May 24, 2013
Malvinas on show
Politicians the world over perform stunts all the time. Politics is a lot about stunts to the point that it’s difficult to tell when a stunt is not a stunt. President Cristina Fernández de Kirchner, for instance, has announced an ambitious housing plan worth 20 billion pesos in ANSES social security agency funds. Is that a stunt? Well, not if people (an estimated 100,000 in a year) take out mortgages and houses are actually built.
A spectacle doesn’t necessarily have to lack substance. Fernández de Kirchner on Thursday addressed the United Nations Decolonization Committee in New York to reassert Argentina’s claim to the disputed Malvinas Islands on the 30th anniversary of the end of the South Atlantic War with Britain.
Stunt or substance? It’s hard to tell. But Argentine diplomats on Friday said that the President’s statements on Thursday signalled the end of what they said was an effort to make the Malvinas issue “visible.” Britain did not just stand there watching with arms crossed while Fernández de Kirchner did all the talking at a forum that, as this newspaper put it, is “typically the realm of middle-ranking diplomats.” The UN committee, when all was said and done on Thursday, issued a resolution urging Argentina and Britain to “restart negotiations” in order to find “a peaceful solution” to the conflict.
Britain and the residents of the islands, who claim the right to self-determination, had already announced their own stunt.
Officials speaking for the islands’ 3,000 inhabitants said on Tuesday that next year they plan to hold a referendum on the Malvinas status as a self-governing overseas British territory. At last, an election that will be so easy to call! Anybody out on those windswept islands thinking of voting in favour of Argentine rule? Imagine that lone voter going down to the Stanley pub the day after the election. The referendum will probably go down as one of the easiest results to call in the history of humankind.
It’s a stunt. But the islanders can fire back that Argentina, when it comes to Malvinas, is performing spectacular stunts all the time. Island officials on Thursday tried to present Fernández de Kirchner with a letter explaining their position at the UN. But the President refused to take the letter. Thursday (remember it was the 30th anniversary of the end of the war) was charged with symbolism. A ceremony was held in Stanley to pay homage to the British soldiers who died in the brief but fierce war.
British Prime Minister David Cameron also on Thursday had the islands’ British flag flying over Number 10. There will be, Cameron said on Thursday, “absolutely no negotiation.” On Thursday, Argentina had splashed advertisements urging Britain to “give peace a chance” in many major world newspapers, including British ones. Thirty years turned on Thursday since the war ended. The Malvinas issue is as deadlocked as ever.
Critics will argue that Fernández de Kirchner has gained very little by trumpeting Argentina’s demands. But what has she lost by waxing nationalist? Polls show the obvious: support for the country’s claim over the Malvinas is big in Argentina. The President’s taste for the spectacular, if anything, has forced Britain to hit back with some rhetorical fireworks of its own.
Yet the aim of the Argentine government is not only to make Malvinas “visible.” Almost everything in the CFK administration has to be executed spectacularly, for greater — and immediate— effect on public opinion. Take the announcement of that mega housing plan on Tuesday.
The annoucement was made at a brand-new museum built on the grounds of Government House. The place was packed with hundreds of cheering UOCRA construction union workers and with Kirchnerite activists. The housing plan was explained by Deputy Economy Minister Axel Kicillof, the Keynesian academic with a taste for Marx, and by ANSeS head Diego Bossio.
After the two (relatively) young economists spoke the President addressed the nation in a speech carried live on television as a national broadcast.
It was Kicillof who did the most of the explaining. It was another test for Kicillof who recently addressed the Senate to explain the nationalization of the Argentine energy company YPF, and is now surely the most influential economist since Domingo Cavallo (the architect of the peso-dollar peg in the 90s) and Roberto Lavagna (economy minister first to caretaker president Eduardo Duhalde and then to the late president Néstor Kirchner in 2003).
Kicillof performed well, but he had a few slips including a howler when he said that the Kirchnerite economy was in a “vicious circle” when he meant to say a “virtuous one.” The idea of the housing plan was not to feed a real estate bubble, Kicillof said. Instead, mortgages will be given for construction projects. The speculation was that, to take the pressure off the dollar, Kicillof had hammered out a plan for people to borrow in pesos at interest rates lower than the annual inflation rate (at least 23 percent according to private economists).
The peso has been under pressure at least since November and that pressure has increased this year when the AFIP tax agency tightened currency exchange controls, making it practically impossible for the average citizen to walk into a bank and purchase dollars at the official rate (about 4.51 pesos on Friday). Dollar deposits are being withdrawn from private banks at a rate of about 100 million dollars a day.
Yet how real are the fears of a crash, despite the irritation and anxiety that comes attached with Argentina’s history of financial explosions and implosions? A group of anti-government demonstrators on Thursday night bashed pots and pans to protest what they say is rampant government corruption (they are also not happy about the dollar restrictions). Even when the dollar deposit drain makes for a scary backdrop to the exchange restrictions this, to quote Kicillof, “is not 2001” simply because the peso is no longer pegged to the dollar (meaning that only a fraction of what the banks holds are greenbacks).
The Central Bank boasts reserves of nearly 47 billion dollars. The dollar deposits count as reserves and CFK and her officials can’t be happy with the withdrawals. But ask an economist and he will tell you that (again technically) there’s enough dollars in the Central Bank to deal with this run. But it’s still a run at a time when AFIP is already having to appeal court rulings in favour of allowing dollar purchases at the official rate (and Justice Minister Julio Alak was also forced to deny on Tuesday that the Civil Code reform bill sent to Congress includes the sweeping pesification of all debts, contracts, and deposits).
The star appearances of Kicillof and Bossio (described by the President as part of a group of officials “who work”) presumably signals that losing power are Federal Planning Minister Julio De Vido, a member of the Kirchnerite old guard, and Vice-President Amado Boudou, who is facing allegations of influence-peddling in court.
The national government is also admitting that the world economic crisis will also have an on the local economy.
The President addressed the Council of the Americas business forum on Friday and admitted that Argentina, in the current foul global financial climate, can’t be expected to grow at the China-like rates it has achieved since 2003 (or even 2002 as some argue). Fernández de Kirchner also told US business leaders on Friday that Argentina’s dollars are “real” and must be “protected.”
Official news on Friday that economic activity increased only 0.6 percent in April year-on-year will probably add more anxiety and irritation to the current context, which also includes the powerful teamsters union asking for an annual pay hike of 30 percent (and rejecting an offer of 18 percent in three installments). The wage bargaining by the teamsters is charged politically because teamster Hugo Moyano, the secretary-general of the CGT union umbrella group, has been at odds with Fernández de Kirchner after she refused to accept his political demands ahead of last October’s presidential elections.
A strike by drivers hit security companies in charge of delivering cash to banks on Friday, prompting fears that ATMs would be short of money over the weekend. Moyano’s truckers have flexed their muscle as the wage talks continue. Moyano’s union has not ruled out a general strike that could hit ATMs, garbage collecting, and the ports. Moyano is aiming to be re-elected as CGT boss at a convention on July 12, but he lacks the support of both the national government and a group of large trade unions. The anti-Moyano unions claim that the call to the July 12 convention was made by Moyano at a recent leadership meeting that lacked the required quorum to session. The conflict between the Kirchnerites and Moyano could also have an effect on Peronist party politics.
Moyano has already declared that he is ready to back Buenos Aires Governor Daniel Scioli, a moderate Kirchnerite with a conservative background, for president in 2015. Moyano and Scioli were photographed together last Sunday at a soccer game hosted by the governor.
Fernández de Kirchner and Scioli could still be on the same side come next year’s midterm elections. But what happens after that? The President is barred from running for a third consecutive term in office — unless the Constitution is reformed. Scioli recently said that if the Constitution is not amended he will make a bid to clinch the Peronist presidential nomination in 2015. Polls show that Scioli is currently the most popular politician in the land (ahead of both CFK and Buenos Aires City Mayor Mauricio Macri, the head of the centre-right PRO party). Polls can change. The President was very unpopular during the standoff with farmers over export duties in 2008 only to be re-elected last year with 54 percent of the votes.
CFK can still have the benefit of the doubt because the economy hasn’t crashed just yet. Fernández de Kirchner said on Friday that Argentina plans to cancel major debt payments this year and that 2013 will be easier. The President also welcomed news on Thursday that Mexican tycoon Carlos Slim had agreed to take a stake of 8.4 percent in YPF (from banks holding defaulted Grupo Petersen debt).