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June 23, 2020

ARGENTINA: Fernandez’s balancing act

BY Nicholas Watson

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( 3 mins)

Recent events highlight President Alberto Fernandez’s role as a balancing force between competing political factions and differing viewpoints. While there are positives to this situation, it is also true that the role of mediator-in-chief reflects Fernandez’s own fragile political position vis-à-vis his powerful VP Cristina Fernandez (CFK) and La Campora, the group led by her son Maximo Kirchner. Balancing from a position of weakness also raises the risks of policy missteps, messy trade-offs, and a permanently unsettled administration.

Vacillating over Vicentin

The situation surrounding the agro-export company Vicentin is a case in point. The government has in recent days seemingly backed away from an outright expropriation of the company following a court ruling late last week that effectively put Vicentin’s management back at the helm of the company, while demoting government-appointed administrators to a supervisory role. Public demonstrations that took place in several provinces on 20 June contributed to the decision to take a step back and consider an alternative plan for Vicentin, the exact details of which remain unclear, but which still involves state intervention.

Fernandez – and the Kirchneristas who pushed for radical action – not only misjudged the public reaction, but also appear to have bungled their calculations on obtaining congressional support for an expropriation. CFK can muster a Senate majority fairly easily but the lower house is more problematic for the governing Front for All (FdeT) coalition. When legislators who follow the moderate Peronists Roberto Lavagna and Juan Schiaretti – key to a lower house majority – confirmed that they did not back expropriation, the plan quickly unraveled.

Why Fernandez did not foresee these challenges – or did but could not convince Kirchneristas that they were worth heeding – is moot. Regardless, the president has managed – for now – to pull off a retreat of sorts, albeit a messy one that has roused opposition parties, mobilized the anti-Peronist vote, and still undermined investor confidence. As Kirchnerismo looks to exploit the health and economic crisis for its own ends (e.g. judicial reforms), there are likely to be plenty of further tests of Fernandez’s ability to instill restraint.

Arbitrating over Covid-19

The other area in which Fernandez’s moderating role is visible is in the government’s approach to Covid-19 in the Metropolitan Area of Buenos Aires (AMBA) that straddles Buenos Aires province and the capital; the former is governed by CFK’s protégé Axel Kicillof, and the latter by Horacio Rodriguez Larreta of the opposition Republican Proposal (PRO) party. The province and city account for 90% of Covid-19 cases and have been reporting around 2,000 new daily cases between them in recent days despite a lockdown that is approaching its 100th day on 28 June.

Kicillof is in favor of a return to strict sheltering restrictions; Buenos Aires provincial health authorities have even argued for a quarantine extending to September. Larreta argues that public patience is already fraying and that a stricter quarantine will not work anyway given expanding community transmission. In a sign that both arguments carry significant costs, Fernandez yesterday, 22 June, put off a decision until later this week. The probability is that Fernandez will opt for a compromise in which some non-essential activities are restricted without a return to the full lockdown seen in March. A halfway response along these lines is unlikely to lessen economic damage, while it will highlight the lack of an exit strategy.

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