Thousands of people took to the streets across Argentina on September 13 to protest generalized insecurity, heavy handed state intervention and a looming threat of constitutional reform that could pave the way for the re-election of President Cristina Fernández de Kirchner in 2015. Temperatures have hit a boiling point after a very long simmer heated by years of government-denied inflation, nationalizations, import restrictions, and now talks of constitutional reform.
It is often said that Argentines yearn for and lament the passing of the belle époque, a period at the turn of the last century when Argentina was considered one of the richest, fastest growing countries in the world. Their lingering arrogance as a European-like exception on a “lost continent” in the late 1980s and 1990s quickly crumbled with the 2001 economic meltdown and historic $100 billion default.
Today´s protests are reminiscent of the cacerolazos—or pot banging—that took place before Argentina crashed in 2001. After hitting rock bottom, things began to pick up for the country in 2003 thanks in large part to high commodity prices and an accompanying export boom led by soy.
The presidential power couple, Nestor and Cristina Fernández de Kirchner, were politically compensated for the comeback and amassed considerable power and wealth during the first decade of the millennium. It now appears the credit was misplaced as Argentines once again pine for economic stability, safety and security, and rational governance –despite continued strong commodity prices!
I recall learning about the failings of the Import Substitution Industrialization (ISI) model at the London School of Economics in the late 1990s, a time when Argentina was opening itself to the world. So it seems so confusing to me when—in the midst of solid economic recovery—the Kirchners would promote such an out-of-date model.
One could of course come to peace with the concept of ISI since it’s hard to argue with its objective of creating a formidable national industrial base. Yet its implementation in Argentina has been nothing short of a circus act. Large and small companies alike have been barred from importing, unless they export a similar amount in goods. This has led even multinational companies to get into odd businesses. Japanese carmaker Nissan now exports wine, for example. It has also left Argentina's middle class hard pressed to buy toaster ovens, DVD players and clothes dryers.
Adding insult to injury, the Kirchner government denies the over 25 percent inflation affecting the country since about 2004. Consumers are dizzy and concerned. Their potential for savings has been eroded by run-away prices and a drastically weakened peso. One older woman said to me recently that it reminds her of the 1980s under President Raúl Alfonsín when prices were changing constantly, in some cases before you made it to the check-out counter.
Moreover, the government has flashed back to another draconian measure reminiscent of the 2001 bank restrictions. Argentines can no longer access dollars. The government claims that they can so long as they justify their tax-paying income, but the reality is much more complicated. Argentines can now only access $100 a day for international travel at the official exchange rate of nearly 4.5 pesos per U.S. dollar. These restrictions, of course, do not apply to government officials. Considering that Argentina’s real-estate market is largely dollar-based, these restrictions don’t just impact on well-heeled travellers but have broad sweeping implications for the domestic economy.
Many frustrated Argentines are comparing their country to Venezuela. But at least in Venezuela, like it or not, the government’s policy is clear and consistent. In Argentina, there are always exceptions, back-door negotiations and hypocritical pontificating. Not surprisingly, a recent poll by Management Fit claims that 53 percent of Argentines disapprove of the president. Insecurity and economic problems top their worries as they, once again, take to the streets.
Janie Hulse Najenson is a contributing blogger to AQ Online. She is an analyst based in Buenos Aires, Argentina and the editor and producer of Insights from the Field, a quarterly publication promoting perspectives from within Latin America on politico-economic and security issues affecting the region.