Southern Exposure

Desde as Entranhas dos Labirintos Latinos.

Monday, December 22, 2003

The Presidential Game

In a contest of pure strategic skill, Argentina's NĂ©stor Kirchner could eat George W. Bush for breakfast. Make it Cheney or Rove. Or Cheney and Rove.

Consider Bush's strategic scenario: an omnipresent, easy-to-hate enemy
of the US, the magically growing american productivity numbers, record
corporation profits to turn into campaign donations, and a severely split
Democratic party. Pfui! Piece of cake.

Argentina is a whole other game. The field is smaller, yes, and the stakes
less, but, ah, the complexity of the game! The ambiguities! I'll use last
week as an introductory tutorial on what it takes to play Argentina's
Presidential Game (this will also count as this week's news roundup,
in case anybody is following them).

You're the President of Argentina. The first thing that lands in
your desk: debt. Your country owes a huge amount of money in terms
of GDP, but unlike the US you can't just keep issuing more debt,
as nobody in its right mind is going to believe you're going to
pay it without some strong guarantees (the USA in 2040?). Anyway,
even if you could issue new debt, the payments would
be so high that you'd have no way of meeting them without (a)
spiraling into an(ohter) exponential curve of growing debt, or (b)
slashing government services so badly that the country's economy and
population would take an enormous hit - a dilemma I propose to call
"Arnold's Choice". What'd be your move?

Kirchner's is a deadly but very interesting -if you happen to
have nothing at stake- game of chicken against the financial
international community. "We'll pay this", says Argentine,
where "this" means an incredibly low amount of money, and far,
far in the future. "You've got to be kidding," say the private
creditors. _"You'll have to pay us this much" (a much, much
higher amount that Argentina's offer). Both sides just look at each
other across the table and try very hard not to blink, diplomatically
speaking. It's a daring move, in some sense an unavoidable one, but
it takes a lot of care to pull it off. Just last week, for example,
you'll had have to pay your IMF dues, while announcing in public
that you won't cede to the Fund's pressure, and then you quietly
issue the new fiscal laws the IMF has asked you to. In short, you
keep bridges open while building enough internal support to make
it clear that you don't actually need to cross them. The
reason a lot of people in New York and London is following this
is that if Argentina "gets away" with this, you'll begin to see a
whole lot of new "final offers" from other developing countries.

That's just part of the foreign side of the game. I won't even get into
international relationships (e.g., our scheduled bi-annual diplomatic row
with Uruguay, or the intricacies of the G-20's group and individual
agendas). Instead, let's take a look at the internal front.

It's Saturday, December 20. You take a peek out of your Presidential office window towards Plaza de Mayo, and see it teeming with piqueteros protesters commemorating another year after the protests that finalized De la Rua his administration. They are there to *cough*subtly remind you*cough* that whatever happens once, could in principle happen twice. A small bomb hidden in a trashcan has just exploded, wounding more than 20 people. You just know that they are going to blame the Government, and that your Government (and the piqueteros that more or less side with you) are going to call it a self-attentate (Argentina is that kind of country).

Ironically, piqueteros and their marches are more or less financed by
the Government's social plans, but you can't take those away without
starting some really violent backslashes, and probably another one-way
helicopter trip out of the Casa Rosada (yes, that's the Argentine White
House, and no, don't get me started with the name). What's worse, while
the piqueteros' frequent disruption of roads and plazas is starting to
seriously annoy the all-important political mainstream, you've been forced
to explicitly forbid police forces to restrain them, risking violence,
maybe a dead body or two in national tv... you know how it ends.

The "alienate almost the entire world after the 9/11 goodwill spike"
level of diplomatic skill just won't cut it. You'll need to get back to
the oldest of all power games: ruthlessly take control of resources, and use them to divide, isolate and co-opt the opposition. Put your sister in charge of most social plans (and by 2004, practically a "super-minister" in that area), as your wife is already powerful Congresswoman, and give the money of the social plans primarily to those opposition leaders that are open to "dialog" with you.

Unsurprisingly, it seems to be working. There were actually three
different marches to Plaza 25 de Mayo, each of them representing a
different sector of the piqueteros movement, each of them fighting the
other two as much as they fight the government. Keeping this up, you
actually have a chance of neutralizing the piqueteros movement without
violence or plunging the country into chaos.

It's not an easy path to walk: according to numbers released last
week (and going to be re-released in another version the next one;
it's a tale of political manipulation of indexes which I don't have
the time to cover here), 14% of your active population is thoroughly
unemployed -imagine that, dear US reader-, while if you actually
do the obvious thing and consider those in the social plans as
unemployed, the number climbs to 20%. Imagine managing that
social climate in a country that is well-aware that it popularily
threw down a too-timid democratic government two years ago, and
that has just received certain confirmation that their labor
laws were directly paid off to the Senate with funds from the SIDE
(Argentina's intelligence service).

But if you happen to keep everything sort of in track, if you can
avoid either turning Argentina into a financial pariah or ruining
the country to pay its debts, if you can keep the piqueteros
under control with your police forces tied down, if you can win
or survive the tens of political struggles I didn't have time or
space to comment on here, then you get to reap the fruits of the
favorable international climate (namely, China's demand for soy,
and your weak currency-backed tourism revival), in the form of last
week's numbers for Argentine growth:

Argentina's third trimester showed Year-to-year growth
of 9.8%, putting it among the top five countries in the world in that
statistic (interestingly enough, the others include China, Russia and
India). Total growth for 2003 will amount between 7.5% and 8%, and for 2004 the absolute floor is a healthy 4%.

Next week: If it's a slow news week and I get morbid enough, I
might tell you about Padre Grassi's trial. Padre Grassi is/was a popular
catholic priest accused of, you guessed it, sexual assault of minors. It's
an old and ugly tale with lots of politics and media issues all over
it, and frankly I rather not touch it (or him) with a ten-foot pole.
But his lawyers just got denied a legal move declaring incompetent the entire
damned judicial system in the State of Buenos Aires, and another trying
to declarate unconstitutional the (relatively new in Argentina) oral
public trial. If that's the level at which this trial is going to play
out, I'll be hard pressed not to cover it.

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