Wednesday, April 24, 2024

OPINION AND ANALYSIS | 17-12-2022 05:32

Dry rot or drought rout

Argentina’s numerous crises are invariably a fertile field for extended analysis by pundits and economists but this columnist would argue that in many cases the causes can be reduced to a single word – drought.

Argentina’s numerous crises are invariably a fertile field for extended analysis by pundits and economists but this columnist would argue that in many cases the causes can be reduced to a single word – drought (not a fertile field for agriculture). The British obsession with the weather (confirmed as the favourite topic of conversation in a survey last September, ahead of football or pets) might seem to single them out, along with their respect for queues, as one of the world’s duller and more unimaginative peoples for thus reserving comment on the more important and exciting aspects of life but this Englishman maintains that it could be usefully applied to Argentine political and economic analysis.   

Two examples immediately spring to mind here from the years 1943 and 2018. The first eludes this column’s usual frame of reference in almost four decades of newsroom memories, predating my birth by several years, but the mid-1943 coup eventually culminating in the birth of Peronism serves as a prime example of this underestimated factor. Easy enough to explain this coup amid a world at war and the natural tensions between Allied and Axis sympathisers within a dubiously elected civilian government of military origin – even if the motivation of the GOU (Group of United Officers), formed just three months before their coup, probably had less to do with any general sympathies for Nazi Germany or fascist Italy (despite the huge Italian component in the Argentine population) than with nationalist pushback against the prospective presidency of Robustiano Patrón Costas, widely perceived as the candidate of Standard Oil, as the successor of Ramón Castillo.

All these factors have been the subject of extended debate but they might well be supplanted by the single word of drought. The years 1941 and 1942 were among the driest of the past century. The prolific novelist Eduardo Mallea wrote about 1941: “Now 44 days running of drought and fire ravaging high and low, the sierra uplands, the valleys and the brush-land … In that zone of drought and desolation there were hardly any cattle left with the vegetation burning up from below.” And the pioneering socialist Alfredo Palacios wrote about 1942: “The land has become a wilderness with no rain – the birds have left and also mankind.” Nor should it be forgotten that elsewhere 1943 was the year of the Great Bengal Famine killing millions. So in the prelude to the 1943 coup it could be asked what disrupted Argentina more – a distant war from which it remained neutral or this annihilation of its central economic activity?

The year 2018 definitely falls within this columnist’s newsroom memories (his first full year at this newspaper rather than the Buenos Aires Herald). The jury is still out over when the wheels started coming off the Mauricio Macri administration after a successful 2017 featuring economic growth of almost three percent (his only positive year) and a resounding midterm victory with Cristina Fernández de Kirchner reduced to a senatorial second place in her stronghold of Buenos Aires Province.

Numerous economists give a very precise date to the reversal of Macri’s fortunes – the December 28 (the Argentine equivalent of April Fool’s Day) of 2017 when then Cabinet Chief Marcos Peña drove a coach and horses through then-Central Bank Governor Federico Sturzenegger’s inflation-targeting and hence Central Bank independence, easing the latter’s 2018 inflation target from 10 to 15 percent while mounting contradictory pressures to lower interest rates to keep growth going as well as maintaining fiscal gradualism. Such vulnerability to political pressures had overseas markets eyeing Argentina amiss from that point on according to many orthodox economists (and Sturzenegger himself, following his resignation six months later).

According to such economists, Central Bank independence is the bedrock of the emergence from inflation in the rest of the region – Peru, the South American country now in the news with its acute political turmoil and its sixth president in four years, would be a case in point here, maintaining the same Central Bank governor over the last 16 years throughout governments of left, right and centre with total independence, single-digit inflation and reserves (US$74 billion) almost doubling those of Argentina in a much smaller economy.

Others might favour the date of May 8, 2018 when Macri resorted to the International Monetary Fund (IMF) as an alternative to admitting the failure of fiscal gradualism – especially criticised by those allergic to those initials but also questioned by more centrist opinions, including this columnist when writing the editorial for this newspaper. While dire, the situation did not seem to justify the extremes of going to the IMF, especially given the Fund’s White House neighbour in Washington, Donald Trump – not only because of the tougher conditions which might be expected but because Trump was always game for overdoing the loan (initially a record US$57 billion) to redefine Argentina politically for good.

Yet what tipped the scales here and what this column would insist was the underlying problem was the worst drought of this century in 2018 (with the possible exception of 2008-2009 when Cristina Fernández de Kirchner’s epic clash with the farming sector over grain export duties has gone down in history as a political battle with the backdrop of drought forgotten). Macri may have been exaggerating when he called it the worst drought in 50 years but not much – more impartial estimates gave 30 or even 44 years with over 20 percent of the harvest lost and 30 percent of export earnings.

Space is lacking to investigate other droughts against the political context of their years but whenever there is a crisis, it might be worthwhile to be very boring and British and start asking about the weather.

Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.


More in (in spanish)