Argentina in 2008

Argentina in 2008

Area: 2,780,403 sq km (1,073,520 sq mi)
Population (2008 est.): 39,737,000
Capital: Buenos Aires
Head of state: President Cristina Fernández de Kirchner

Argentine Pres. Cristina Fernández de Kirchner began her second month in office in January 2008 with high public-opinion approval ratings (in the low 50th percentile), a large and disciplined majority in the Senate (48 of 72 seats) and Chamber of Deputies (155 of 257 seats), the support of 20 of the country’s 24 governors, and an iron control (in concert with her political partner and husband, former president Néstor Kirchner [2003–07]) of the governing Justicialist Party (also referred to as the Peronist party). Her political honeymoon was to be short-lived, however.

On March 11 Minister of Economy Martín Lousteau introduced administrative Resolution 125/2008, which modified tax rates and regulations governing Argentina’s principal export crop, soybeans and soy-related products. Participants in the country’s agricultural sector—increasingly resentful of what they viewed as the national government’s excessive taxation, price controls, and arbitrary interference in the sector’s business practices—banded together to protest the modifications, particularly the imposition of a dramatic tax increase and a virtual ceiling placed on future profits. Never before had Argentina’s disparate agricultural producers, ranging from large landowners and multinational corporations to small-scale farmers, joined in such a unified manner to oppose national government policy.

The four-month conflict between the government and the agricultural sector included roadblocks by the agricultural producers and resulted in food shortages in the urban centres; government negotiations with the agricultural organizations eventually reached an impasse. Meanwhile, a bill that was drafted by the government in June to pass into law Resolution 125/2008 came to a formal vote on July 17 in the Senate, where 36 senators approved the measure and 36 senators, including many Peronists, rejected it. The tie was broken by Argentine Vice Pres. Julio Cobos, who voted against the bill.

This crushing defeat in the Senate represented the first important political setback for Kirchner and Fernández de Kirchner in their five years in power. The government that emerged on July 17 at the end of this political conflict with the agricultural sector was much weaker than the one that existed prior to March 11. Between March and July, President Fernández de Kirchner saw her public-approval ratings plummet to less than half of their January values, her (and her husband’s) control over Peronism weaken (with numerous prominent Peronists now actively challenging her administration), and her relationship with Cobos become irrevocably damaged.

In addition to difficulties in the political realm, Argentina also faced serious economic challenges. These included an annual inflation rate of about 25% (an estimate by independent sources; the national and international community no longer considered the government-calculated inflation rate credible) and a decelerating economic growth rate of 7% (with a 5% growth rate projected for 2009). In an effort to spur foreign investment, President Fernández de Kirchner announced in September that Argentina would begin paying back the country’s overdue loans from the Paris Club of creditor nations.

by: Mark P. Jones