Argentines stockpiling cash in anticipation of crisis

Argentines, mistrustful of their government and fearful of what a global slowdown could mean for the local economy, are back to hoarding dollars, according to the New York Times:

Argentines are pulling money out of the country’s banking system at a pace that has alarmed some economists, stoking potentially self-fulfilling fears of another crippling default on international debt that could bring Argentina’s seven-year economic expansion to a screeching halt.

The Grey Lady’s report didn’ t go unnoticed in Argentina, where La Nacion, the national paper that’s highly critical of President Cristina Kirchner, noted the Times’ sharp criticism of her government, which it said compared poorly to that of Chile’s Bachelet and Brazil’s Da Silva, both of whom took better advantage of the commodoties boom to put away savings for the hard times that are now upon us.

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Cristina congratulates Barack

President Cristina Kirchner was quick to congratulate president-elect Barack Obama on Wednesday, sending a letter that read “many will congratulate you for having been able to interpret the hopes and dreams of the American people. I join them in these more than deserved demonstrations of admiration. Nonetheless, this new epoch that begins today in your country is, more than anything, a great moment in epic struggle against discrimination…”

The letter, which was extremely warm, betrays CFK’s hopes that the tide of history is turning her way: neo-liberal capitalism is falling and an ex-activist – a black one, at that – has made it to the White House. After taking office in 2003, her husband Nestor Kirchner began by stablising the turbulent Argentine economy – which was growing rapidly due to the high prices the country’s agricultural products were fetching in a food-hungry market – then started taking up the leftist rhetoric of some of his neighbours and allies.

Cristina casts herself as a modern-day Evita – ex-student activist, defender of the poor and anti-US imperialist (and although experts say poverty has increased under the Kirchners the government manipulates official statistics to match its narrative). The Kirchners have taken up the cause of those who wish to see the crimes of the Dirty War punished, and courts are convicting and jailing ex-military repressors on a regular basis.

Her letter likens the struggle of her generation’s activists against the country’s military dictators – and the high price it paid (around 30,000 Argentines were killed during the 70s and 80s) – to the civil rights movement in the US.

This communion of sacrifice and rebellion, of solidarity and respect for justice, is what you will find in my government and and its people in our decision to advance, without rest, towards a more free and just world.

The Kirchners are from the Peronist party, whose traditions are populist and authoritarian but which delivered hard-fought rights to Argentina’s workers and usually counts on the country’s unions and urban masses for support. The Kirchners have abused the IMF for its role in imposing neo-liberal policies in exchange for loans, which most Argentines and many economists agree helped aggravate the country’s 2001 currency crisis. In a recent address to the UN general assembly, CFK defended the role of the state in the wake of the US financial crisis, and her latest move in that direction is a controversial plan to nationalise the country’s private retirement funds.

Each day we must confront many great challenges. At the moment, the world economic crisis that is unfolding with the destructive speed of an epidemic demands audacious and innovative solutions, but also, collective action.

In this way, just as those who confronted a world war understood the importance of multilateralism, so must we, with the same nobleness and intelligence, make urgent and necessary changes to create a multilateralism that might respond to the complexities of our distinct realities.

We have a great opportunity to eradicate poverty, discrimination and inequality in our societies. As you said in your campaign, to achieve this we need better education, health and opportunities. And, without doubt, more dialogue between leaders and their people.

I know we can count on you, and I want you to know that you can count on my sincere friendship.

DR. CRISTINA FERNANDEZ

President of Argentina

Fernandez de Kirchner will soon head to Washington to the G-20 meeting Bush has convened to discuss the world economic crisis. It remains to be seen whether she and Obama see quite so eye-to-eye as she seems to imagine.

Verdict in on suitcase scandal, as fresh details of shady campaign financing emerge

Yesterday, as a Miami court declared one Venezuelan, Franklin Durán, of conspiracy and acting illegally as a foreign secret agent in the US, his one-time hapless associate, Guido Antonini Wilson, went on CNN to assure that the suitcase with some $800,000 in US bills, captured by Argentine customs agents last year, was destined for the electoral campaign of Cristina Fernández de Kirchner.

Unsurprisingly, neither the judgment nor the CNN interview elicited any sort of comment from the Casa Rosada, or pink house – the seat of Argentina’s executive here in Buenos Aires.Today's cover of La Critica

When the scandal first broke last December, the Kirchners’ initial response was to denounce a CIA plot to destabilise their government, the president and her associates later shifted gear, accusing Antonini Wilson of being a fugitive from Argentine justice, and daring him to declare before in an Argentine court. In fact, Antonini Wilson was allowed to leave Argentina unmolested just days after the suitcase was discovered, and having visited the Casa Rosada in person. He told reporters he is more than happy to declare before an Argentine judge, and has in fact already contracted a lawyer for his defence.

Now some hope that the Argentine justice system – which struggles to assert its independence from the executive and is rife with corruption and inefficiency – will indeed open a home-grown investigation into the matter of whether Chavez illegally funded Fernández de Kirchner’s campaign.

Meanwhile, the cash-stuffed suitcase isn’t the only thing casting doubts of her campaign finance. Campaign funding has never been particularly transparent in Argentina, but after newspapers published reports that a supposed narco-trafficker, Sebastián Forza, who was assassinated in August in a mafia-style shooting, had financed her campaign to the tune of 200,000 pesos.

Now the public prosecutor is investigating “ghost donations:” several people who swear they never gave a penny to Kirchner’s presidential campaign figure on the legally required donor lists as having donated large sums well beyond their means. La Nacion has named several such ghost donors, three of wholm were registered on the same day, November 22, 2007, as having made cash donations.

Argentine football team in God’s hands

Argentina’s most beloved son, Diego Armando Maradona, is to be the new coach of Argentina’s national football team. The news comes just over a week after the team’s humiliating loss to Chile in its latest world cup qualifier, which prompted former coach Coco Basile’s resignation.

Maradona, often cited as the best player in the history of the game, is famous for his controversialHand of God” manouver, which resulted in an illegal but unpenalised goal against England in the quarter-final of the 1986 World Cup in Mexico City, along with the “Goal of the Century“, an amazing feat which saw him dodge and weave past six England players in that same match. While football aficionados appreciate the technical brilliance of the latter, Maradona’s countrymen are particularly fond of the Hand of God, expressing as it does, so eloquently, the national love for the “chanta” – the wise guy who cheats and gets away with it.

Maradona’s rags-to-riches story begins with a childhood spent in Buenos Aires’ slums, followed by a glittering career which saw him play for the iconic Buenos Aires team Boca Juniors, and later in Europe for the Barcelona and Napoli clubs. While playing for Naples, he was suspended after failing a doping test. He has had problems with cocaine addiction, but has lately been in good health. Argentines are hoping he is the dose of inspiration – and technical expertise – that the team needs to lift its game.

Argentine absurdity strikes again

Argentina’s wacky economic policies are making the news again, with the president succumbing to the nationalisation fever currently sweeping the capitalist world, saying she plans to have the government take over Argentina’s private pension funds.

President Cristina Fernández de Kirchner made the surprise announcement on Tuesday, in an appearance on state TV. She said that the government would nationalise all of ten Administradoras de Fondos de Jubiliación y Pensión (Administrators of Retirement and Pension Funds, or AFJP for short) that hold some $30 billion worth of investments, mostly Argentine government bonds and the and shares that represent the retirement savings of millions of Argentines.

The Economist sums up the situation nicely, echoing the lack of confidence most Argentines place in their government. What many here and abroad are asking is whether the proposed nationalisation is really a move to protect Argentines’ retirement from the vagaries of the stock market in uncertain times, or is it just a craven attempt to fill treasury’s coffers so the government can fund its election campaign in 2009?

Commentators and opposition politicians here in Argentina are extremely dubious. One opposition leader, Buenos AIres-based Elisa Carrió, said the move was an attempt to “plunder pensioners’ funds” and use the cash “to pay off debts or to amass a war chest for elections,” which will see a new Congress sworn in next year. Mauricio Macri, mayor of Buenos Aires and political foe of the Kirchners, who detect presidential ambitions in the millionaire ex-manager of the Boca Juniors football club, says the move would be a “criminal mistake” and has urged all citizens and opposition leaders to pay close attention to what’s going on.

The government, which appears to prefer improvisation over careful planning, is in an increasingly dicey fiscal position, with revenues dropping dramatically following the fall in commodities prices over the last few months. Some estimates say the weakening demand for Argentina’s agricultural products could see the government short by as much as USD$6 billion next year.

Many say the plan to nationalise pensions is sure to result in a drawn-out conflict which will see the government rely on populist rhetoric to justify the state takeover while heaping abuse on the “selfish” urban upper- and middle-classes who resist any effort that would see their wealth distributed more evenly. This is pretty much the same song sheet Cristina’s used during the debate over her attempt to impose a hefty tax-hike on farmers that saw the country divided strongly along ideological lines, with farmers staging a 100-day export strike earlier in the year. The measure was ultimately defeated in Congress, where Kirchner’s own party members – and, dramatically, her vice president – voted the bill down. The new proposal to nationalise retirement funds is also likely to meet with strong opposition across all party lines in the Congress but whether it will again split Argentines along the traditional – but arguably irrelevant – ideological divide remains to be seen. The president has lost considerable political capital over the course of the year and accusations of corruption like those being aired in the Valijagate suitcase scandal point to an extreme lack of transparency in her government.

Even lefty columnists, like La Critica‘s Martín Caparros, find they can’t support the move. “I couldn’t be more in favour of the nationalisation of pension funds,” he wrote on Wednesday. “Argentina needs to recover the State that was destroyed by the Peronists of the 1990s, but for this to happen the State must be and appear to be unblemished, unpolluted, cleaner than a propaganda white-wash. We all know this is not the case, and this makes it so much harder to defend certain policies.”

The private pension funds were created by Carlos Menem’s neo-liberal (but Peronist in name) government in the ’90s after years of poor management of retirement funds by successive Argentine governments which left the savings exposed to economic turmoil like hyper-inflation as well as the risk that they’d be sacked by crooked or incompetent politicians. Around 85% of workers took up the offer from private funds, and though the funds’ performance has fallen far short of perfect it’s not clear that their investors will feel confident with the government taking over.

The news saw the local share market, the Merval, sink by 18 points on Wednesday, to its lowest level in 20 years. But the Argentine exchange wasn’t the only one affected by the announcement. Markets around Latin America plunged after the news, which also shook things up in the mother country, where Spain’s share market dropped by 8%, its second sharpest fall for the year. The Spanish national daily, El Pais, referred to the move as an “Argentine absurdity.” Several major Spanish corporations have significant investments in Argentina, and would be affected by the move. Relations between the Kirchners and their Spanish counterparts are already somewhat strained by the Kirchners’ determination to nationalise Aerolineas Argentinas, which is owned by Spanish businesses. Despite assurances that the deal will be done above-board, with a proper takeover of shareholdings, there is so much mistrust of the Kirchners – and their government does so much talking out of both sides of its mouth – that some fear the company will be not so much nationalised as expropriated.


Coach resigns after Argentina’s hopeless performance

In an update to our earlier post, Alfio “Coco” Basile has resigned as coach of Argentina’s national football team after a string of lacklustre games that reached its nadir with Argentina’s pathetic loss to Chile last night.

Historic loss to Chile

It seemed as though there were 22 Chileans on the field to Argentina’s 11 during last night’s World Cup qualifier played in Santiago.

The Chileans were on top of the Argentines from the beginning, interrupting their passes and taking their marks. The home crowd was a sea of red t-shirts urging Chile to end the decades-long losing streak against its neighbour and rival, and the players looked as hungry as could be. The only hope for Argentina was that playing such an intense game would wear the Chileans out half way in.

The Argentine team looked like a bunch of superstar players that had gotten together for a friendly reunion. It was hard to detect any strategy. Messi barely got a chance to perform his usual dart-and-shoot goalmaking magic. Riquelme’s presence (denied due to a yellow card during the weekend’s messy but ultimately victorious game against Uruguay) was sorely missed, with Messi acting as playmaker and Agüero stuffing up the scarce opportunities to score. Some players were unusually useless – Cambiasso took the prize there – but on the whole, hopeless and pathetic. They didn’t even look like they were trying.

And the Chileans didn’t get tired, not one bit. They scored a goal in the first half and didn’t give Argentina any chances, while the Argentines were beyond creating any.

The win was delicious for Chile – rivalry with their neighbour is always vigorous, and they haven’t beaten Argentina in 35 years. Also, Chile failed to qualify for the last two World Cup tournaments, and this puts them closer to competing in South Africa in 2010.

“Chile was the superior team, there are no excuses,” said Coco Basile, Argentina’s coach.  “They beat us well – they beat us in every corner of the field… They were just a running machine. It was impressive.”

One minor salve for Argentina’s hurt pride may be that Chile’s coach, Marcelo Bielsa, comes from the other side of the Andes. But the fans and the sports writers here are inconsolable. They’ve been disappointed with their team’s lacklustre performances of late. Even in winning matches against others in the South American pool, the selection has lacked sparkle, seemingly devoid of a common sense of purpose. The sports columns are wondering whether the team is suffering from one of the national illnesses – excessive individualism. It does seem sometimes, watching them, that they’re a bunch of stars without a constellation.

Beauty prize for the match goes to Matías Fernandez of Chile, who did a great job on the field while adorning the scene with his delightful curls.