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04/02/2014 | Peso panic and rocketing prices shake the throne of Argentina's Queen Cristina

Uki Goni

Argentina's president, Cristina Fernández de Kirchner, and her ministers blame foreign 'vultures' for an economic meltdown as power cuts hit Buenos Aires and goods vanish from supermarket shelves

 

Even in normal years, the summer heat in Buenos Aires is overwhelming. Among a population of nearly 13 million packed into the long shore of the wide River Plate, the phrase most often heard from the lips of porteños is: "It's the humidity that kills you."

For those who can't afford to escape to the exclusive summer resort of Punta del Este, across the river in Uruguay, or make the longer trip to the golden beaches of Brazil, there is only one solution: air conditioning. But a combination of global warming and an abrupt economic collapse scuppered even that consolation for shopper Graciela Fernández last week. When the temperature insisted on staying at around 40C and humidity levels rose to a drenching 90%, Fernández rushed to buy an air-conditioning unit she had seen on sale a week before.

"When I went to buy it, the price had gone up 25% since when I checked prices last week," she complained outside the Alto Palermo shopping mall. "The same thing just happened to me at the pharmacy where I went to buy the medicine my husband takes: the price was up 20%."

The economic panic leading to price mark-ups of this kind began in mid-January, when Argentina's central bank reserves dipped below $30bn, forcing the government of President Cristina Fernández de Kirchner to drop its policy of injecting large quantities of dollars into the exchange market to shore up the overvalued peso.

The sudden dollar scarcity on Argentina's exchange market sent the peso's official value crashing to eight pesos to the dollar, while the "blue" illegal rate shot up to nearly 13 pesos. Retailers immediately marked up their prices to reflect the new reality. In some cases, items were pulled en masse from the shelves, as retailers pondered how much to mark up their goods.

But the government has been quicker at naming culprits than finding solutions. Every morning around 8am, the stern-faced cabinet chief Jorge Capitanich stands behind a podium at the Casa Rosada presidential palace for a televised verbal blast at the perceived enemies of the "victorious decade" presided over by the current president and her husband, the late Nestor Kirchner. Without naming them, Capitanich lashes out against the "visible and invisible" politicians, labour representatives, businessmen and journalists he blames for the sudden collapse of the peso and the explosive price increases that followed the forced devaluation.

Argentina's economic earthquake has placed a huge question mark over the political future of the stateswoman so powerful she is referred to as Queen Cristina by both the opposition press and her supporters. In the past week, Capitanich has attempted to pin the price lurch on faceless foreign speculators, whom he accuses of a "strategy of domination" to gain control of Argentina's oil and freshwater reserves, pandering to the widespread belief here, often underlined by the president in her speeches, that "vultures" of the leading industrial countries harbour secret plans to siphon off natural reserves from this resource-rich South American nation.

Capitanich has also blamed "anti-patriotic" farmers and large retailers, allegedly in league with independent, corruption-probing journalists, of fuelling price rises by "generating psychological action of permanent destabilisation" against Fernández de Kirchner.

But critics of the government point to inept administration and populist spending by a government that considers itself to be leading a revolution against Argentina's erstwhile oligarchy.

"I think it's game over for them," said outspoken writer Jorge Asís, whose blog charts alleged corruption among "Kirchnerista" officials. "They're a group of people busy staring at themselves in the mirror while believing they are carrying out a revolution and spreading blame around."

Vitriolic criticism of that kind rankles with the president, who last year pushed through a media reform law that is forcing Argentina's largest newspaper, Clarín, to sell off parts of its cable, internet and television empire and prohibiting supermarkets and electronic goods retailers from placing ads in the paper, which cuts off one of the title's primary sources of income. Clarín claims its forced downsizing is retribution for its reporting of corruption, including investigations into the alleged behaviour of Capitanich himself.

With approval ratings that for a long time hovered around 70%, Fernández de Kirchner was once impervious to such venom, but the peso crash, abrupt price increases and the suddenly bare supermarket shelves as retailers pull products from sale, have sent that approval rating falling to only 27%, according to a January poll.

At the core of the sudden disenchantment with Queen Cristina is rising anger not only at the inflationary spiral, but at widespread, long-lasting power cuts during the record summer highs that left thousands of people in Buenos Aires without air conditioning and running water.

While the government claims the 2013 inflation rate was below 11%, private estimates place it at closer to 30%, and even that pales compared with the sudden leap in prices propelled by January's peso crash.

For the president, the economic debacle couldn't have come at a worse time. In October, she had to withdraw from the public eye after surgery to remove a blood clot in her brain, apparently caused by her hitting her head while leaving the presidential jet. Her absence left the government in disarray. Although in recent weeks she has reappeared in public, she seems to have delegated control to Capitanich and young economy minister Axel Kicillof, who is said to have been behind the decision to devalue the peso.

Bolstered by her re-election in 2011, when she won 55% of the vote, she still holds a comfortable majority in Congress, with a wide majority of provincial governors and city mayors still under her sway. Having succeeded her husband, who won the presidency in 2003 and presided over spectacular economic growth during his four years in office, she commanded adoring popular support across a wide spectrum of Argentinians, all of whom benefited economically over the past 10 years.

Until the end of last year, Fernández de Kirchner had felt so confident that, despite accelerating inflation and revelations of alleged corruption among her top officials, she organised a spectacular festival in December to celebrate 10 years of Kirchner rule. During the festivities, which included an open-air concert in front of the Casa Rosada in Buenos Aires, the president, seemingly oblivious to the rising tide of discontent, danced on stage to the music of some of Argentina's most famous artists.

"She's more powerful than Perón ever was," former Peronist interior minister Carlos Corach once said, referring to the three-time president, Juan Perón, who founded the Peronist party to which Fernández de Kirchner belongs.

Peronists rallied around her after her 2011 victory and even made plans for an "Eternal Cristina", seeking to modify the constitution to allow her to stand for a third term from 2015. But that dream of an eternity in office seems to be fading fast for Queen Cristina. And temperatures continue to rise in Buenos Aires.

The Guardian (Reino Unido)

 


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