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Argentine Political Outlook (Feb-22-16) PDF Imprimir E-Mail
Feb-22-16 - by Rosendo Fraga

1. Obama's visit is the biggest success in Marci's foreign policy, giving relevance to Argentina at a regional level. Italian Prime minister Renzi visited Argentina within the framework of a regional tour including Peru, Chile, Colombia and Panama. The decision was made after the Argentine government submitted an acceptable proposal for those Italian bondholders who have not accepted the debt swap. This week French President Hollande is visiting our country, going to Uruguay first and Peru next; the visit had been delayed for a year due to the terrorist attack to the French satirical magazine Charly Hebdo. But Obama, after visiting Cuba -first United States presidential visit since 1928- is coming to only one South American country, Argentina, a decision adopted a month and a half ago, something unusual for American diplomacy. Visits from United States presidents have been rare throughout Argentina's history. The first visit was that of President Roosevelt (1928) and the last one, President Bush Jr. (2005), both for the purpose of partaking at Inter-American conferences held in Argentina. Among other US presidents who visited our country we can mention: Eisenhower (1960), Bush -father- (1990) and Clinton (1997). Obama's visit entails a delicate political aspect: a tour of the former Esma, housing the museum that pays homage to those who died as a consequence of violations of human rights during the 70s. This visit is scheduled for March 24, the 40th anniversary of the last military coup. That same day, the Kirchnerist movement after giving evidence of its convening power in the streets for the release of political activist Milagros Salas, will present its new alliance with the left in the same location.

2. Griesa's decision to lift the precautionary measures against Argentina if the Congress repeals the "lock" and "sovereign payment" laws. This shows progress in the "holdouts" issue. It implies the beginning towards normalization of the relationship with the markets and the end of the default that started in 2001. Therefore, the Congress has gained priority as regards this issue. In order to repeal both acts - that prevent from paying bondholders who did not accept the 2005 and 2010 debt swap, majority of the House of Representatives and the Senate is required. Among the province governors with some clout within the Senate, it can be presumed that there is a favorable stance since solving the problems with the holdouts will allow the provinces to get indebted at a lower cost abroad, this being the way opened by the Executive to cover its deficit. But Macri has not been able to make the Congress pass any of his bills, showing that he still needs to further negotiate with the governors and Massa. From all DNU -Exceptional Executives Decrees- the Congress must validate, only one would not be approved: the one that suspends the 15% disbursement of co-participation to the provinces. As regards the appointment of new members in the Court and new political ambassadors, the Commission in charge has decided in favor of the first.

3. Macri's government has shown failures during last week in the economic area, his strong point presumably.  The crisis at the INDEC is relevant because of what normalization of that institute of official statistics means. Inflation figures have been distorted for four years under Cristina Kirchner´s administration. The government has paid for a credibility cost due to the replacement of its Technical Director Bevaqua. The fact that the scales for the payment of the income tax have not been modified, makes 180.000 workers who were going to be out of the scheme to be included, in total 270.000 more persons will pay that tax together with 110.000 more pensioners, according to trade unions. Those same trade union leaders (Moyano, Barrionuevo and Caló) who applauded enthusiastically last week Macri's announcement on the increase of the minimum limits are now hardly criticizing him. In the Congress, the approval of a change will have to face strong resistance. Salary negotiations with teachers' unions have collapsed. Education Minister Bullrich said that he had offered national teachers (accounting for less than 10% of the total) a 40% rise in the basic salary and 32% for the rest. Unions said that they had received a total proposal of 40%. Both proposals are impossible to be satisfied by most provinces and they contradict the 25% ceiling the government is suggesting - not imposing - subject to its inflationary policy. Commencement of the school year on February 29 is at risk, no salary agreement has been reached with the 24 districts. This compromises the government´s objective of starting the school year punctually this year. The three facts show that a system with an economic team made up of 7 Ministers with the participation of the Central Bank´s Director and under the coordination of Cabinet Chief, needs further adjustments and changes. Upon this situation, Macri replies with a new press conference. At the same time, there is a debate within the ruling party whether to denounce the bad inheritance left by the Kirchnerist party on March 1 during the opening of the Congress ordinary sessions, as since that day, problems will be felt as belonging to this new administration.

4. Public security -the government's focal challenge. As regards the fight against drug trafficking, the Executive decided to refer the register of chemical precursors (those in control of ephedrine import) from the Sedronar to the Department of Justice. The Government of the Province of Santa Fe reached an agreement with the General Attorney´s Office so as for the state and provincial justices to act in a coordinated manner, an issue of crucial importance. The Department of Justice is intending to create a special venue against drug trafficking. The demonstration asking for the release of political activist Milagros Salas with the participation of 40 Kirchnerist political and social organizations and supporting groups, that materialized in two hundred road and street blockings throughout the country including all accesses to the City of Buenos Aires, shows that this political force, weakened in the Congress and the governors are trying to take their opposition to the streets. The answer of the government is a "protocol" to regulate -in fact to prohibit road blockings - that will be tested this week with the demonstration by state workers claiming against dismissals that in fact, account for 6,5% of 122,000 employees Cristina Kirchner hired to expand public administration. In the province of Buenos Aires, the eviction of 2,000 families who have been illegally occupying lands for four months in Merlo, marked an important step for the provincial government, in a complex and delicate area. The relationship with the Pope is complicated as shown by the rosary sent to Milagros Salas but the meeting with the President on February 27 is underway - the first in two years and a half, a meeting that may help bridge gaps. According to the Pope, the government should prioritize the poor. Macri will announce important measures before visiting the Vatican such as a VAT reduction on the basic basket for pensioners who collect the minimum payment and for the family allowance beneficiaries trying to show that the ruling party does not govern just for the rich. Within the Peronist party, the national council is meeting on Wednesday 24 towards the appointment of José Luis Gioja as the Peronist Party President by consensus.

5. To conclude:

a) Obama's visit is the biggest success in Macri's foreign policy -a political gesture showing a particular support.

b) Griesa's decision to lift the precautionary measures against Argentina if the Congress repeals two acts means an important step in solving the holdouts issue.

c) But three mistakes in relevant economic matters show that the government requires adjustments and changes within its internal structure.

d) Public security represents a significant challenge both to combat demonstrations and drug-trafficking matters.

 
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