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Argentina: The Decade of Instability

By: Contributor - Jan 22, 2014, 2:00 pm

EspañolAfter winning the Argentinean presidential election in 2011, Cristina Fernández de Kirchner (commonly referred to as CFK) — now without her husband, former President Néstor Kirchner, who passed away in October 2010 — began a more aggressive second term. Where the ex-president succeeded because of his manipulation and effective control of fanatics, the current president fails, wrongly acting on their proposals.

Peronism has the ability to serve two masters. When former President Juan Domingo Perón was on the rise, decades ago, he used both the communist left and fascist right for his political aspirations. Years later, he commanded fascists to slaughter the extreme left, because he could no longer control their competing interests; the ideals each side had for the nation were completely contradictory.

From the moment Néstor Kirchner rose to power, almost 11 years ago, he encountered a similar conundrum: whether to redistribute wealth upwards or downwards. More to the point, he had to decide whether the government would continue to support the corporations glued to the seat of power — often led by Kirchner’s own front men as pawns — or if they would finally start dismantling crony-corporations, enabling citizens to obtain what they deserved, through “social justice.”

Typically, you cannot have it both ways. But CFK (pictured) decided to resort to a proven alternative: uncontrolled monetary expansion. Even if we ignore the fact that Vice-President Amado Boudou received a cut from each bill issued, continual expansion — a tax in disguise — allowed CFK to enforce her model of wealth distribution both upwards and downwards.

But guess what happens when the Central Bank loses its autonomy and is no longer responsible for the value of the currency: uncontrollable inflation. It has not been as wild as the hyperinflation of 1989, but strong enough to surpass the rate of salary increases, and with it, a downfall for people’s purchasing power.

Can we keep releasing currency while reserves are plummeting? Can we continue to restrict imports, fostering stagnation over progress and industrialization? Can we keep blaming the villains listed in the Kirchner play book for diehards, no matter who they are?

For the last two years, the government has been imposing different restrictions on the outflow of currency. Their strategy started in November 2011, by limiting foreign currency acquisitions, and penalizing purchases intended for saving. To buy currency for tourism purposes, we now need to ask the government for permission, and they authorize an allotment based on our determined “purchasing power.”

Initially, they resorted to total import obstruction — that is, unless you had a personal relationship with the now former Secretary of Commerce Guillermo Moreno. They invented a 15 percent tax on credit card purchases abroad, which even included airline tickets bought on Aerolíneas Argentinas, the national airline. This same tax rose to 20 percent and, more recently, to 35 percent, while the government kept lying to our faces. The Central Bank now asks us to name the dates and locations for our trips abroad, so they can gather even more information about how we paid for our trip.

The government has even prohibited supermarkets from advertising in-store credit card discounts. Further, through nationwide advertising, they have advised citizens to purchase food at the central market in Buenos Aires — even for residents of Salta, a city situated 1,700 kilometers away. They’ve even asked citizens to boycott tomato purchases when the prices soar.

These restrictive measures always cause the same reaction in Argentineans: “they have gone too far.” To go further would not be logical, it would not be possible. How far can they really go?

Nobody knows what is going to happen two years from now. CFK will be forced to relinquish power in December of 2015, as our constitution does not allow for a third term. But Argentinean politics are anything but predictable. Candidates consistently rise and fall in the polls, and Peronism is once again gaining momentum.

One thing is certain: we have not seen her limits yet.     

Translated by Melisa Slep.