Wednesday, April 24, 2024

OPINION AND ANALYSIS | 18-03-2023 03:53

A crack-up waiting to happen

A few days ago, the official annual inflation rate topped 100%. No doubt it will continue to rise; since slowing it down would require a large amount of political will, a commodity which these days is in short supply in official circles.

Financial ventures, such as the one involving the late Silicon Valley Bank which catered for technological start-ups, can come apart with quite astonishing speed; apparently, it took only 80 seconds for the California-based entity to turn from being a viable concern with plenty of money into a pile of wreckage. It would seem that nobody important saw what was coming or, for that matter, knows whether it was just a minor accident that will soon be forgotten or the start of something really serious that will have worldwide repercussions. As we are frequently reminded, when it comes to making predictions, financial experts are about as useful as the Etruscan haruspices who claimed to get a glimpse of the future when sifting through the entrails of the animals they sacrificed.

The same cannot be said about what is happening to Argentina’s economy. For many years it has been unpleasantly plain to anyone with a modicum of common sense that, unless some drastic measures are taken, it will end up on the trash heap, leaving survivors to pick through the ruins in search of what they would need to stay alive for a bit longer.

A few days ago, the official annual inflation rate topped 100 percent. No doubt it will continue to rise; since slowing it down would require a large amount of political will, a commodity which these days is in short supply in official circles. It could easily reach 200 percent or more before the year is out.

Unfortunately, Peronist governments have always been prone to cave in to inflationary pressures. They feel obliged to pretend that Argentina is far better off in financial terms than she actually is because otherwise they would have to resign themselves to managing scarcity, which is something they staunchly refuse to contemplate. If Economy Minister Sergio Massa were to attempt to bring public spending into line with the available resources, he would get mugged not just by diehard Kirchnerites but also by relatively sensible Peronists who need government funds to stay in business.

Massa himself must be well aware that it is government overspending, made possible by the printing of a phenomenal number of banknotes, that is driving inflation skywards, but his boss, Cristina Fernández de Kirchner, refuses to believe it. In her view, thinking such thoughts is reactionary, something typical of monetarists and other vermin, and therefore cannot be permitted. When accepting an honorary doctorate in Río Negro last week, she said as much. Along with her obedient followers in La Cámpora, an intellectually challenged organisation which specialises in acquiring well-paid public sector jobs for its members, she makes out that “redistributing” whatever money can be found among the poor who happen to provide her with her electoral base, and forcing businessmen to operate at a loss, should be more than enough to solve the problem.

Until Cristina and those individuals who cheer her every utterance are sidelined, the economy will continue to pick up speed on a journey that is bound to end with an almighty crash. The Kirchnerites want to delay the day of reckoning until they are safely out of office and can then blame the disaster on the fiendish Mauricio Macri they assume is backed by a heartless neoliberal cabal with links to foreign speculators and the International Monetary Fund. If they get away with this, as they imagined they could until February, when inflation surged ahead at an even faster rate than before, but are now beginning to have their doubts, they would have a good chance of returning to power four years later or even sooner.

According to many Kirchnerites, Macri and those who in any way can be associated with him belong to the same political movement as did the military men who ruled Argentina between March 1976 and December 1983, while they themselves are the spiritual – and in some cases biological – heirs of the Montoneros who sought to sweep the “oligarchs” aside and establish their own “progressive” dictatorship.

This means that they feel entitled to go to virtually any lengths to oppose them and, while about it, treat the country as a battleground in which the fate of the non-combatant population is of little concern. They are certainly more worried by the possibility that in the polls they will suffer a wipe-out than by the tremendous harm they are doing to the many millions of men, women and children who, as a result of their efforts, will spend the rest of their lives below the poverty line.

At the start of the year, when those who could afford it were enjoying their summer holidays, it was widely assumed that the economy would remain in one piece until the next government had been voted in and was ready to take office. But then inflation picked up steam, the leaders of organisations allegedly representing the poor started making increasingly aggressive demands, and it was realised that the prolonged drought which had a devastating effect on farming would deprive the country of at least US$20 billion.

All this, combined with government infighting in which Kirchnerites are attacking the hapless president Alberto Fernández – who knows that were he to call it quits too soon, what little power he wields would vanish entirely and therefore insists he has a chance of getting re-elected – has raised the possibility that the current order could collapse well before October finally arrives.

Opposition politicians are in two minds about what could very well happen in the coming weeks. While a Kirchnerite implosion would certainly suit them, it could make them responsible for handling an extremely volatile situation before they have had time to put their own divided house in some kind of order. They must also take into account the possibility that, should the Peronists manage to replace Alberto’s administration with a short-lived caretaker government, it would confront them with the risk that, merely by restoring an illusion of stability, it could deprive their Juntos por el Cambio coalition of the clear-cut electoral victory they think should be theirs.

Of course, to succeed in this, the Peronists would have to ensure that Cristina and her adherents remained nowhere near the centre of power, since their proximity to it has had much to do with Argentina’s wretched international reputation, but they include in their ranks individuals who, when it comes to getting rid of potential losers, can be as unsentimental as any Conservative in the United Kingdom. If convinced that two decades of Kirchnerite hegemony over their movement is about to come to an end, they can be relied on to do whatever it takes to make sure they do not get dragged down with it.

James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).


More in (in spanish)