Saturday, March 28, 2009

The Kirchners make a dash for it

The Kirchners make a dash for it
Mar 26th 2009 | BUENOS AIRES
From The Economist print edition

Hoping it’s not the exit

Illustration by Claudio Munoz
Illustration by Claudio Munoz

AS ARGENTINA’S president in 2004, Néstor Kirchner pushed a bill through Congress that pinned all future federal elections on the fourth Sunday of October. The intention was that incumbents should not benefit from holding them at their political convenience. Five years on, his successor—his wife, Cristina Fernández de Kirchner—is meddling with the law to bring forward this year’s mid-term elections to June. The “first gentleman” himself will probably lead their Peronist party’s list of candidates in Buenos Aires province. Having passed in the lower house, the president’s measure was due to get the Senate’s approval on March 26th.

Ms Fernández used the world financial crisis as an excuse for bringing forward the election. In truth it is a shrewd, if shameless, ploy by a power couple who know that the value of their brand is tanking. Since she took office in December 2007, Ms Fernández’s popularity has sunk from 56% to 30%, according to Poliarquía, a pollster. Much of this decline was inevitable because the economy was bound to slow after five years of breakneck growth, fuelled by soaring agricultural prices and her husband’s expansionary policies. But Ms Fernández exacerbated her misfortune with bad decisions. Above all, she chose to raise taxes on farm exports a year ago, which has led to big protests. As a result, the Peronist block in Congress, solid under Mr Kirchner, has frayed, cutting Ms Fernández’s majorities in both houses.

The economy is one reason she wants the elections sooner. Poverty has been creeping up since early 2007 and the country has probably just tipped into a recession that is likely to deepen during the year. Ms Fernández cannot run a counter-cyclical policy, because lavish government spending has left her without the money to pay for it. Neither does she have a righteous fiscal history and a credible national-statistics office behind her, both necessary for a loan from the IMF, were she inclined to beg for one, which she is not. Voters would thus have been likely to punish her allies harder in the fourth quarter than they will be in the second.

There are other factors, besides the economy, in the president’s calculation. Advancing the date on which half the deputies and a third of the senators must reapply for their jobs should stem the flow of former friends across the floors of both houses. That is because Argentina’s proportional-voting system encourages party discipline as elections draw near. Legislators will now care less about their constituents’ worries and more about pleasing the party officials who choose candidates’ positions on the candidate lists.

Advancing the ballot date brings the Kirchners other benefits. One is that election news has temporarily snatched some limelight from the disgruntled farmers who, after eight months of tenuous peace with the administration, have grown rowdy again. This week they refused to sell grain and livestock, and blocked roads to stop them being transported, to try to make Congress cut export taxes. Ms Fernández has offered to share the proceeds of these taxes—which are as high as 35% on some farm products—with provincial governors, to keep them loyal. Another benefit of early congressional voting is that it will take place before at least two prominent governors’ elections, which the Peronists’ opponents are likely to win.

Most important, altering the electoral calendar gives anti-Kirchner groups both inside and outside the ruling party less time to get organised. For years the Kirchners’ greatest asset has been the disarray of their rivals, who are scattered among several parties and have proved unable to unite around a leader. But these rivals have lately been growing stronger. One potential threat is a nascent alliance between Mauricio Macri, the mayor of Buenos Aires city, and two dissident Peronists: Felipe Solá, a well-regarded former governor and agriculture minister; and Francisco de Narváez, a rich businessman with a substantial electoral machine.

Mr de Narváez may lead this new alliance’s electoral list in populous Buenos Aires province, perhaps going head-to-head with Mr Kirchner. The province contains the capital’s sprawling, lower-middle-class suburbs—Peronism’s heartland—where the Kirchners have strong patronage networks and Ms Fernández remains popular. If the vote were held today, Mr Kirchner would win easily. He should still have a fair chance of victory in June, thereby allowing his wife to stumble on. But with the new opposition alliance arousing some interest, the first couple are taking a gamble. If Mr Kirchner loses, it may spell the beginning of the end for Kirchnerism.

Thanks to Anonymous for finding this:)


1 comment:

vdavisson said...

FerFAL did you see this:
China, Argentina sign 70b yuan currency swap deal

By Wang Bo (
Updated: 2009-03-30 14:51

China inked a 70 billion yuan ($10.25 billion) currency swap agreement with Argentina on Sunday, the largest financial deal between China and a Latin American country, Xinhua News Agency reported.

The deal was jointly signed by People's Bank of China Governor Zhou Xiaochuan and Central Bank of Argentina Governor Martin Redrado on the sideline of the 50th annual meeting of the Inter-American Development Bank, which aims to stabilize regional currency, shun financial risk and stem the ripple effect of the ongoing financial crisis.

Under such a framework, Argentina importers could use renminbi, instead of the US dollar, to settle deals with Chinese exporters, Xinhua reported.

Argentina is the fifth country after South Korea, Malaysia, Belarus and Indonesia to sign such a currency swap deal with China.

So Argentina would stop using the dollar, at least for Chinese imports. A move to undermine the dollar as the world's reserve currency?