Don’t Cry for Me Argentinians

With empty government coffers, inflation of at least 20 per cent, and rising street crime and protests, Ms Kirchner has taken some extreme actions to try and hold her economy and political support together.

Image courtesy of Presidency of the Nation of Argentina © 2007, some rights reserved

The first of a series of populist actions occurred last May, when Argentina stripped Repsol, a Spanish company, of its stake in the Argentinian oil firm YPF, accusing Repsol of not investing enough in the company and consequently being responsible for the 31 per cent decline in its oil output in the last ten years.  Although this move earned Ms Kirchner some popularity within Argentina, it was both short-lived and at a high price.  The expropriation of Repsol provoked a hostile response from both the EU and Spain, with Spain’s prime minister Mariano Rajoy Brey accusing Ms Kirchner’s government of “trying to hide their own weaknesses with supposed acts of authority” and European trade chief, Karel De Gucht voicing his “serious concerns about the overall business and investment climate” in Argentina.  While nobody expects Argentina go out of its way to please Europe, picking a fight with Spain, both one of the few and Argentina’s biggest investor is unlikely to help the country’s ailing economy.

If the threat of nationalization is not enough to put off foreign investment in the country, a lack of reliable figures on the Argentinian economy might be.  Known to publish inflation statistics half as high as independent estimates, last month the International Monetary Fund gave Argentina until December 17th to publish some reliable inflation and GDP figures.

Aside from scaring away foreign investment, Ms Kirchner has also made some hostile political moves, recently reopening the issue of whether Argentina or Britain legitimately owns the Falkland Islands.  While the two countries never came to an agreement over who owned the islands, the fact that the last Falklands conflict was also initiated during a period of economic crisis in Argentina has led to suspicions that Ms Kirchner is trying to use nationalist politics to deflect attention from Argentina’s domestic problems.  True or not, Ms Kirchner has refused to acknowledge the outcome of a referendum on the issue this coming March on their sovereignty, arguing that as the inhabitants of the islands are not of indigenous origin the result will be void – a rather sketchy argument considering roughly 90 per cent of Argentinians are of European descent.

It could be argued that the focus of Argentina’s foreign policy is on Latin American integration rather than on worldwide issues, but even in this political sphere Ms Kirchner is beginning to create enemies.

While Argentina and Brazil are usually political allies, protectionist measures from both sides are reducing economic cooperation between the two countries. While their participation in Mercosur, a South American trade block modelled on the EU is supposed to increase free trade, Argentina has increased the number of products that do not automatically get export licences and Brazilian imports have declined by 15 per cent since 2011.

Protectionist measures are also damaging relations with neighbouring Uruguay.  Argentinian-Uruguayan relations have been tense since 2006, when a four-year conflict was sparked by a dispute over the construction of pulp mills: Argentina stipulated that Uruguay had no right to build the cellulose plants as they could pollute the Uruguay River, which forms the border between the two countries. Although Ms Kirchner eventually resolved the dispute, her recent actions have had the effect of pouring salt on a wound. Efforts to encourage Argentinians to spend their holidays at home have come across as an attempt to undermine Uruguay’s tourist industry. A recent government leaflet comparing prices in holiday destinations in Argentina and Uruguay and a charge of 15 per cent to all credit card transactions abroad threaten to deprive Uruguay of the half a million Argentines who spend their holidays there each year.

One country where it could be said that Argentina’s bilateral relations have improved is Venezuela, especially since its acceptance into Mercosur last July, but this may well be a blessing in disguise.  While their friendship is portrayed as Latin American countries against Western corporate domination, there are some uncomfortable similarities between Ms Kirchner and Chávez which have raised doubts as to the democratic nature of the Argentine government.  Both presidents have a strong hold over state media and there are rumours of changes to the constitution allow Ms Kirchner to run again, with Kirchnerite politician Luis Ángel D’Elía declaring that “there should be no legal impediment” to her re-election.

Ms Kirchner has shown that she has little regard for other nations when it comes to the interests of her country, but have her actions earned her support within her own country? Protests across the country this September and current polls of 24 per cent support for Ms Kirchner suggest that they haven’t.  While protesting in Argentina is common even in times of political and economic stability, these last few months there has been a growing rift between the government and popular sentiment – a bad sign in a populist regime.  The government showed a complete lack of sympathy for the protesters and the Kirchnerite group, ‘Unidos y Organizados’, accused government officials who wanted better salaries of “defying democracy” and of wanting a coup.

So while Ms Kirchner’s populist Peronist-style politics of protectionism and nationalism have given her short boosts of support, they are unlikely to help Argentina in the long run.  Her hostile foreign policy has not only lost her powerful allies in the international spectrum but may well scare away foreign investment that could give a vital boost to the Argentine economy.  Although she has picked an oil-rich ally, the controversy surrounding Chávez’s re-election has raised fears of a similar outcome in the Argentine presidential elections of 2015.  A woman who once evoked memories of the beloved Eva Perón, Cristina Kirchner’s taste for designer clothes during times of crisis and parallels with Chávez seem to have reminded Argentina of the less attractive aspects of the Perón regime, aspects which eventually led to his overthrow.

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