IPS-English ELECTIONS-ARGENTINA: President Kirchner's Legacy, Pending Challenges
 
Date: Thu, 25 Oct 2007 16:07:11 -0700

 
Marcela Valente

BUENOS AIRES, Oct 25   (IPS)  - When Néstor Kirchner took over the
presidency in 2003, Argentina was in a state of collapse. He managed
to establish a model of economic growth that brought down the soaring
unemployment and poverty rates. But whoever succeeds him in December
will still have challenges to face.

On Sunday, Argentine voters will decide whether or not Senator Cristina
Fernández is the person who should take on these challenges as his
successor. The president's wife and the candidate of the dominant
centre-left faction of the governing Justicialista (Peronist) Party,
she is way ahead in the opinion polls, and is likely to win outright
in the first round.

Kirchner could have stood for a second term but has chosen to go.
He is leaving, however, with an approval rating of over 70 percent
-- more than three times the 22 percent of the vote he took in 2003,
when he was elected in the first round because his rival, former president
Carlos Menem (1989-1999) withdrew prior to the runoff, in the face
of certain defeat.

During his administration, Kirchner renegotiated the bulk of the
foreign debt, on which Argentina had defaulted during the late 2001
economic and political meltdown, and paid off what the country owed
to the International Monetary Fund (IMF). 

The fiscal deficit, a constant feature of the economic landscape
throughout the 1990s, became a surplus after 2003 and has remained
so over the four-and-a-half years of his government.

The four-year (1998-2002) recession also turned into steady economic
growth. Bolstered by high demand for commodities in the international
market and a rapidly recovering market at home, gross domestic product
grew at a rate of eight percent a year. 

Although poverty persists, the proportion of people living below
the poverty line was halved, and the unemployment rate fell from 17
to 7.7 percent.

But as the indicators have improved, social demands have grown. Wage
and pension levels have recovered, but workers and retirees are demanding
further increases, and experts say that about 45 percent of jobs are
temporary or precarious and offer no social security.

Economist Ernesto Kritz of SEL Consultores, a labour consultancy,
told IPS that in his view, the most important challenge for the next
government will be ”to significantly reduce informal sector work.”

”The last job of most unemployed people was in the informal economy,
and poor households depend on that sector for their income. Dealing
with this issue is an essential condition for achieving growth with
equity,” he said.

”I don't like Cristina,” Alicia Fernández, an 84-year-old pensioner,
told IPS. ”I prefer Lavagna,” Kirchner's former economy minister,
who is also a presidential candidate. After 11 pension hikes granted
by the Kirchner administration, her income has doubled, but nevertheless
she won't be voting for the president's wife.

While her expanded pension is all very well, she finds that her expenses
for food and medicine eat into the difference. ”The money doesn't
seem to go as far, because everything costs more,” she said.

Political analyst Rosendo Fraga told IPS that if she wins, as expected,
Cristina Fernández's first challenge as president will be ”to get
people to see her administration as a first term,” without dragging
whatever burdens the Kircher administration may leave behind.

What people want depends on who you talk to, and their social backgrounds.
In general voters are concerned by the rising prices of the past year,
and by the persistence of inequality. Official statistics put inflation
at an annual 8.6 percent, but private estimates are double that figure.

Food prices are at the top of the agenda for both candidates and
consumers, and on the front pages of major newspapers. Owners of large
companies say they are afraid that prices and wages will spiral out
of control, and they are also worried by the shortage of energy to
keep up with the rate of growth.

Other pressing concerns are public insecurity, corruption, deficiencies
in the education and public health systems, the long delays creating
a backlog of trials for human rights violations committed during the
1976-1983 military dictatorship, and the safety of witnesses in the
trials.

Kirchner's stance against impunity won him the support of the country's
leading human rights groups, such as the Mothers and the Grandmothers
of Plaza de Mayo. But he has drawn criticism from other quarters for
the slow pace of the trials and the lack of security for witnesses,
one of whom went missing last year.

And while changes made to the process of the selection of Supreme
Court magistrates have restored the Court's credibility and turned
it into a prestigious institution, on the other hand civil society
organisations are annoyed by the lack of access to public information,
the reportedly biased distribution of official advertising, and the
tense relationship between the administration and the press.

Meanwhile, environmentalists say the country's economic growth has
come at great cost to natural resources and local communities. Until
the last moment they tried, with varying degrees of success, to wrest
promises from candidates to legislate for a more sustainable form
of development.

But for the majority of voters, the economy is the main concern,
because of the impact it has on people's daily lives.

”On the social and economic fronts, there are two major challenges,”
said economist Alejandro Vanoli, vice president of the National Securities
Commission (CNV) and a member of the Grupo Fénix (Phoenix Group) of
economists at the University of Buenos Aires, which advocates an alternative
development model to the free-market policies followed in the 1990s.

”The production system must change and diversify, to generate employment,
and it should not be based solely on export-oriented agriculture or
on the exploitation of oil reserves, which are capital-intensive industries,”
he told IPS.

”Today, the country's growth and employment depend a great deal on
commodity prices which are negotiated on the international market,
and this has to change,” he said.

The second challenge is to change the pattern of wealth distribution,
he said. While Vanoli points out that social indicators have improved
under Kirchner, he said tax reforms and more effective social spending,
in terms of both quantity and quality, are required to overcome inequality.
                   

However, Vanoli does not have much time for other issues, which are
harped on by Senator Fernández's rivals: rising prices, energy shortages,
or the lack of agreement on renegotiating the six billion dollar foreign
debt with the Paris Club.

”It's important to have inflation under control, but I'm not willing
to put it at the top of the agenda,” he said. ”The main thing is to
keep the economy growing, and in Argentina, behind complaints about
inflation there is often a desire to cool the economy down and reduce
government spending.”

Neither is debt a priority issue, in Vanoli's view. ”It would be
good to reach an agreement with the Paris Club, as long as we don't
have to accept conditions imposed by the IMF,” he said.

As for the debt bond bearers who did not accept the exchange offered
by the government three years ago, he said the Argentine Congress
should decide whether or not to reopen negotiations, and if so, the
new offer should be no better than the one made by the government
in the first instance. 

In any case, in his opinion, solving the problems Kirchner leaves
to his successor is not a pre-requisite for attracting investment.
Vanoli said Argentina has experienced growth in the past few years
without resorting to international credit, while exercising independent
policy-making, and he is confident the country will keep to that path.


*****
+ ELECTIONS-ARGENTINA: Cristina's Low-Income Voter Support Base (http://ipsnews.net/news.asp?idnews=39773)
+ LABOUR-ARGENTINA: Informal Economy Just Won't Shrink (http://ipsnews.net/news.asp?idnews=38136)
+ CHALLENGES 2006-2007: Argentina's (Economic) Growing Pains (http://ipsnews.net/news.asp?idnews=36102)
+ SEL Consultores - in Spanish (http://www.selconsultores.com.ar)


(END/IPS/LA IF IP DV HD PR MX MD CS/TRASP-VD-SW/MV/DM/07)


 
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