When Cristina met Kev

cfk-and-ruddster

Here you see Australia’s Prime Minister Kevin Rudd on the receiving end of some of Cristina Kirchner’s famous French-polished hand gestures during the G20 summit. What ever can they be talking about?

Maybe Cristina is asking Rudd the question so many Argentines ask when they meet an Australian: Why is it that the two countries – both of them young, with vast resource-rich territories and a small, urbanised and educated population – have met with such distinct destinies?

How did a former penal colony that never even had the gumption to boot out its colonisers, whose people don’t even know how to build a decent barbecue, make a fortune on farming and mining while Argentina, with its sophisticated folk, its beautiful capital whose Hausmann-esque boulevards are lined with beaux-art palaces, go from one of the world’s richest countries in the early 20th century to one of its most dependable basket cases?

I’ve never known quite what to say when taxi drivers have asked me this, which is lucky, because taxi drivers in Buenos Aires don’t want to hear your theories – they want you to hear theirs.

It’s because Australia is full of English people! English people are much, much better than Spaniards and Italians! Did you know – the English tried to invade Buenos Aires in the 1800s and what did the Argentines do? Stepped onto their balconies and poured boiling oil on the heads of the passing soldiers! We’ve never stopped regretting it!

I have heard this sorry tale of self-loathing in at least ten taxis.

Argentina is a long way from Australia. It’s unlikely Kevin spends much time studying the vagaries of its crazy political scene run by shameless crooks, mediocre opportunists and unrepentant bullies, with a pathetic opposition shouting weakly from the sidelines. If he did, though, it’d probably remind him a lot of New South Wales.

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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.

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 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.


Bad times for ex-presidents

The scandal that has haunted Carlos Menem since his presidency ended in 1999 will finally be aired in court when the ex-president (and current senator for La Rioja province) will be tried for his part in a secret arms deal that saw weapons sold illegally to both Croatia and Ecuador between 1991 and 1995.

Does this man look like a crook to you?

Does this man look like a crook to you?

The oral trial will be a drawn-out process, with 41 accused under investigation in the matter. Among them is ex-economy minister Domingo Cavallo.

Menem is accused of having signed three secret presidential decrees permitting the illegal arms sales. According to the accusations, Menem knowingly broke a United Nations arms embargo to aid Croatia in its fight against Serbian forces in the early 1990s. He then used the same trafficking network to send arms to Ecuador during a 1995 border dispute with Peru. Many Argentines find it particularly mortifying that Argentine weapons were sent to support Ecuador – not only because Argentina was acting as a mediator between Ecuador and Peru, but also because Peru was the only South American country to stick up for Argentina during the 1982 Falklands War.

Menem has eluded justice over the accusations for some time, and the question some are asking, though, is why now? Menem was detained and placed under house arrest on the same charges on 2001 but was acquitted (in a less-than-transparent process) due to lack of evidence. A case of double jeaopardy? And if not, why has the case taken seven years to be revisited? The timing has some saying it’s the Kirchners taking revenge on Menem – a fellow Peronist – for voting against their grains tax bill that saw farmers strike earlier this year. They do seem to have the power to turn – and halt – the wheels of justice, and the courts’ vigor in the case against Menem is a stark contrast to its lethargy when it comes to examining accusations of corruption against several serving Kirchnerite functionaries. In any case, when he stands trial this week, he will become the first democratically elected president in Argentine history to suffer such an indignity.

Ex-members of the military junta, on the other hand, have been seeing the pointy end of justice ever since the return of democracy in 1983 and it has only gotten pointier since the Kirchners have been in charge.

On Friday, ex-dictator, former president General Jorge Videla was moved from house arrest in the leafy and civilised Buenos Aires neighborhood of Belgrano to a military prison in the Campo de Mayo, just outside the capital.

Videla was convicted of crimes against humanity when Raúl Alfonsín, the first democratically elected president to follow the dictatorship, set up tribunals to judge the ex-military rulers. Videla enjoyed a few years of freedom after Menem handed out pardons for ex-repressors in 1990, but those pardons have been overturned by the Kirchners and since last year Videla has been stuck at home, much like any other 83-year-old man who finds himself heartily unloved by the majority of his neighbours and fellow citizens. But now instead of growing old and dying among family, he will be in prison – on the very site where many Argentines found themselves illegally held and tortured under his authority during the 1970s.

While serving out a life sentence, Videla faces further charges and will be called to give evidence in a number of pending cases, including an investigation into the widespread practice of “baby theft” – the policy of misappropriating the newborn babies of illegally imprisoned women, who were later “disappeared” and their babies illegally adopted by military families. He also faces kidnapping charges and is being processed for having participated in “Plan Condor” – a clandestine scheme by which the military governments of several Southern Cone countries (backed with training and tacit approval from the USA) helped each other by swapping illegally detained prisoners and exchanging information obtained under torture.

As for slippery old Menem – his get-out-of-jail-free card is still valid for a while. Serving senators are protected from imprisonment (possibly the main reason Menem has sought to prolong his political career), so even if found guilty, he buys some time until his term ends in 2014.

US crisis hits Argentina

As the world awaits news of whether the US government will step in to rescue the global financial system, South American nations – including Argentina – are already feeling the effects of the crisis.

President Cristina Kirchner initially ventured to assert that Argentina would remain largely untouched by the crisis. While claiming this economic sturdiness as some kind of achievement of hers, it’s really just due to the fact that credit plays such a small role in Argentina’s economy, where people buy houses in cash and relatively few have access to credit cards.

But the country is already learning that their president was quite mistaken. Soy – one of Argentina’s most important exports – has already fallen to US$384 per tonne, a drop of 35% over the last two months. Given the government’s high (and controversial) export duties on grains, including soy, which is taxed at 35% of export sales, this will have a serious impact on revenues next year – some say the government will gather up to 10 billion pesos less in 2009.

Meanwhile, inflation is still putting pressure on consumers – and despite the fact that official statistics downplay the inflation rate, it’s also making it hard for the government to rein in public spending. Already the government has had to cut energy subsidies and raise tariffs on services, but some say in the new year public infrastructure projects will also be affected.

Neighbouring economies will also affect Argentina’s economic health. There are fears that if Brazil’s growth slows, Argentina’s exports to its major trading partner will drop, while Argentine business is nervous about Brazilian imports flooding the local market.

And of course credit – hard enough to get in Argentina – will become even tighter, with mortgages only offering variable rates. Argentine consumers will, like others elsewhere, put major purchases on hold and cut overall spending while they wait and see what happens.

All of this throws in doubt the capacity of Argentina to make good on bold plans to pay its debt to the Paris Club and to strike a deal with those still holding Argentine bonds that were subject to the country’s 2002 default.

The Kirchners have benefited extraordinarily well from a rapidly growing Argentine economy, overhwlemingly driven by high commodity prices. With the US economy going into recession, the US will buy fewer products from China, slowing that country’s growth and causing a drop in demand for Argentina’s soy and other food products. The Kirchners have every reason to be nervous.