Bloomberg News

Argentines Stage Protests at Prices, Fernandez Re-Election Bid

November 08, 2012

Argentines packed streets and squares across the country last night, banging pots and waving banners to protest President Cristina Fernandez de Kirchner’s failure to combat inflation and crime, and oppose changes to the constitution that would allow her to seek a third term.

The protest, the second this year, was set to be the biggest since 2008, according to political analyst Carlos Fara. In that year, Fernandez’s attempts to raise farm export taxes sparked a four-month conflict that blocked highways and created food shortages.

Since her October 2011 landslide re-election, Fernandez has tried to stem capital outflows by restricting imports, forcing companies to repatriate export revenue and banning most purchases of dollars. With annual inflation that private researchers estimate is faster than 20 percent, South America’s second-biggest economy ground to a standstill in the second quarter after expanding an average 7.7 percent a year from 2003 to 2011.

“The unfavorable economic situation is a breeding ground for discontent,” Fara, who runs Carlos Fara & Asociados polling company, said in a telephone interview from Buenos Aires before the protest began.

Demonstrators began to march in different neighborhoods at 7 p.m. local time. In downtown Buenos, Aires they blocked the main thoroughfares, banging pots and holding Argentine flags and posters that read “Not to the change of the Constitution,” “Stop Crime and Authoritarianism” and “Free Press.”

‘Responsibility,’ Popularity

Protesters carried a 100-meter (328-foot) long flag to the Plaza de Mayo singing “no to re-election,” while in front of the presidential palace, protesters sang the national anthem.

Claudia Romano, who identified herself as a housewife, said she participated in the rally to ask the president to listen to the people.

“We want to support the country and her government, but she needs to listen us and acknowledge her mistakes,” Romano said. “We can’t stand more inflation and the level of crime we have, she has the responsibility to give us answers.”

Television news channels broadcast similar scenes from the major cities of Mendoza, Santa Fe and also outside the presidential residence in Olivos, Buenos Aires.

The 59-year-old president’s popularity has plunged by more than half since her re-election with 54 percent of votes, according to a survey by Buenos Aires-based pollster Management & Fit.

‘Complicated Position’

The Oct. 18 to Oct. 29 survey showed her approval rating dropped to 28 percent from 63.3 percent a year earlier. About 64 percent of the 2,100 people questioned said they were in favor last night’s rally, while 20 percent were against it. The poll has a margin of error of 2.3 percentage points.

“Politically, she’s in a more complicated position because the economy is weaker,” said Alejandro Urbina, who helps oversee about $800 million of emerging-market assets at Silva Capital Management in Chicago. “Inflation remains high and the impact on people is very negative. The situation is not improving but deteriorating.”

Argentina, which defaulted on $95 billion of debt in 2001, has the highest credit risk in the world after Greece. The cost to insure Argentine bonds against non-payment for five years rose to 1,909 basis points earlier this month, according to data compiled by Bloomberg.

Crime, Inflation

Crime and inflation are the main concerns of Argentines, according to Management & Fit. While the government said that consumer prices rose 10 percent in September from a year earlier, private economists estimated the increase was 24.3 percent, according to a report released by opposition lawmakers.

Rising costs and wages have damaged the country’s competitiveness in international markets, prompting a drop in exports.

“The first thing the government should do is to acknowledge mistakes,” said Roberto Sanchez Dahl, who oversees $1.4 billion of emerging-market debt at Federated Investment Management Co. in Pittsburgh. “Inflation is an example. They live in a different reality and it’s the people in general who suffer the real inflation.”

Fernandez, who was first elected in 2007, has followed her late husband and predecessor Nestor Kirchner’s policies of boosting wages and pensions to stimulate consumption and bolster demand for goods made by local manufacturers. Reduced demand from Brazil, the country’s main trade partner, has led exports to fall in five of the past nine months.

Slowdown, Confidence

This year’s slowdown in the economy led Argentines’ confidence in the government to fall for a fifth consecutive month in October, according to a poll released by Torcuato Di Tella University on Oct. 31.

The confidence index fell 36 percent from a year earlier, the survey of 1,209 people showed. Confidence fell 1 percent in October from September to 1.67 on a scale of zero to five.

Fernandez’s loss of popularity comes at a time when supporters are seeking to amend the constitution to allow her to run for a third term in 2015. Lawmaker Diana Conti said in an Oct. 31 interview with Radio Continental that the present system, which sets a maximum of two consecutive terms, is “ridiculous.”

In the Management & Fit poll, 66 percent of respondents opposed a reform of the charter while 27.5 percent were in favor.

Dividing Lines

As a constitutional amendment will require the approval of two-thirds of Congress, Fernandez’s supporters are counting on 2013 midterm elections to add lawmakers to their coalition.

“Political tension is bound to rise in in the run-up to the key 2013 midterm elections as the government tries to tighten its control over the political system,” Daniel Kerner, a political analyst at the Eurasia Group wrote in a statement on Nov. 5.

Fernandez has sidestepped questions about her political future.

“It doesn’t’ depend on me,” Fernandez said in a Sept. 28 exchange with students at Harvard University in Cambridge, Mass. “The constitution doesn’t allow my re-election as president, so this is beyond what I want. It’s not my responsibility to reform the constitution,”

Opposition lawmakers from both houses have pledged to vote against any attempt to modify the constitution.

“We are committed to not voting for any kind of reform or any maneuver to seek a re-election,” said opposition Senator Adolfo Rodriguez Saa. “In 2015 we’ll have a new president.”

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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