[Marxism] Dwindling debt, growing popularity for Kirchner

Louis Proyect lnp3 at panix.com
Tue Jan 3 06:13:23 MST 2006

NY Times, January 3, 2006
As Argentina's Debt Dwindles, President's Power Steadily Grows

BUENOS AIRES, Dec. 30 - Just four years ago, Argentina's economy was 
prostrate and its politics in chaos, after a financial crisis resulted in 
bank deposits being frozen, the government defaulting on more than $100 
billion in debt and five presidents holding office in two weeks. But on 
Tuesday, the country is expected to pay off the last of its debt to the 
International Monetary Fund and simply walk away from further negotiations 
with the group.

Argentina still owes tens of billions to private lenders, even after a debt 
restructuring in March. But the $9.8 billion payment is an important 
symbolic milestone and just one of several recent signs that President 
Néstor Kirchner appears to be concentrating more power in his own hands and 
steering his government to the left. Since a midterm election victory in 
October, Mr. Kirchner has also moved to establish an alliance with 
Venezuela's populist leader, Hugo Chávez, and, as a traditional Peronist, 
to extend the hand of the state deeper into the economy, the judiciary and 
the news media.

"With this payment, we are interring a significant part of an ignominious 
past," Mr. Kirchner said recently, adding that the action would liberate 
Argentina from a supervisory body that was making "more and more demands 
that contradict themselves and economic growth." That position is popular 
here because many Argentines believe that the I.M.F. is responsible for the 
policies that led to the economic crisis of 2001, and then left the country 
to recuperate on its own.

Mr. Kirchner, 55, took office in May 2003 having won less than a quarter of 
the popular vote. But he has erased memories of the crisis of 2001 and 
early 2002 and now enjoys record levels of public support - 75 percent or 
more, according to recent polls - that allow him to do largely as he pleases.

"Kirchner has resolved the problem of power and legitimacy" that the crisis 
created, "and so has more margin to maneuver," said Juan Carlos Torre, a 
political scientist at Torcuato di Tella University here who has written 
extensively on Peronism, the nationalist movement formed in the mid-1940's 
by Juan Domingo Perón with strong working-class support. "But instead of 
being more generous and open, he has become more sectarian."

Mr. Kirchner's popularity is mainly a result of three consecutive years in 
which the economy has grown by an average of about 9 percent. That has left 
him and his team confident, even cocksure: the presidential chief of staff, 
Alberto Fernández, told reporters just before Christmas that although the 
government surely made some mistakes in 2005, he would be hard pressed to 
name one.

But an inflationary surge is now threatening, and Mr. Kirchner has 
responded in statist fashion, trying to impose price controls on certain 
essential products. He first used that weapon in March, when he urged 
Argentines to buy "nothing, not even a can of oil" from Shell after company 
executives ignored his suggestion that they not raise prices.

Late in November, as a prelude to negotiations to control increases in food 
prices, he blasted owners of two of the country's biggest supermarket 
chains, warning them to "stop extorting us." Supermarkets then agreed to 
temporary price freezes that are to expire early in 2006, but economists 
said they feared that the accords might be a prelude to more systematic 
controls if inflationary pressures did not abate.

Complaints of official pressures on the news media are also growing. In a 
report on what it called "indirect censorship," the Association for Civil 
Rights warned this month that "the current government has made control of 
national media content a priority that it pursues with systematic vigor, 
subjecting the media to a behind-the-scenes executive siege." Most 
controversial of all, however, is Mr. Kirchner's plan, now before a 
Congress that recently renewed his emergency powers over the economy, to 
overhaul the Council of Magistrates, the 20-member panel that oversees the 
judiciary. Human rights groups and opposition political parties say the 
plan, which would cut the number of members to 13, is intended to give Mr. 
Kirchner greater control over judicial nominations.

"We believe this reform is unconstitutional and a step backwards," the 
executive director of the Association for Civil Rights, Roberto Saba, said 
in an interview here, adding, "There is a sensation that the government 
feels stronger and wants to make its authority felt."

In foreign policy as well, there has been a notable shift in attitudes. 
Argentina's relationship with the United States in the 1990's was so close 
that one president, Carlos Saúl Menem, called it "carnal." But Mr. Kirchner 
has been moving in the opposite direction, seeking the embrace of 
Venezuela's leader, who has proved a perennial thorn in the Bush 
administration's side.

During a hastily scheduled visit to Venezuela in November, Mr. Kirchner and 
Mr. Chávez reached several agreements that sealed what Mr. Chávez has taken 
to calling "a Caracas-Buenos Aires axis." Mr. Chávez announced plans to 
build a gas pipeline to Argentina and to make fuel available on highly 
favorable terms, an important guarantee with an energy shortage said to be 

Analysts say the alliance is more tactical than ideological. "For someone 
like Kirchner," a native of frigid Patagonia "who doesn't have an 
extroverted character, Chávez is too tropical," Mr. Torre said. Others say 
Mr. Chávez embodies the kind of military-nationalist alliance that Mr. 
Kirchner finds repugnant because of his own experiences here during the 
military dictatorship in the 1970's, when friends of his were killed and he 
was briefly detained.

The election this month of Evo Morales, a Chávez acolyte, as the president 
of neighboring Bolivia complicates matters even further. Mr. Kirchner has 
courted and encouraged the new Bolivian leader, but would see his own 
popularity drop if Mr. Morales's promised transformation were to go awry 
and degenerate into class, regional or racial conflict that, in the worst 
case, would send refugees spilling across Argentina's northern border and 
constrict the flow of natural gas to Argentina.

But Mr. Chávez has already bought more than $1 billion in Argentine bonds 
and, according to officials here, may be willing to buy up to $2 billion 
more. That, plus booming exports, has given Mr. Kirchner the latitude he 
needs to pay off, in one lump sum, Argentina's final obligations to the 
I.M.F. and to call off further negotiations on issues like monetary policy 
and utility rates.

Economically, the deal offers no advantages for Argentina, which will pay 
Venezuela interest rates more than double the 4 percent or so that 
Argentina has been paying the fund. But it has enhanced Mr. Kirchner's 
image politically, as was made clear when he summoned politicians, 
businessmen, labor leaders and leaders of civic groups to the presidential 
palace on Dec. 15 to announce that, from now on, "this country will be 
different; it will have political sovereignty and economic independence."

Roberto Lavagna, who as economy minister since 2002 was the main architect 
of Argentina's stunning emergence from the 2001 financial crisis, had 
consistently urged a more cautious course regarding both the recent 
inflationary surge and the fund. But he was ousted in late November and 
replaced by a lesser-known economist, Felisa Miceli, president of the 
state-run Banco de la Nación, who has described herself as "a Kirchnerite 

That change was part of a broader cabinet shake-up that also brought in new 
defense and foreign ministers. The new defense minister, Nilda Garré, had 
served as ambassador to Venezuela, where she had praised Mr. Chávez and his 
policies. The new foreign minister, Jorge Taína, has a reputation as a 
nationalist who favors closer ties with the rest of Latin America, rather 
than an emphasis on the United States and Europe.

"What Kirchner likes is to be absolutely in charge, so he has become his 
own economy minister," said Joaquín Morales Solá, chief political columnist 
for the conservative daily La Nación. "Even more than moving left, there's 
a turn towards a personalistic style of governing, with a dose of 
authoritarianism and hegemony and an aggressive style of permanent rupture 
and confrontation."



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