THE OPPENHEIMER REPORT - New president picks too many fights
May 15, 2008
When Argentina's President Cristina Fernández de Kirchner won her country's elections last year, I wrote that she was likely to be an improvement over her predecessor and husband Néstor Kirchner. I was wrong.
Five months after taking office, Fernández de Kirchner has been as unable -- or unwilling -- as her husband to take advantage of Argentina's best external economic conditions in recent history to reinsert her country in the world economy. Instead, she has carried on with Kirchner's confrontational style and populist policies, causing meager domestic and foreign investments.
The conventional wisdom in Argentina's political circles is that Kirchner -- officially head of the ruling Peronist party -- is still ruling the country behind the scenes. Political commentators refer to Kirchner as ''co-president,'' or they talk about ''the presidential couple.'' Hopes that Fernández de Kirchner would help mend her country's divisions and improve ties with Washington and Europe have been largely dashed.
Last week, when the United Nations released its annual figures on foreign investment in Latin America, it was hard not to notice Argentina's steady regional decline.
Despite benefiting from nearly 9 percent economic growth thanks to soaring world prices of soybeans and other commodities, Argentina's foreign investments grew by only 14 percent last year. Comparatively, foreign investments in El Salvador grew by nearly 600 percent, Chile by 96 percent, Brazil by 84 percent, Peru by 54 percent, and in conflict-torn Colombia by 40 percent.
In dollar terms, the figures are just as striking: While Brazil got $34.5 billion in foreign investments in 2007, Mexico $23.2 billion, Chile $14.5 billion and Colombia $9 billion, Argentina received only $5.7 billion, according to the U.N. Economic Commission for Latin America figures.
Economists say that Peru, a much smaller economy which got $5.3 billion in foreign investment last year, may overtake Argentina this year.
Domestic business confidence runs low. According to a recent poll conducted by the World Economic Forum in 127 countries around the world, Argentina placed 124th -- just above Chad, Venezuela and Zimbabwe -- in its business community's confidence that property rights are well protected by the law.
What's going on in Argentina? Judging from what I saw during a visit there earlier this year and what I heard in various interviews this week, Fernández de Kirchner -- like her husband -- is picking fights with almost everybody.
At home, Fernández de Kirchner's government is lashing out against farmers, who are blocking roads and holding back soybean and rice production since the new president increased soybean export taxes from 35 percent to as much as 44 percent. Fernández de Kirchner accuses farmers of being greedy and oblivious of the poor. But farmers counter that the new taxes are destroying Argentina's top export industry.
In recent days, with her popularity falling, Fernández de Kirchner has lashed out against Argentina's mass circulation daily Clarín, which until recently had a soft spot for the Kirchners. Argentina's freedom-of-the-press groups are protesting what they describe as growing intimidation against the media.
On the foreign front, Fernández de Kirchner reacted with an amazing lack of judgment earlier this year to a U.S. prosecutor's charges that a suitcase with $800,000 in cash carried by Venezuelan businessman Guido Antonini Wilson to Argentina was destined to help fund Fernández de Kirchner's presidential campaign.
Instead of calling for a full investigation, Fernández de Kirchner's joined Venezuelan President Hugo Chávez's government in blaming the whole case on an alleged U.S. conspiracy. At least three of the Venezuelans arrested in Miami have already pled guilty to participating in a Venezuelan-government effort to cover up the alleged campaign donation.
My opinion: To be fair, Fernández de Kirchner cannot be put on the same level of economic or political lunacy as Chávez. She is not nationalizing industries every other week, nor supporting terrorist groups abroad.
But Fernández de Kirchner has failed to realize that the difference among Latin American presidents today is not among rightists and leftists, but among those who make friends -- like those of Brazil, Mexico, Chile, and Peru -- and those who are picking fights all the time, like Chávez.
So far, she has come across as closer to the latter, which has kept Argentina from using its economic momentum to achieve long-term growth and reducing poverty much more rapidly.