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Inicio arrow Análisis arrow Argentina arrow Argentine Political Outlook (May-28-18)

Argentine Political Outlook (May-28-18) PDF Imprimir E-Mail
May-28-18 - by Rosendo Fraga

1. It is no coincidence that on Thursday night, May 24, the President launched the modification of the defense law regulation to allow the Armed Forces to cooperate in homeland security. Decree 727 of 2006 (signed under the Kirchners Administration) establishes that the Armed Forces can only be employed in the face of an external threat from a Regular Force of a foreign state. In modern military conflicts, this means never. That same day at dusk there was a protest by Federal Police personnel in uniform against Minister Bullrich and the IMF due to the decision of giving 4,000 agents the option to join interior forces, the Metropolitan Police or retire. The government was taken by surprise, as the Minister had given the order to harden the crack-down on protests, beginning with the arrest of subway workers on Tuesday, May 22, a situation that extended the strike to all subway lines. The following day (23) the crowded "Federal Teacher March" took place in defense of the Public Schools. On Thursday (24) the national strike and march of the port and maritime unions was held, and on Friday (25) the protest against the IMF was launched under the slogan "The Homeland is in danger", with the presence of Peronist unions that respond to Moyano, combative unionism of the two CTAs, social movements, human rights organizations and artists that converge in the "21F Movement". The coincidence of growing protests and difficulties of the Federal rmed Forces led Macri to move forward in a bill delayed for 2 years.

2. This has also led to a change in the government's social approach, which until the end of last week it thought that the problem was the loss of the middle class vote and not the situation of the poor. On Monday, May 28, a national march for "Peace, Bread and Work", organized by social movements (pickets), was launched around the so-called "Saint Cajetan Trio": the popular economy workers confederation (CTEP), the combative classist current (CCC) and the Barrios de Pie Movement. This sector is on good terms with the Pope and the Church and has a dialogue with the government as opposition. Some other groups also joined the march, such as the Evita Movement, which the government believed to have gained its support, as well as radicalized groups, such as the FOL and the "Darío Santillán Front." The march ends on Friday, June 1 - it will last the whole week – at the gates of Congress, where they will submit five bills to make the "popular economy" viable, which may have important parliamentary support. The government has had to assume that the 20% devaluation of the last month is transferred in its entirety onto basic food items, such as bread, noodles and rice, surpassing the average of food and inflation. This means that the lower income sectors that social movements represent are in a critical situation. This led the President on the same night of Thursday, the 24th, to arrange a permanent dialogue table with them and to accelerate the distribution of food to the soup kitchens and community kitchens. The CGT and the Episcopate have shown signs of support for this march.

3. At the same time, Congress and trade unions are important players in politics. The Chief of Staff, Mr Peña, gave his monthly report before Congress in the Lower House. He found a harder opposition, but not ready to hasten crisis. The ruling party continues to negotiate with the governors to prevent the Senate from the final approval of the "rates emergency". It is not certain that it will achieve it, but Macri continues to fear the alleged political cost of using the veto. On June 1 the increase of transport fares takes effect, and this will generate mounting tensions among users, at times when the "social mood" is not the best. On Tuesday 29, political and social opposition sectors, submitted to Congress a million signatures asking for a popular consultation on the pension reform. In the context of Macri's efforts with the governors, this week he will visit Salta, seeking to empower governor Urtubey as head of the pro-dialogue opposition. But in the union field, at the beginning of the week the government will formalize before the two Public Administration guilds (Ate and UPCN, whose salary scales are shared by the Armed Forces), that the increase will be only 12% without updates. Rejection and forceful measures are expected. At the same time, the court inquiry before which Moyano had to appear in Córdoba on May 31, has been postponed again. Perhaps, the critical situation that Brazil is experiencing, due to the effects of a truck drivers strike, which lasts for 7 days and has not given in, not even in the face of the intervention of the Armed Forces, could influence this new postponement. At the same time, a federal judge (Bonadío) summoned for inquiry the first important official under the Macri Administration, the head of the Anses (Basavilbaso), which may anticipate a change in the federal justice system.

4. On the economic front, Minister Dujovne does not manage to consolidate himself as the coordinator of the economic area and the Macri Administration faces two important decisions abroad this week. The government’s step back with the suspension of the withholdings cut, has been the first relevant defeat of the Minister of Finance, hastened by his Agro-industry counterpart (Etchevere) and the reactivation of the "Liaison Table" of the four agro-entities. The public definitions of the Deputy Chief of Staff (Quintana) saying "I do not feel that I have lost power", go in the same direction. This happens when all signals coming from abroad show that the interest rate in the US will continue to rise and complicate Argentina. On May 31, the OECD Board will decide which countries aspiring to join it - Argentina is one of them - will begin the process to do so. On the following day, the Morgan Stanley Bank will define if Argentina is in a position to raise its rating from "borderline market" to "emerging market". Both facts will prove whether the recent crisis has truly affected the long-term view on the country. The Chief of Cabinet this week begins a tour in Cuba to reestablish political relations with his government, the United Kingdom where he will pay tribute to the fallen British in the Falklands (in exchange for the English minister’s tribute in Buenos Aires last week) and then will go to New York, where he will meet with investors to give guarantees about the Argentine future. It seems more like a tour determined by a "pre-presidential" campaign than a government’s need.

5. To conclude:

  1. The government decides to use the Armed Forces for homeland security in times when a conflict of discipline affects the Federal Security Forces and social protests are unleashed.

  1. At the same time, the national picket march makes the government think that devaluation has hit basic food items and so it creates a table of dialogue with all sectors.

  1. Congress is the stage of political (not decision-making) action. The 12% increase will be rejected by the Public Administration, and the court inquiry of Moyano is postponed while the inquiry of Basavilbaso begins.

  1. Dujovne fails to consolidate his role and the definition as to OECD accession and the “emerging market” rating will prove whether the crisis has truly affected the long-term view on the country.

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