Morning Must-Read: Uki Goñi: Peso Panic Shakes the throne of Argentina’s Queen Cristina Fernandez de Kirchner

Uki Goñi: Peso panic and rocketing prices shake the throne of Argentina’s Queen Cristina: “The economic panic… began in mid-January, when Argentina’s central bank reserves dipped below $30bn, forcing the government of President Cristina Fernández de Kirchner to drop its policy of injecting large quantities of dollars into the exchange market to shore up the overvalued peso.

The sudden dollar scarcity on Argentina’s exchange market sent the peso’s official value crashing to eight pesos to the dollar, while the “blue” illegal rate shot up to nearly 13…. The government has been quicker at naming culprits than finding solutions… Jorge Capitanich… televised verbal blast[s] at the perceived enemies of the “victorious decade” presided over by the current president and her husband, the late Nestor Kirchner… “visible and invisible” politicians, labour representatives, businessmen and journalists he blames for the sudden collapse of the peso and the explosive price increases… faceless foreign speculators, whom he accuses of a “strategy of domination” to gain control of Argentina’s oil and freshwater reserves, pandering to the widespread belief here, often underlined by the president in her speeches, that “vultures” of the leading industrial countries harbour secret plans to siphon off natural reserves…. Capitanich has also blamed “anti-patriotic” farmers and large retailers… corruption-probing journalists… “generating psychological action of permanent destabilisation”….

The president… last year pushed through a media reform law…. Clarín claims its forced downsizing is retribution for its reporting of corruption, including investigations into the alleged behaviour of Capitanich himself…. At the core of the sudden disenchantment with Queen Cristina is rising anger not only at the inflationary spiral, but at widespread, long-lasting power cuts during the record summer highs that left thousands of people in Buenos Aires without air conditioning and running water.mWhile the government claims the 2013 inflation rate was below 11%, private estimates place it at closer to 30%, and even that pales compared with the sudden leap in prices propelled by January’s peso crash….

Bolstered by her re-election in 2011, when she won 55% of the vote, she still holds a comfortable majority in Congress, with a wide majority of provincial governors and city mayors still under her sway… she organised a spectacular festival in December to celebrate 10 years of Kirchner rule. During the festivities, which included an open-air concert in front of the Casa Rosada in Buenos Aires, the president, seemingly oblivious to the rising tide of discontent, danced on stage to the music of some of Argentina’s most famous artists. “She’s more powerful than Perón ever was,” former Peronist interior minister Carlos Corach once said, referring to the three-time president, Juan Perón, who founded the Peronist party to which Fernández de Kirchner belongs. Peronists rallied around her after her 2011 victory and even made plans for an “Eternal Cristina”, seeking to modify the constitution to allow her to stand for a third term from 2015. But that dream of an eternity in office seems to be fading fast for Queen Cristina. And temperatures continue to rise in Buenos Aires.

February 22, 2014

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