Dispute between Alberto Fernández and Cristina Kirchner paralyzes Argentina’s government

RIO DE JANEIRO, BRAZIL – The open dispute between Alberto Fernández and Cristina Kirchner is paralyzing Argentina.

A day after the resignation of all Ministers and senior officials representing the vice-president in the cabinet, the president posted a long Tweet on Thursday (16) in which he warns that he is the one in charge. “Admininstration will continue as I see fit,” he wrote, and “this is not the time to create disputes.”

The electoral debacle in Sunday’s primaries, in which the pre-candidates of united Peronism lost in 18 of the country’s 24 districts, ultimately catalyzed a crisis entrenched in the palace that is conditioning the government’s progress, and is now aggravating the economic crisis, alarming voters and boosting the conservative opposition.

After Wednesday’s political earthquake, Argentina is now a spectator for the clash of the two conflicting forces. The source of tensions lies in Cristina Kirchner’s decision to promote her former chief of staff, Alberto Fernández, as a presidential candidate in 2019, with her as vice-president. This pairing was joined by Sergio Massa, a leader who had defeated Kirchnerism in Buenos Aires province and now completed the total unity of Peronism.

The strategy worked and Alberto Fernández prevented Mauricio Macri’s reelection at the polls. But the tension between a president without votes, but with formal power, and a vice-president without formal power, but with votes, weighed on the government’s first two years. Until it all went up in smoke with the defeat in the September 12 primaries, the election that chooses the candidates who will run for a seat in Congress on November 14.

The defeat put an end to the myth that “united Peronism will never be defeated” and reinforced Kirchner’s demands that her coalition partner undertake a profound cabinet reform. But Fernández preferred to wait for the legislative elections, arguing that a change midway through the electoral campaign would only complicate things.

On Wednesday, 5 Kirchnerist Ministers and some senior officials announced that they were leaving the government. The blow was delivered, although Argentina always has its nuances.

At the top of the list of resignations is Interior Minister Eduardo ‘Wado’ de Pedro, a man from the vice-president’s closest group. De Pedro submitted a letter of resignation that his spokespeople quickly released to journalists and on social media, but which never officially entered the Casa Rosada. Absent this formality, the Kirchnerist stampede became a political move to pressure Fernández to dismiss the Ministers that the ex-president doesn’t want in the government: Chief of Ministers Santiago Cafiero and the Minister of Economy Martín Guzmán.

However, 24 hours after the crisis broke out, the situation remains unchanged: Alberto Fernández has barely moved his chips and Cristina Kirchner is silent, at least in public. Sources released the information that on Wednesday afternoon she called Minister Guzmán to say that it was not true that she was asking for his resignation. The call was confirmed by the Ministry of Economy.

The strategic move shows the president that Kirchnerism will not be content with the Economy Minister alone. As tension reached its peak in the corridors of power, a radio station broadcast the audio of an ultra-Kirchnerist deputy ranting against Alberto Fernández. Fernanda Vallejos, a prominent member of the La Cámpora group controlled by Máximo Kirchner, Cristina Kirchner’s son, referred to the president as an “intruder” and a “scoundrel” and considered him a “tenant” of the Casa Rosada who in two years has squandered the ex-president’s votes.

“We all expected the sick Alberto Fernández, the intruder Alberto Fernández, on
Monday at 8 AM [after the electoral defeat] to be giving a press conference at his desk with all resignations on the table (…) Not only has he not done it, but he doesn’t want to do it,” Vallejos said. Following this logic, the resignation of Kirchnerist Ministers was intended to force the changes that the President “doesn’t want to make.”

Vallejos later apologized for her words, which she considered “inappropriate” and the result of friction in a private conversation. However, they were a brutal testament to the thinking of one of the sides that today has Argentina mired in uncertainty.

The dispute, still open, can only lead to negative solutions. If Alberto Fernández yields to pressure, he is greatly weakened, but keeps the coalition alive. If he doesn’t give in, he will be strengthened as a leader, but will break the unity of Peronism less than two months before the legislative elections.

The support he has received from governors, unions and social movements does not seem to be enough for now to maintain the governance of a country that has been in recession for the past 3 years, aggravated by the pandemic.

INFLATION AND NEGOTIATIONS WITH THE IMF

Amid the political instability looms the specter of crisis and, above all, external indebtedness. The Ministry of Economy late Wednesday night submitted a draft Budget for 2022 that foresees 4% growth and 33% inflation, i.e. 15 percentage points less than expected for this year.

The most relevant aspect of the Budget Bill, which must be passed by both legislative houses, is that it does not contemplate capital payments to the International Monetary Fund (IMF) for the US$44 billion debt incurred by Macri in 2018 and which is undergoing renegotiation. Economists fear that the disputes will complicate this dialogue, which is in the hands of Minister Martín Guzmán.

Argentina must pay the IMF this year two principal payments worth US$3.8 billion. The first, due by the end of September, can be paid with part of the Special Drawing Rights it received from the agency in late August.

Guzmán’s cabinet also foresees a primary deficit – excluding the payment of salaries – of 3.3% of GDP by 2022 and a 30% devaluation of the peso. Each US dollar will exchange for 131.10 pesos, according to the government, compared to the almost 103 pesos currently paid in the official market (closed to savers) and the 180 pesos in the parallel market.

The 2022 Budget bill is optimistic about the recovery of other key factors for economic growth, such as private consumption and investment, with projected increases of 4.6% and 3.1%, respectively.

The Argentine economy’s real figures have not coincided with those budgeted by the national authorities for years. For 2021 the government estimated inflation at 29%, a figure reached in the first 7 months. In the last year of Mauricio Macri’s government, the price increase more than doubled projections. It was 53% compared to the 23% estimated in the official accounts.