in mind is hard to say, but most presumably understand that it must entail rather more than the unconvincing promise to balance the books by 2025 – when members of the current opposition may well be in office and could therefore be obliged to pay the political costs of any belt-tightening nastiness – that government spokespeople have just announced.

Though it would seem that a relatively undemanding agreement has come into sight, whatever transpires is more than likely to be attacked by a small but highly influential group of individuals who are hell-bent on striking a blow against capitalism by severing economic ties with much of the rest of the world. Leading it is none other than Cristina Fernández de Kirchner who, while in Honduras to attend the swearing in as president of Xiomara Castro de Zelaya, a lady surrounded by notorious anti-Semites who think Jews are the source of most of the world’s ills, attacked “multilateral credit organisations” that favour fiscal discipline and, according to her, are in league with the drug-smuggling cartels. She also accused, yet again, those judges who take a dim view of corruption of behaving like the military coup-mongers of not that long ago because on occasion some have ruled against politicians, including allegedly progressive ones, found to have been on the take.

All this suggests that Cristina, who enjoys the enthusiastic support of many members of the government formally headed by Alberto Fernández, wants Argentina to refuse point-blank to make any effort to appease the IMF by drawing up a feasible recovery plan Kristina Georgieva and Gita Gopinath would be willing to rubber-stamp. She apparently thinks it would be better for her to have the country sink even deeper into the mire in which it is struggling than it would be to risk what political capital she still retains by sharply reducing government spending, especially in the depressed Buenos Aires Province slum belt that provides her with millions of votes. She assumes she will manage to persuade the populace that all the many woes awaiting it ought to be blamed on the arch-villain Mauricio Macri and his cronies in the IMF, the United States, Western Europe, Japan and the world’s financial community.

Cristina’s chances of success in this endeavour look slim, but she is clearly so desperate that she will try just about anything she feels could help her avoid getting jailed for life on corruption charges or, what for her would surely be a more appealing outcome, having to seek refuge in Cuba or any other country that would be unwilling to extradite her.

It so happens that the current vice-president’s transformation into a strident foe of what in most parts of the world is regarded as economic sanity is entirely due to her own personal problems with the law. Had it not been for her decision first to go along with her husband’s thievery and, after his demise, to rake in even more money and help her subordinates acquire hundreds of valuable properties both here and abroad, she would in all probability have remained the feisty but on the whole fairly sensible moderate she was before temptation came her way. Until then, she certainly did not seem to be averse to capitalism.

Unfortunately for millions of men and women, Cristina’s drama is now Argentina’s. As far as she is concerned, nothing at all matters apart from her own well-being and that of her children. For this to change, those who are reluctant to tie the country’s fate to Cristina’s would have to deprive her of the political power she continues to have, but the man best placed to do this, Alberto, is so scared of her that he obeys almost all her whims, as do many other Peronists who have grown accustomed to letting her call the shots as long as she allows them to go about their business, presumably because they believe she still has enough votes in her bag to force them to come to heel.

Most serious economists think that what Cristina and her supporters want is utter folly, that telling the IMF where to get off would have a devastating effect on the country by depriving both the public sector and the already hard-pressed business community of any access to the money markets on which almost all activities depend. Would it be worth ruining the country in order to score what the Kirchnerites and some leftist fellow-travellers would see as useful debating points against the loathsome “neoliberals”? Cristina and her underlings evidently think it would be, but few others have the same priorities. For most people, getting it drummed into them that a wicked world is to blame for everything bad that happens here is not much of a consolation. They would much rather see the men and women in power make a genuine attempt to get a grip on things and prevent the country from sliding over the cliff which sober-minded economists say lies just ahead.

Optimists tell themselves that Cristina and company are resigned to seeing Alberto make an agreement with the IMF that, no matter how it is packaged, obliges the government to slash public spending (something it would have to do with far greater ferocity if it defaulted on the money owed to the financial watchdog), but want people to remember they did their very best to defend the interests of the population. Given the habit Peronist governments have of spawning an internal opposition which can take proper advantage of the setbacks suffered by the president and by doing so make things more difficult for their political rivals, those who think this way could be right, but seeing that the entire Peronist family won barely a third of the votes cast in the recent parliamentary elections, such a scheme would be unlikely to work.

As for the pessimists, they think that Cristina and her friends really have come to the conclusion that it would be best for them to go all revolutionary and, after cutting ties with the IMF, wage a propaganda war against the US “empire” and its many outposts in the hope of conserving the support of the many who would suffer the predictably unpleasant consequences of what they would call a declaration of independence.

Is this what is in store for Argentina? We should soon know the answer to that disquieting question. Like the Central Bank’s reserves, time is fast running out and some big payments are coming due. This is why the gap between the free-market exchange rate and the official ones is getting wider and the country risk index is soaring ever higher into the stratosphere, all of which is making people who are fed up with being held hostage to Cristina’s legal troubles very nervous indeed. 


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James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).


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