RIO DE JANEIRO, BRAZIL – Alberto Fernández breeds confidence. After almost six months as Argentina’s president, he is still very popular. But he also keeps virtually all the uncertainties open. The management of two very complex crises, the pandemic and the debt renegotiation, takes up most of his time.
Neither his project nor his true strength within Peronism is yet known. In the coming weeks, when it comes to deconfinement and if, after the default declared on Friday, it is found that there is an agreement with the creditors or whether Argentina is definitively isolated from the international financial system, Fernández should face a disastrous economic situation.
No one will ever challenge the rigor with which he has led the fight against the pandemic. His prudence has earned him Argentinians’ respect: eight out of ten support him. With the peak of contagion already very close, the number of deaths remains quite low (433, according to Friday’s data), and no hospital has come close to collapse; in fact, most of the ICU beds remain empty. This has a price.
The city of Buenos Aires, unlike other provinces in the country, will have undergone (if there are no further extensions) 80 days of quarantine, more than any other city in the world. The closure of the political and economic capital entails a very high cost.
Alberto Fernandez’s presidency has been marked by extraordinary circumstances from the outset. The fact that ex-president Cristina Fernández de Kirchner chose him as her candidate and agreed to take over the vice-presidency was exceptional. The same applies to his impressive victory over Mauricio Macri, with no second round required.
The virtual moratorium that Macri bequeathed to Argentina led to another anomaly: Fernandez kept his economic program on hold until there was an agreement with the creditors on restructuring his debt, also choosing to govern without a budget law.
Then another major anomaly exploded – the pandemic. With Congress closed (the Senate has just resumed its strictly virtual sessions), Fernández assumed full powers. The economic emergency law, passed in December, and the health emergency allow him to govern by decree. To date, he has issued 23 Necessity and Urgency Decrees (DNU).
Argentina formally defaulted on Friday, May 22nd, when it failed to pay a US$503 million debt security maturity without any kind of political repercussions. The absence of congressional life and the lack of an opposition leader (Macri no longer counts) leave Fernández with a very wide margin.
But no one knows exactly what Alberto Fernández’s margin is, because his limits are internal. They are said to be the vice-president, Cristina Fernández de Kirchner, and her son, Máximo Kirchner, who heads the majority in the Chamber of Deputies.
Kirchnerism maintains the militant base on which the president relies, deals directly with judicial matters (the many lawsuits against the ex-president unfold day after day). In Greater Buenos Aires, the voting center that allowed Fernández to comfortably win the presidency, the Kirchners and Governor Axel Kicillof are in charge.
Fernandez sought close cooperation with opposition politician Horacio Rodriguez Larreta, the Mayor of Buenos Aires, and one of the main candidates to lead the conservative and liberal forces in the 2023 elections. Meanwhile, the provincial government of Buenos Aires, in Kicillof’s hands, did everything to boycott the relationship between Fernandez and Larreta, accusing the Mayor of neglecting health care in the ‘villas miseria’ (slums) and turning the capital into a major infection hotspot.
Another example is the extraordinary tax bill on large fortunes, allegedly to be paid only once. It would affect 12,000 people with assets of more than US$3 million (R$16.6 million) and should raise three billion pesos (R$240 million), which would be used to cover the costs of the pandemic.
The problem with this tax is that it overlaps with a tax on personal assets, and double taxation is unconstitutional. Máximo Kirchner pushed the bill until he got the president’s endorsement – and the forced applause from Diego Armando Maradona, who declared himself “totally in favor of the wealth tax”.
Kirchnerism does not fail to send signals. Deputy Fernanda Vallejo proposes that state credits granted to companies to keep them afloat during the pandemic should be translated, in the event of default, into corporate shares. In other words, the state should become a shareholder of these companies, whether large or small.
The idea has been hovering in the air, as a sign of where a majority sector of the government is headed. The president does not comment. Within Peronism itself, he is accused of acting more as an arbitrator between different trends than as a leader.
Health management and the debt issue have allowed Fernández to retain a professorial tone, mostly restrained, above the political dispute. A few weeks ago, there were some minor pot-banging protests against the accumulation of extraordinary powers, but the fear of the pandemic and the media’s focus on negotiations with creditors ensured a genuine grace period for the president.
This period of popular consensus will end with the quarantine and the agreement or rupture with Argentina’s debt creditors: Fernández will then have to deal with a grim economic reality. It is estimated that the recession will eat up ten percent of Argentina’s GDP this year, which has been shrinking since 2018.
Almost half the population will have fallen into poverty. And the peso will continue to depreciate against the dollar, as has consistently been the case for the past three years, despite increasingly strict exchange controls.
In a way, Alberto Fernández’s presidency will truly begin at that time. And things will not be easier than they are now. Perhaps they will even be more difficult.
Cristina Kirchner’s permanent shadow
Cristina Fernández de Kirchner is always there. She has achieved the Justice area for her political group, where she can influence the course of lawsuits that concern her, and the area of welfare policy, through the control of the National Social Security Administration.
Her son Máximo is the head of the congressional majority; her faithful ex-Minister of Economy, Axel Kicillof, now governor of the largest province in the country, Buenos Aires, has placed Carlos Zannini (sued along with her for alleged cover-up) in the Treasury Attorney’s Office, and now he seems to have shifted his gaze to the energy field.
Kirchnerist Federico Bernal, head of the National Gas Regulatory Agency, began to implement initiatives without Matías Kulfas, Minister of Productive Development, officially the one in charge of the area and one of Alberto Fernández’s main collaborators.