No less than 12 of the 20 Frente de Todos ministers swearing in 30 months ago yesterday are now gone and yet none of these dozen changes convey the impression of the wheels coming off more than last weekend’s noisy eviction of Productive Development Minister Matías Kulfas. Infighting enters new dimensions when the two wings of the ruling coalition accuse each other of the same crime – namely, favouring the multinational Techint for the metallic casing of the Néstor Kirchner gas pipeline after previously overlapping approval due largely to the lack of any other options.
The political nature of this dispute over the pipeline tender was evident from the start due to the crass technical ignorance displayed by both sides – confusions between millimetres and inches, tubing diameters and metal thickness but this column will not elaborate on that in order to avoid further errors. The May 30 resignation of pipeline project chief Antonio Prosnato over this hopelessly entangled tender marked the end of any technical criteria as politics took over completely.
Vice-President Cristina Fernández de Kirchner wasted little time in stepping into this vacuum for a blast of “national and popular” rhetoric against the powers that be (which never include her), criticising the government in general and Kulfas in particular for not pressuring Techint to return the favour of being granted this tender by manufacturing the metal tubing here instead of in Brazil – as if any sane businessman would invest in building an entire plant to produce some US$200 million of tubing with no clear prospect of anything beyond. For one reason or another Kulfas departed from the usual script of President Alberto Fernández (and of his successor, Ambassador to Brazil and losing 2015 Peronist presidential candidate Daniel Scioli) of turning the other cheek to such swipes, pointing out that the tender had been steered Techint’s way by energy officials who were vice-presidential loyalists of La Cámpora origin. Both this critique and the accompanying suspicions of corruption are valid enough, even if also littered with technical errors, but his clumsy manner of making the point (off-the-records very much on the record) made it easier for President Fernández to yield to vice-presidential pressure.
Kulfas is a dead duck but with both sides of the ruling coalition hurling charges of corruption, federal judge Daniel Rafecas (despite being the presidential nominee for attorney-general) has no choice but to take up the case with the ex-minister as star witness. Cristina Fernández de Kirchner has won the day but what about the tomorrows – what was she trying to achieve? The suspicions of corruption are clearly based on the Techint tender being sabotaged in order to sneak in crony capitalism, for which a “national bourgeoisie” is her favourite synonym. But could it be that she is trying to scupper the deal (while in the process torpedoing the tentative presidential approaches to big business) as an end in itself because, convinced of an inevitable defeat next year, she does not want the next government to reap the benefits of the pipeline?
If so, she is carrying to extreme lengths the subordination of the economy and all else to politics with the supreme absurdity of this country having to spend billions of scarce dollars on importing fuel when possessing the world’s second-largest reserves of shale gas at Vaca Muerta which cannot be transported for want of a pipeline now turned into a political football – the diesel shortages now crippling agricultural production are the most immediate expression of this folly with populist pricing the culprit. The scarcity of dollars is a further absurdity with record exports, a trade surplus and all major debt payments deferred. There are no easy exchange rate options against this – devaluation would only spark runaway inflation whereas an overvalued currency boosts demand and defends growth while supply dries up for lack of dollars and hence inputs.
Not much space left for the memory lane segment of this column to link past and present. If there have already been a dozen ministerial changes in this government, there were dozens in the 34 years of my Buenos Aires Herald newsroom experience as from 1983. Any comparison with Kulfas should limit the field to the economic sphere but even here there were 27 ministers during those 34 years with an inherent instability in a volatile economy. Most changes were almost routine with few marking any alteration in course – the exit of Bernardo Grinspun in 1985 marked the end of the heterodox economics of the democratic spring, the arrival of Antonio Erman González in late 1989 spelled Carlos Menem exchanging his alliance with business for a fiscal rather than economic slant and Ricardo López Murphy in 2001 had ultra-orthodox economics reigning supreme for a fortnight. The real shocks to the system were the departures of two highly successful ministers – Domingo Cavallo in mid-1996 and Roberto Lavagna in late 2005 – but these were driven by political jealousy rather than any change in economic direction (hence Cavallo was replaced by the highly orthodox Roque Fernández, a co-author of convertibility, and Lavagna by a series of Kirchnerite sycophants). Thus no economic policy in Argentina seems as dangerous as its total subordination to politics – which is what has happened with Kulfas.