Sunday, May 26, 2024

OPINION AND ANALYSIS | 08-05-2021 00:01

Nothing more supreme than uncertainty

Guzmán is not the first economy minister to be humiliated by political priorities and nor will he be the last.

The week’s two main headlines at time of writing have been Economy Minister Martín Guzmán’s abortive bid to ditch his Energy undersecretary just before the weekend and last Tuesday’s Supreme Court ruling to uphold classroom education in this City. This column’s dominant criterion has always been the number of newsroom memories evoked rather than the relative importance of the issue and that yardstick (right or wrong) inclines the choice to the former item. In 34 years at the Buenos Aires Herald I honestly cannot remember paying much attention to the Supreme Court – overshadowed by the 1985 junta trials during the Raúl Alfonsín presidency, functioning as a rubberstamping agency as from 1990 when packed from five to nine justices by the late Carlos Menem, and then restored to a laudably neutral mode by the also deceased Néstor Kirchner in 2003 – until the year 2013 when I will never forget the “deer in the headlights'' expression on the face of then-Supreme Court Chief Justice Ricardo Lorenzetti as he listened to then-President Cristina Fernández de Kirchner’s proposal to “democratise justice” in her state-of-the-nation address.

So nothing in this column about the institutional logjam between the clamorous need for classroom education reasserted by the Supreme Court versus the right of an elected government to dictate emergency measures amid the undeniable crisis of the coronavirus pandemic (rightly or wrongly, most probably the latter) while scorning a judiciary intrinsic to the separation of powers.

That phrase “It’s the economy, stupid” has been quoted incessantly in the three decades since coined by spin doctor James Carville in Bill Clinton’s successful 1992 presidential campaign in the United States but now is the time to let readers into a secret – firstly, as first attributed to Carville, the phrase was actually: “The economy, stupid” and secondly, it did not originate with Carville at all but was born in Argentina many years previously when a rising politician from a minority faction of the ruling party out of sync with the dominant wing but entitled to a ministry inquired what portfolio he might expect and was told: “The economy, stupid,” such is the degree of frustration and humiliation awaiting anybody who tries to apply any logic there.

The devaluation of Guzmán proceeds non-stop even if devaluation of the currency slows down this year at times in a bid to decelerate inflation. Energy Undersecretary Federico Basualdo’s blind defence of dirt-cheap electricity bills (which especially favour upper-class households with their multiplicity of electronic devices) not only defies Guzmán’s authority in denying the minister any control over subsidies and hence progress towards a more balanced budget – Basualdo’s insistence on single-digit utility rate increases also flouts a January report by his immediate boss, Energy Secretary Darío Martínez, indicating a 31 to 35 percent increase was in order. Nor is the disciple of Joseph Stiglitz granted any joy on the front of his prime achievement, last August’s debt deal with private sectors – not only is any agreement with the International Monetary Fund (IMF) being rolled over until after the elections but the Senate dominated by Vice-President Fernández de Kirchner is pushing a bill to earmark the extraordinary special drawing rights being granted by the IMF this year to domestic purposes, not to repaying the IMF or the Paris Club as contemplated by Guzmán.

Anyway enough of the present – time for the history lessons which are the trademark of this column. Guzmán is not the first economy minister to be humiliated by political priorities and nor will he be the last. This columnist’s first memory of an economic czar falling victim to electoral cycles is Juan Vital Sourrouille (nicknamed ‘Quatrocchi’ or “four eyes” due to his incredibly thick spectacles), author of the initially successful but short-lived Austral Plan in 1985. The 1989 Radical presidential candidate Eduardo Angeloz pushed him out early in that year in order to assert his Spring Plan – a mix of short-term stopgaps which served to feed rather than curb hyperinflation and more long-term policies such as privatisation which were never on in an electoral year.

Sourrouille was followed by no less than five ministers in the next two years, none of whom made much impact (least of all Miguel Angel Roig, mentioned in last week’s column, who died after only six days on the job) but then came five years of Domingo Cavallo, the author of convertibility. Cavallo’s exit in 1996 was due to a combination of his deploring corruption too loudly and Menem needing him less after clinching re-election in 1995.

The next victim of politics was Ricardo López Murphy, who hardly lasted longer than Roig (a fortnight in March, 2001) – the Bulldog was shown the door for proposing spending cuts of two billion pesos (then also worth US$2 billion) over an extremely broad front including the dismissal of 40,000 state employees but he aimed too far by including among his targets education (then considered sacrosanct, not like today).

Roberto Lavagna was Argentina’s economic pilot out of the storm of the 2001-2002 economic meltdown (although his predecessor Jorge Remes Lenicov did much of the dirty work) but he was booted out in late 2005 after denouncing the overpricing of public works (there was then no concept of lawfare to explain this away) along with the global commodity price boom making Néstor Kirchner feel that he could place the economy on automatic pilot. Lavagna was followed by Felisa Micheli who had problems explaining over US$60,000 found in the toilet of her office. The traumas of Martín Lousteau with the sliding scale of grain export duties in 2008 formed the subject of this column on January 16 while the increasingly notorious Amado Boudou was promoted to the vice-presidency in 2011.

The historic vulnerability of economy ministers did not diminish under the market-friendly Mauricio Macri presidency. Alfonso Prat-Gay lasted just a year before being eased out on the pretext of dividing his ministry into two (Treasury and Finance), only for his successor in the former, Nicolás Dujovne, to resign a week after the PASO primary debacle of August, 2019, which destroyed all hopes of being able to resist the sustained run on the currency thanks to the record stand-by of US$57 billion he had negotiated with the IMF.

The ball is now in Guzmán’s court to see if he follows this long line. 

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Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.


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