The honeymoon is officially over for Argentina's President Cristina Fernandez de Kirchner.
BY CHRONICLE EDITORS
Cristina Fernandez spent her first 100 days as Argentina's president ignoring the country's growing inflation, pending energy crisis, major debt default and need for reforms aimed at attracting more foreign investment.
Instead, she marked her 101st day - on March 11 - by announcing a hike on taxes for exports of soybeans and sunflower seeds. As the Financial Times has pointed out, the new tariff regime replaces a 35 per cent levy on soya sales, with charges of up to 95 percent if prices rise to $600 a ton. Farmers will now have to pay 44 percent on exports at prices of about $465 a ton. Added to income tax and provincial levies, this results in a total tax burden on farmers of 73 percent, according to data from the Argentine Agrarian Federation quoted by the Financial Times.
WORSENS CRISIS
The new taxes led to widespread protests from the farmers themselves - and then by disgruntled citizens in Buenos Aires as well. Instead of trying to solve the crisis, Cristina opted for ridiculing the farmers' protest as a "protest of the plenty" and repeating at every opportunity that she would not back down.
"Food shortages will probably intensify this week, which could lead to new bouts of social unrest in the cities," Credit Suisse analyst Carola Sandy wrote in an analysis today. "Last week’s street protests in Buenos Aires and other cities reflected the voters’ broad discontent with the government’s policies and not only concerns with food shortages or food inflation due to the farmers strike."
The food shortages have helped to further boost inflation. While the official figures shows that prices are barely growing, independent economists say the problem is only getting worse and that the government continues to meddle with the data from the official statistics agency Indec.
"The empirical evidence suggests that prices are increasing in Buenos Aires and elsewhere in the country," Sandy says. "Thus, the decline in provincial inflation may be yet another indication that the federal government is intervening broadly in the estimation of Argentina’s macroeconomic indicators."
NESTOR'S LEGACY
To be fair, Cristina did inherit most of her problems from her husband, Nestor Kirchner, who was Argentina's president for nearly five years until December last year. But unlike her husband, she is under more pressure to resolve them. While there was widespread hope that she would be more pragmatic than her husband, often known for his bullying treatment of foreign business and political leaders and lack of decorum, she has instead been a big disappointment.
Take the case of the farmers. She clearly believes that they have to pay the price for her policies aimed at redistributing wealth. The problem is that she is hurting the agricultural sector, a key pillar of Argentina's economy. The "pragmatism" she was supposed to have is nowhere to be found. Instead, she appears content using Luis D'Elia, who leads a band of thugs that frequently - and violently - attack government opponents. "The only thing that motivates me is hatred against the whorish oligarchs," he said after attacking a protester in the latest round.
While Argentines are suffering from a lack of beef and other food products, they are also suffering from an absence of substance at the Presidential Palace.
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