Andrew Cusack

High Drama in Argentina’s Halls of Power

Posted by Andrew Cusack on July 27, 2008

It is an age-old question: what happens when an irresistible force meets an immovable object? The force in question is the farming community of Argentina, once among the agricultural powerhouses of the world, and the object is the country’s slippery presidential couple, President Cristina Fernández de Kirchner and her husband (and predecessor in the top job) Néstor Kirchner. From all the way back in March, the Kirchners have been locked in a bitter dispute with the farming sector of the country since the presidential couple unilaterally imposed a massive tax on soy exports.

The Kirchners deride the farmers as “oligarchs” and claim that the exorbitant tax on one of Argentina’s most successful commercial sectors will be redistributed to the poor. Of course, it would be irresponsible to simply take from the haves and give to the have-nots; the money raised would only go to the deserving poor, namely those who happen to support the Kirchner regime. Along the way, every cog in the machine will take his fair share, with a respectable amount left over to fatten the calves (metaphorically speaking) of the Kirchnerite street operators who quite openly buy votes during election time and pay union members to show up at pro-government rallies in between.

“Thanks to the high prices of agricultural exports,” the New York Times reported in 2006, ”estancieros are leading the country out of the worst economic crisis in its history.” Well, thanks to a global food shortage, those prices have only increased since 2006, and the Kirchners smelled a buck to be had. Why, the couple reckoned, should the farmers lead the entire country out of poverty when only part of the country bothered to vote for Mrs. K in the presidential election? The farmers, on the other hand, failed to see any reason why they should foot the bill for K & Mrs. K, so they took to the streets and highways protesting the unfair levy. Country went to town, told it a thing or two, and indeed much of town agreed.

This worried the Kirchners, who began to see the possibility of things going pear-shaped. “Maybe we should talk,” said Madam President, “Take no prisoners!” said the First Gentleman, the good-cop/bad-cop redolent of a second-rate TV drama. Finally, a course of action was decided: pass the buck — refer the tax to Congress, where the Kirchners have a comfortable majority in each chamber, and let them take the blame.

On July 5th, the Chamber of Deputies put its stamp of approval on the export tax — albeit with a majority smaller than expected — and the matter passed to the Honorable Senate of the Argentine Nation (to give its official title). Composed of 72 senators, a bloc of 37 members is needed to form a majority and the Kirchner-led Front for Victory has 42 senators of its own, not including a few more senators from provincial electoral alliances that, for local reasons, back the Ks but are not formal members of the Front.

The final countdown

The Senate was packed for the vote on July 16th. This was a make-or-break moment in the Country-versus-Kirchners dispute and while the government have a Senate majority, everyone kept an eye open just in case. The senators wrangled for seventeen hours straight, and the debate dragged on into the early hours of the 17th. This was no worry for Argentines — the “early to bed, early to rise” proverb is unheard of and unthinkable in Argentina. Finally, it came to a vote. With 37 needed to pass, and 42 senators in the Frente camp, the division on the vote was 36 to 36, dead-even.

Like many other American republics, Argentina’s constitution is modeled on that of the United States and so the Vice President of the country — Kirchner loyalist and ex-Radical party member Julio Cobos — is also the President of the Senate, who only votes in the event of a tie. Faced with this massive responsibility of breaking a tie on an issue of great import to the well-being of the nation, Cobos tried to take a note from the Kirchner playbook and pass the buck. He called for a second division, just to make sure. Again, the senators voted, and again, 36 for, 36 against. There was no escaping it: Cobos would have to decide.

Very well, it was down to him. It was four o’clock in the morning, and competing crowds of farm supporters and their pro-government opponents gathered outside to await the decision. Sweating profusely, Cobos spoke with torturous slowness on the gravity of the situation. “I think today is the most difficult day of my life,” he pronounced, as the senators shifted awkwardly in their chairs, waiting for the final word. “They tell me I must go along with the government for institutional reasons, but my heart tells me otherwise,” he said. Nervously holding on to the microphone, the Vice President paused between groups of words and breathed heavily for many seconds as the country hung on each word he pronounced. “May history judge me. … (pause) vote … my vote is not positive, it is against.”

Outside, the farmers and all the supporters of the Country cause burst into joyful elation and enthusiastically broke into the national anthem: “Hear, o mortals, the sacred cry: ¡Libertad, libertad, libertad!” Among the Kirchnerites, meanwhile, there was much renting of garments and gnashing of teeth, compounded by the mental calculations that they might actually have to lower themselves to what the countryside (and most of the town) do: work for a living.

Surveying the damage

The Kirchners have not done well for themselves in this battle. Cristina’s popularity soared at 58% when she succeeded her husband as president. A poll by the Spanish newspaper El País found that her approval rating is now at an unprecedented 23%. Her first year in office isn’t even finished and she has sunk to Bush-levels in the polls. In a Westminster-style system, the government’s failure to secure a victory in such an important vote would lead to its downfall and a new election, but unless Mrs. K decides to resign, Argentina is stuck with her for three more years before her term expires.

Cristina Kirchner would do well to note that Argentina’s last female president, Isabel Peron, was overthrown in a coup (and is currently under arrest in Spain for collusion in the disappearance of a political activist). Political intervention by the military is unthinkable today, but presidential careers aren’t only finished by military coup or the completion of a term. Between December 2001 and May 2003 — just a year and a half — Argentina went through no less than six presidents. Cautious Argentines fear that a resignation on the part of Mrs. Kirchner would only strengthen the country’s reputation for instability, but nor is Argentina’s reputation bolstered by the four-month national crisis the Kirchners provoked.

The opposition — Socialists, Radicals, anti-K Peronists, Christian-democrats, conservatives, and market liberals — will only be encouraged by the farm victory, and in the coming months opportunists currently in the Kirchner camp may take advantage of Cristina’s unpopularity to defect. Those who would count on her resignation will likely be disappointed. The histories of both Nestór and Cristina Kirchner show that they will cling to power to the bitter end, no matter what negative impact that has on Argentina. For now, it is enough to do as the farmers have done and celebrate… while preparing for the next battle with Argentina’s Bill & Hillary.


Comments

The Kirchners are also trying to foist abortion on the Catholic country of Argentina.  Even though Christina Kirchner claimed to be pro-life while campaigning, she is now pushing for the legalization of abortion.

Posted by Max on Jul 27, 2008.

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“The Kirchners deride the farmers as “oligarchs” and claim that the exorbitant tax on one of Argentina’s most successful commercial sectors will be redistributed to the poor.”

Nope. Everybody knows the reason behind this tax increase is to pay the foreign debt. Even Nestor Kirchner said it. Argentina’s external debt with IMF, WB, and many other creditors is the real problem and was the cause of the financial collapse of 2001. Right now is about 150+ U$ billions.

The reason the US does not face a similar immediate collapse is because the dollar is used as currency all over the world and China and Japan have billions of U$S in their arks. If this situation changes in the future, and there are ominous signs, the US economy may collapse in a similar way as its external debt is huge. Needless to say, the common folk will suffer the most.

Posted by H.A. on Jul 27, 2008.

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Andrew,
Enjoyed the column and your perspective. You hit the all the major points in a
literate and reasoned manner. As I read your comments, I thought back to my time
in Argentina as a professor....Thanks for the essay.

What an exciting report...the vice-president is to be commended for his vote of concience...and in reference to a previous poster’s comment, they surely did want to distibute the money to the poor and not pay down external debt - isn’t this the ‘job’ of government? To buy votes from the poor? Could you imagine a government, given the choice between paying down debt and buying votes that would actually choose to pay debt? The only place that happened was in Rumania, and NC didn’t have to worry about public opinion (at that particular time anyway).
Also, there are hopes to try to tax exports of Argentine mines, too. They probably hope to become the new Perons, and distribute wads of cash.

I am neither defending the Kirchners, nor expressing wishful thinking. They may give some crumbs to some “deserving poor”, but they big money is going out of the country to pay down external debt, as has happened during the last 30 years when Argentina passed from world creditor to world debtor. Behind the populist facade the Kirchners just do what Wall Street, IMF, and WB tell them to do.

Posted by H.A. on Jul 28, 2008.

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Kudos to whoever decided that articles regarding the ongoing Argentine financial straits are prudent. It takes very little imagination to figure out that Argentina is the Bellweather and the Gringo’s of el Norte are intent upon hewing to its course enthusiastically.

One feels bad for the coming summer cocktail party schedules of the IMF and WB staffers though. While it may have been fun to talk shop about inflation, failure and the God-like powers of the IMF/WB when it involves a country thousands of miles away, it will be less so when the country shot full of holes is one’s own freshly minted Banana Republic.

Hopefully this is the beginning of Cobos’s campaign.

Just wait for the Kirchner bufoons to start nationalizing soy production following the recipe created by that Spanish communist and philoterrorist Roberto Viziano Pástor, a recipe he already sold to Chavez, Morales, Correa. Yeah, sure they want to re-distribute wealth, that is redirect money of working people to the lazy Chavezian army of salaried street thugs who “support” the Kirchners.

H.A. is wrong. Argentina doesn’t owe any money to the IMF. The tax increase was driven by the need to close the fiscal gap: operating public expenditures have been growing at 50% p.a. The incompetence of the Kirchner has probably no parallel in history. Argentina now faces the best conditions in the international markets in over a hundred years.

Posted by Adam on Jul 28, 2008.

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Adam,
Argentina does not owe much to the IMF precisely because Kirchner paid them almost 10 billions single-handedly some time ago. See:

However the foreign debt is still huge for the scale of the country. Depending on the sources the amount varies. In any case big investment banks and other speculators are usually the big creditors. You can find information wherever you want to. For example here and here:

Posted by H.A. on Jul 28, 2008.

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The links did not get trough. The first is:
clarin.com/diario/2005/12/15/um/m-01108325.htm

The last two are:
latin-focus.com/spanish/countries/argentina/argdebt.htm
soitu.es/soitu/2008/06/23/info/1214251761_353147.html

Posted by H.A. on Jul 28, 2008.

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