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20/08/2007 | Argentina: Serial Scandals Show Strategy Shortcomings

Oxford Analytica Staff

EVENT: Presidential candidate Senator Cristina Fernandez de Kirchner and running mate Julio Cobos launched their campaign on August 14.

 

SIGNIFICANCE: The launch coincided with a series of scandals that have undermined the government's image among its middle-class constituency.

ANALYSIS: The launch of the presidential campaign of Senator Cristina Fernandez de Kirchner and her running mate, Mendoza Governor Julio Cobos (expelled from the opposition Radical party after joining the government ticket), has been marred by a new scandal that threatens to touch both members of the government and its closest allies:

• On August 4, a Venezuelan businessman named Alejandro Antonini Wilson entered the country with nearly 800,000 dollars, undeclared, in his suitcase, on a private flight chartered by Argentine state oil company Enarsa and in the company of Enarsa's president, representatives of Venezuelan state oil company PDVSA and three members of the Argentine Planning Ministry, including the head of the roads concessions division, Claudio Uberti.

• Antonini, who has apparently entered Argentina twelve times this year, arrived two days before a visit by Venezuelan President Hugo Chavez; the case was not reported until several days later.

• Uberti, known as an important nexus between Buenos Aires and Caracas, in particular for Planning Minister Julio de Vido (who had earlier pressed for him to be named ambassador to Caracas), was sacked on August 9.

An international arrest warrant has now been issued for Antonini. There is speculation that the cash he carried could have been destined for possible bribes, or to finance pro-Chavez grassroots groups and local politicians. Radical party president Gerardo Morales (running-mate of opposition presidential candidate Roberto Lavagna) has presented an official complaint alleging possible money laundering.

Corruption comes back. Transparency in the public sector was one of the key planks of President Nestor Kirchner's platform when he took office in 2003, and he has constantly sought to highlight the differences between his government and the levels of corruption recorded in the 1990s. Nevertheless, the cloud accompanying the official launch of the Fernandez de Kirchner/Cobos ticket is a virtual repeat of earlier events:

• The proclamation of Fernandez de Kirchner's candidacy on July 19 came three days after Economy Minister Felisa Miceli resigned following discovery of a package containing some 64,000 dollars in her office. Investigations into two other cabinet members, Defence Minister Nilda Garre and Environment Secretary Romina Picolotti, were announced in the same period.

• Those events followed the revelation of bribe-paying by executives of Swedish construction company Skanska, which led to the dismissal of the heads of gas regulatory body Enargas and state-controlled fiduciary fund Nacion Fideicomisos.

Kirchner has sought to gloss over the recent spate of corruption allegations against members of his administration, claiming they represent evidence that "for the first time in Argentina, corruption is being fought seriously". However, in practice, there is minimal evidence of this: none of these cases produced any official sanction until they were made public by the media, and little progress in investigations is evident. (Indeed, the judge investigating Garre has been suspended.)

This failure to act effectively highlights the shortcomings of a system in which a weak state system -- including the legislative and judicial branches -- is overshadowed by a dominant president. Although the concept of a 'strong' president may appear attractive in a context where the state fails to exercise its role effectively, in practice the lack of curbs on excessive personalism raises the risk of selective impunity. At the same time, and of greater concern to the government itself, the actions of the authorities in the scandals surrounding Miceli and Uberti suggest prior knowledge that money would be found. This raises the likelihood that that information came from rival factions within the governing Peronist party or the government itself, with the intention of undermining rivals rather than seeing justice done.

Foreign policy shift? The appearance of a new scandal now has generated government anger, much of it directed against Chavez. Cabinet Chief Alberto Fernandez described the events as "an abuse of confidence" by PDVSA directors, while Kirchner called for explanations from Chavez, together with the resignation of PDVSA Vice-President Diego Uzcategui Matheus, the company's representative in Argentina. The latter was finally announced yesterday, after a week of delays, although Venezuelan intransigence over the scandal may generate significant tensions between the two. Chavez allies, including another former Kirchner cabinet member, 'piquetero' leader Luis D'Elia, have attributed the case to CIA machinations, an explanation given little credence.

The spate of corruption claims is taking a toll on both Kirchner and his wife, in particular among middle-class voters who represent their key constituency. This is also the sector where resistance to the close relationship with Chavez (and his intromissions into domestic politics) has been the strongest. However, while recent events have tarnished the government's image in the critical pre-election period, they may strengthen Fernandez de Kirchner's likely preferred policy: a distancing of relations with Chavez in favour of improved ties with Mexico and the United. Indeed, the perception that Fernandez de Kirchner will be less tolerant of the Venezuelan president could reflect favourably on her at a time when distaste for the bilateral relationship is rising.

Policy constraints. However, the beneficial effects of this perception will be limited by the stronger view that Fernandez de Kirchner is unlikely to deviate significantly from the policies of her husband:

• This was clearly illustrated on a recent visit to Spain, where her explanation of her proposed industrial policy elicited a blunt question from a Spanish businessman as to whether the views she expressed were hers or those of her husband.

• In this context, limited 'tweaking' of policy will not generate a marked change in the investment climate.

• This is particularly the case where the perception that corruption is an integral element of doing business is increasing -- a perception that is unlikely to attract the type of investment most beneficial to the economy.

In the current climate, Fernandez de Kirchner's platform of forming a 'social pact' among workers, business and the state, opening Argentina to the world and strengthening institutions, is likely to generate scepticism -- in particular given her failure to comment on the Antonini scandal even during her campaign launch.

Falling confidence. According to the Index of Confidence in the Government published by the University Di Tella, public confidence in the government fell from a high of 3.32 points (out of a possible 5.0) in February 2004 to a low of 2.0 points in July, down from 2.07 points in June. The sharpest month-on-month falls related to transparency, where the number of respondents who considered most members of the government to be honest fell from 55% in June to 46%, and the government's general positive image, which fell from 41% to 37%.

CONCLUSION: Although no opinion polls have been published since the Antonini scandal came to light, it remains probable that Fernandez de Kirchner will obtain a first-round victory in October, given sustained economic growth and the lack of an opposition candidate able to convince voters that their support would not represent a 'wasted' vote -- or even to capitalise effectively on the government's increasingly obvious shortcomings. However, her government will take office in a climate of weakness and scepticism difficult to reverse.

Oxford Analytica (Reino Unido)

 


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