Argentine Political Outlook (Feb-09-20)
Feb-09-20, by Rosendo Fraga

1.  Foreign policy remains the priority for the Argentine President these days and his tour began with the meeting with the Pope in the Vatican, which has generated contradictory consequences. There is no doubt that Francisco will support Argentina in relation to the debt, that he shares the concern about poverty with the President and that he wants the country to begin closing the "crack" that has deepened in recent years. But also the Supreme Pontiff considers abortion remains a central issue for the Catholic Church, and he does not want its legalization in Argentina. If the President arrives from the visit to the Vatican and sends the law to Congress to decriminalize abortion, this will not imply the rupture of the Argentine government with the Pope, but a distancing and the opening of a debate that will once again highlight the "crack" that exists in Argentine society on the matter. In reality, the Pope has little influence on international financial organizations, banks or the Davos Forum. Despite this, on February 5 an economic seminar is held in the Vatican, in which critical positions on "financial capitalism" will be raised. But for Alberto Fernández, the relationship with the Pope has greater value in terms of its effect on the domestic policy and in particular in terms of the unity of Peronism, over which does Francisco have influence.


2.  The tour of the four main countries of the European Union (EU) has a double effect: to show that a "third way" is possible in the Western world and to obtain support for the debt renegotiation. Meeting with the heads of state and government of Italy, Spain, Germany and France in six days is undoubtedly a diplomatic success for the Argentine President, who has not yet completed two months in office. But it is not clear whether the governments of these four countries are willing to act effectively in the IMF in favor of the Argentine position. The reality is that the decision of the international financial organization with respect to Argentina depends on the US. Not only because this country is the largest shareholder, but because Washington is the home to the international financial agency and New York is home to Wall Street. Just as Fernandez has effectively achieved the meetings with the first level of European politics, he has not yet been able to schedule a meeting with Trump. It should be remembered that the Director for Hemispheric Affairs of the National Security Council (Claver Carona) has publicly said that while Argentina "continues to be the lawyer of the dictators" - in reference to Cuba, Venezuela and Evo Morales - it "will not have the support of the USA to renegotiate the debt with the IMF or for investments in Vaca Muerta". Next week the new Argentine Ambassador to the US presents his credentials to Trump and, leading the embassies and representations of the Argentine financial organizations in that country, will seek to support the renegotiation of the debt.


3.   Meanwhile, the issue of the Buenos Aires province debt and the possibility of the province hitting default this week is crucial both politically and economically. The President has supported Kicillof, such as he is "just asking for time," which have not been entirely accurate in terms of political reach. The Minister of Finance (Guzmán) accompanies the President in his meetings with Merkel and Macron, while the Buenos Aires governor faces a crucial decision for his province, but which can affect the Argentine position in the renegotiation of the national debt. Meanwhile, the government has achieved strong political backing for the debt renegotiation, with the half approval of the "sustainability law." In the Lower House, it was passed last week, practically unanimously: it obtained 224 votes out of 257 members. The Juntos por el Cambio block voted in favor with the sole exception of 2 legislators. But when voting for the suspension of the Fiscal Pact with the provinces, which forced them to lower local taxes, the opposition voted divided. On Wednesday, February 5, the Senate would give final approval to the bill. The Juntos por el Cambio block in this House has already announced that it will vote in favor as it did in the Lower House. The government will thus have shown strong political support to renegotiate the debt, a week before February 12 when the IMF mission arrives in Buenos Aires.


4. At the same time, the Vice President, after the approval of the "sustainability law" of the debt in the Upper House, begins a new trip to Cuba to visit her daughter on Thursday, February 6. That same day the President ends his international tour. This will cause the Provisional President of the Senate, Senator Ledesma - definitely "pro-Cristina" - to hold the Presidency for almost a day. The fact shows how Cristina Fernández de Kirchner has secured control of Congress. In the Lower House, her son Máximo continues to "accumulate power". Not only does he preside over the official bloc with 120 members, but he is also becoming the "guarantor" in negotiations with the opposition. The Speaker of the House (Massa) seeks to create his own space, having good relations with the President, the Governor of Buenos Aires and the Vice President's son. She visited controversial public works for corruption allegations and endorsed the appointment of Aníbal Fernández as controller at the Yacimiento Carboníferos de Río Turbio (YCRT) signed by her sister-in-law and governor of Santa Cruz, Alicia Kirchner. As for the cases that affect her, none has an immediate summon. The decision of Judge Bonadío to extend his vacation for another month, leaving the court in charge of Judge Casannelo, may favor the judicial situation of the former President. Meanwhile, the government's decision to convene unions, social movements and retirees to control prices in supermarkets shows a dangerous policy, which can lead to greater controls over the economy. Public security is becoming a vulnerable issue for the government, given its "pro-guarantee" position in this area. Finally, the government would be willing to send to Congress the bill for the creation of the Economic and Social Council, Roberto Lavagna being the first candidate to preside over it. 

5. To conclude: 

a) The meeting between the Pope and the Argentine president showed some coincidences about the Argentine situation and the debt issue -where he will hardly be able to help- but also differences on abortion. 

b) The meetings with the heads of state and government of Italy, Spain, Germany and France (Conte, Sánchez, Merkel and Macron) are an undisputable diplomatic success, but the US remains key to the debt. 

c) A BA province default could complicate the international negotiation while the approval of the debt ‘sustainability' law is a political backing to the rescheduling. 

d) Cristina embarks on a new trip to Cuba, showing strong power accumulation, where Maximo -her son and likely successor- plays a key role.