Argentina slider — 22 September 2012

One wonders why a country like Argentina, blessed with vast  reserves of oil and natural gas, enormous quantities of wheat, corn, and cattle and a growing economy with low unemployment is by various indicators in economic and social upheaval. Interested concerns abroad will have an occasion to question President Cristina Fernandez de Kirchner directly about her political and economic programs when she travels to the USA on September 26 to to launch a forum for Argentine Studies at Georgetown University and then travels onto Harvard.

The populist Kirchner government, headed by Christina Fernandez, widow of former president Nestor Kirchner, was reelected in a landslide in 2011 largely due to the support of the lower and middle classes but has seen her popularity sink to 30%.  The Chicago Tribune reports that “Argentine President Cristina Fernandez’s popularity sank to 30 percent in August, less than half of what it was a year earlier, according to a poll published on Sunday that portrayed a country worried about crime and high inflation.”

Recently tens of thousands of middle and upper class people have turned out in the streets  across Argentina in the largest protest in years to protest the policies of the President. The protest, promoted on Twitter and Facebook, highlighted the unrest at increasing levels of crime, economic policies that have created inflation, the restrictions of the purchase of dollars, official corruption, and efforts by the President to amend the constitution to allow her to run for president a third time.

The protesters mocked the notion released by the government that a family of four can feed themselves easily on 6 pesos ($5 USD) per day calling this the “6 pesos diet”. They say this is just one more effort to hide the actual economic situation in the country.  The Economist magazine which publishes inflation, output, and other statistics for countries around the world is blunt in their assessment of official numbers coming out of Argentina.  They write “Since 2007 the government has published bogus inflation statistics to beguile voters and investors.”  Bloomberg says private analysts estimate the current inflation rate as 24%.  The Economist says that Argentina’s second quarter unemployment figures were 7.2%.  They say economic growth was 3.6% in the latest fiscal quarter which represents a slowdown from the 5.1% in the first quarter.  La Nacion newspaper says that the actual unemployment rate is probably a point higher because of various factors including the statistic does not include surveys taken in rural areas.

The slowdown in the economy can be blamed on restrictions on imports designed to keep dollars from flowing out of the country.  People travelling abroad have to apply with the government to purchase dollars and there are restrictions on using debit and credit cards outside the countries. When Argentines use their cards abroad the government charges them 50% if they spend more than $300 USD or 15% if they spend more than $150 USD.  Manufacturers have apply for a license in order to import materials into the country.  The European Union has filed suit with the World Trade Association because of these import restrictions.  Argentina’s populist government policies such as subsidizing the purchase of gasoline have put a strain on dollar reserves and threaten a devaluation of the country which trades on the black market at a premium over the government’s official rate.

La Campora

The government has its own political action organization, La Campora, to promote its policies, fund political campaigns, and some say indoctrinate school children who the government proposes can vote as young as 16 years old in upcoming elections.  La Campora is a pro-Kirchner group founded by Cristina Fernandez’s  son  Máximo Kirchner and is funded by the government.  Its members include the Vice Minister of the Economy who according to a new book is credited with drafting and implementing the idea to expropriate the Argentine oil firm YPF which was owned by the Spanish giant Respol.  Of course expropiating natural resources is not new in South America, but this action was condemned around the world including by the American Secretary of State Hillary Clinton.

La Campora has financial muscle.  La Nacion newspaper says that La Campora has taken control over the airline Aerolineas Argentina by supplanting its management with its own people as well as certain government agencies paying their members inflated salaries.  In her book Laura Di Marco says La Campora syphoned off funds from the airline and the government agencies to help fund the reelection of Cristina Fernandez.  An employee of the airline was fired for denouncing the corruption of his superiors, two members of La Campora.

La Nacion and others report that La Campora is trying to indoctrinate public school children in the ways of the populist Kichner movement. Promoting political parties in schools is prohibited by law.  Such involvement for example includes taking part in a politcal game whose cartoon character  El Eternauta is the logo of La Campora.  One student said, “The point of the game is we are all headed down the same road.  If we follow the Kirchnerista path things will go well.  If not, they won’t”.

More menacing La Campora, has let prisoners out of jail to participate in political rallies.  At a recent political rally banging away at the drums was a former rock and roll musician  Eduardo Vásquez, member of the band River Plate , who on normal days would be behind bars paying the penalty for setting his wife on fire while she was still alive.   With a portrait of Nestor Kirchner rising above the stage, the drummer was heard to say “These are Perón drums”, a reference to the political movement of which the Kirchner regime is an extension and whose most famous figurehead was Juan Domingo Peron and of course Eva Peron.

Crime

There have been some indications that crime is on the rise. In Mendoza some merchants have taken to selling their products through iron barred doors as a means of protection against the rising violence there.  In that city there have been 53 homicides and 20,000 robberies as of July.

Bus drivers are a frequent target.  In Buenos Aires two criminals attacked a 29 year old bus driver taking time to cut off two of his fingers before escaping with 50 pesos ($11 USD).  A 41 year old bus driver was stabbed and beaten to death when he tried to fight off criminals who had robbed his backpack. A 14 year old was detained in that incident.

Corruption

Corruption is rampant including accusations of tampering with the courts.

According to the journalist Jorge Lanata , a functionary of the Fernandez government, Javier Fernández, has “put pressure on federal judges so they would rule in favor of the government.”   As a member of the judiciary he has control over the careers of the judges so Lanata says Fernández calls them and puts pressure on them and in his words “they are screwed” so they obey.

Reuters reports that investigators raided the apartment of the Vice President Boudou  looking into accusations that Boudou helped the printing company Ciccone Calcografica get out of bankruptcy by steering contracts their way to print currency for Argentina.

La Nacion reports that federal judge Norberto Oyarbide wears a $250,000 USD diamond ring for which he paid cash.  The judge said he rented it for $7,500 USD to wear in the courtroom but people who have brought sanctions against him say otherwise.  This is the same judge who in 2009 dismissed the case against Nestor Kirchner saying that the presidential couple enriched themselves while Kirchner was in office.  The judge dismissed the case after having received a sworn affidavit from the Kirchner’s accountants explaining how the couple’s wealth ballooned from $18 to $46 million USD from 2003 to 2008.  At that time Cristina was a delegate in the congress while her husband was president.

Ariel Matarazzo, mayor of the province of Santiago del Estero was arrested travelling from one state in Argentine to another with goods valued at 60,000 pesos ($13,000 USD) which he had bought in Paraguay.  That is not much money but the point is that every Argentine buying goods abroad valued at more that $150 USD has to pay heavy import duties.  When confronted with the issue he said he would not pay because he was son of the head of the House of Delegates where Cristina Fernandez has a majority.

Lázaro Báez , former business associate of Néstor Kirchner escaped sanctions for evading $ 400 million Argentine pesos in taxes and money laundering. The tax court, with judges newly appointed by the Kirchner government, reversed the decision of the Federal Administration of Public Revenue (AFIP) with regard to the money laundering charge.  Regarding the taxes owed  Báez applied for an amnesty program for the unpaid taxes which forgives debts less than $75 million pesos while the amount under investigation was $400 million.

In the biggest scandal of all, the tragedia del once, in which a suburban commuter train crashed this year killing 50 people and injuring 676, has been blamed in part on crony capitalism because nothing has changed for the businessmen who run the railroad.   The Auditor General of the country had informed the railroad no less than four times before the accident that there was a problem in maintenance of the trains including the failed brakes and that there was a risk of fatal accidents.

Presidential Power Grab?

El Mercurio newspaper in Chile says that Cristina Fernandez does not talk about running for a third term in 2015 but allows her spokesmen to do so.  El Mercurio quoted the political analyst Joaquín Morales Solar is quoted as saying that is such a constituional reform were put before the people today it would fail.  He says, “The President does not have the number of legislators necessary to push the need for reform.”   Kristina has 55% control of the congress but congressional elections are coming in 2013 and a split with the major labor union which backs her has questioned how she will fare in that election.  The journalist Jorge Lanata has compared the actions of the President to those of Hugo Chavez saying, “The parallels are incredible”.

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