Policy clouds a promising economy with commodities at a true peak
The core of the crisis between the Cristina Fernández’s government and agricultural producers is not fiscal but rather related to economic sustainability as well as medium- and long-term cultural confrontations that have a long history, the author claims.
(From Washington, DC) THE ARGENTINE COUNTRYSIDE is replete with teruterus, long-legged birds with white, brown, and black feathers and a thin crest at the top of their heads. They always travel in flocks, shrieking unimaginably. To protect themselves and mislead predators, they lay their eggs in a nest while singing teru-teru to announce its location some distance away.
This rural call is a classic tactic in distractive politics; an exercise always deftly practiced by judicial directors, Juan Domingo Perón and after. The ever-astute Perón knew to hide his true intentions behind elaborate smoke curtains. He chose his enemy and focused; he used words like a cape to cloak his intentions. His true interests were somewhere else, like the Teru-teru.
Cristina Fernández, successor in the Argentine presidency to her husband, Néstor Kirchner (a unique achievement in Latin America), is of this same school. So was her husband, as well as the previous Judicialist president, Carlos Menem.
The conflict in the countryside was born of the teruteru-like tactics of Fernández. And, in contrast with the general perception, it is not a conflict with exploitive or even fiscal origins. In the background are hidden three powerful causes, each one with a different level of profundity. The first and most superficial, if it deserves that term, is medium and short-term economic and governmental sustainability. The second is the base substrate, the profound and historical disputes between urban and rural areas in Argentine cultural construction. The third, in the middle and connected to the others, includes Argentina’s medium and long-term governability and institutionality.
SEEDS OF HATE
The key interest in retentions, the central motive behind the strike and the conflict between the agricultural sector and the government, lies in the conditions for the economic model directed by Fernández and her husband before her. “60 percent of exports are based in agriculture, and the majority are primary products on which the Government applies retentions” A sustained exchange rate, at around 3.15 pesos per dollar, demands control of the monetary base, absorbing excesses in capital that could enter the economy. Too much money decreases the value of hard currency and, in turn overheats the economy and could cause inflation to skyrocket.
Argentineans have a phobia of inflation, a virus just the thought of which makes their blood run cold after the devastating experiences of the late ‘70s and late ‘80s. For consumers who have put up with annual rates higher than 5,000 percent, the word inflation is a serious thing.
This fear has stricken the Government, which, under pressure from low prices, has opted to sweep the dust under the carpet (or sing teru-teru at a distance) and eliminate the real inflation with a false index constructed by the dismantled and politically controlled National Institute of Statistics and Censes. “With soy at prices higher than 550 dollars per ton and other commodities advancing at a firm pace, the Government of Fernández examines its ministry’s accounts and trembles”
60 percent of Argentine exports are based in agriculture, and the majority are primary products on which the Government applies retentions. It is a way of controlling the monetary base, which in any case expands with almost half the money that enters through exportation, some 40,000 dollars annually.
If the price of soy and other commodities does not find a cap and the government does not apply greater retentions (mobile or fixed), Argentina will be flooded with money in no time, the dollar will become an easy fallback and, at the same time as we see masses of Argentineans traversing the globe as tourists, the fundamentals of Fernández’s model for growth will crumble like the schools in Sichuan.
RETENTIONS TO THE SPINAL COLUMN OF ECONOMIC RECOVERY
“The rural sector was more easily attacked than urban consumers, given the dispersion of the former and concentration of the latter. It was the only sector that the Government could nab” The tactic of the now ejected minister of Economy, Martin Lousteau, of applying mobile quotas to exportation, springs from this reasoning. With the price of soy higher than 550 dollars per ton and other commodities (wheat, corn, and even rice or milk and meat) advancing at a firm pace, the Fernández’s Government looks at the ministry’s accounts and trembles.
So, retentions. Politically, the rural sector was more easily attacked than urban consumers, given the dispersion of the former and concentration (around public plazas and the media) of the other. In the end, it was the only sector that the Government could nab. Not only has she detained its growth for eight years, but it has been the spinal column of Argentine economic recovery after the crisis of 2001.
What is more, the country’s green plains have a certain ingredient that is like blood to vampires or the meat of a newspaper editor to a politician: they have been internationalized more than ever with international investors eager to put money into Argentine lands and animals; their proprietors (including farmsteaders) have exchanged hardship in the fields for the comfort of small cities in the country’s interior and the peons continue being the weak link in the chain of transmission, winning low salaries for official measurements.
Who could complain if the government set itself against these profit-oriented speculators, these rich new farmers with 4 x 4 trucks, these people who have made themselves millionaires in such little time and apparently by magic, not through their own effort but through incomparable international prices? The question should have been phrased as such: who, in the city, could complain. In the countryside, plenty. And there we go.
Two journalists have unstitched the emperor’s invisible clothes. Their names are Néstor Sargiotto and Adrián Simioni, and they have the unlikely qualities of being intelligent, honorable, and two of the best friends that I have. Sargiotto and Simioni are two sons of gringos (Italian emigrants to the Argentine countryside) raised in the rural agrarian towns of Charras and Alejandro Roca in the highly productive southern Argentine province of Córdoba. They know a bit more about agriculture than President Fernández. They are familiar with it from up close: they know what size a good soy grain should be, how much milk a good cow gives, and how an old sty smells.
“In the countryside there are enormous operators and many of them have squeezed juicy profits from agricultural prices, even with retentions. And not only them: also many small and medium-sized producers have done the same” Their writing has been disseminated through almost all of Argentina thanks to e-mail and blogs, tools curiously urban in nature. The first writer stripped bare the policies behind the teruteru shrieks. The second scrutinized the underlying conflict, one as contemporary as it is historic, between Buenos Aires and the provinces, which is to say between the city and the country. Both writers are armed with figures and statistics, maintaining their precision as economic analysts.
Sargiotto, editor of agricultural publications, an agricultural producer himself, and an analyst of the sector, wrote the analysis, A Few Keys for Understanding the Retentions Problem upon request by businesses that needed information in order to make decisions during the first agricultural strike. A Few Keys…, which retains an ironic tone in keeping with its author’s sense of humor, quickly found its way into the hands of the rural protest’s principle directors, like the Argentine Agricultural Federation, and those of executives like Adrián Urquía, CEO of Aceitera General Deheza, one of Argentina’s greatest exporters of agroindustrial products. Safe Democracy reproduces it with the author’s permission. It is worth the effort to read it carefully.
Of course, Sargiotto is hardly naive. He knows that in the rural sector there are enormous operators and that many of them have squeezed juicy profits from rising agricultural prices, even with retentions. And not only them: also many medium and small producers have been able to recover a respectable quality of life they have not seen for decades (or perhaps an entire lifetime).
THE SIN OF CHALLENGING THE NATURAL ORDER OF THINGS
The point is: is this not as it should be? Is it punishable that someone should make good money? No, nor are we even talking about sort of riches that could be qualified as obscene by some sacristan who had never read Carlos Montaner. “Simioni’s text challenges the Government, blaming it for twisting the agricultural arm to the extreme of enslaving it as an eternal provider for the urban bureaucracies” But for the government of President Fernández, who has built her political capital mobilizing the picketers’ initially just claims in her favor until these became a cuasi-fascist force, it is punishable.
The answer to such insensitivity came from Simioni, editor of the periodical The Voice of the Interior, the leading journal from the Argentine provinces. Simioni gave the title Forbidden to Be Rich in Laboulaye to a volcanic text that expressed the interior’s discontent with respect to the decisions taken in the country’s capital. Forbidden… scattered through blogs with the velocity and inevitability of a swarm of locusts.
The work challenges the Government, blaming it for twisting the agricultural arm to the extreme of enslaving it as an eternal provider of natural resources for the urban bureaucracies. Simioni intelligently and comically alleges that the great sin of the rural sector is that it challenges the so-called natural order of things: the countryside breaks its back working for the good of the city governments; urban wealth is good for filling the eyes of tourists and boasting about the European aspects of Buenos Aires, but those belonging to the destitute agricultural labor force are just that: peons, not kings. It is apparently a contradiction in terms for them to want status as the nouveau riche, buying themselves the newest model of Toyota 4 x 4. That truck is alright for showing urban wealth, but not for the countryside, where it would be scratched, dented, and worn out from use.
If Sargiotto has put his finger on the sore spot of the true economic reasons for retentions, Simioni has poked his nose in a profoundly subjective argument, an ancestral phenomenon in Argentine culture: precarious and hardly rational political relations between Buenos Aires and the interior.
THE TERRITORY OF REDUCTIONISM
Even with all of their wisdom, teruterus easily scatter and flee. A loud noise or the simple presence of a farmer, bigger and taller than the bird, is enough to make it tremble. Certainly it will return to its own plot, though frightened.
“The worrying side of Fernández’s and Kirchner’s political practice is not so much its immediacy but rather Argentine policy’s conditions of construction” The similarity between the teruterus, Fernández as a politician, and Peronism as an instrument of power, only go so far. Fernández and Kirchner are still paving the way to a new hegemonic age of Peronism, which we could call the Familiar Period. The crisis with the countryside could chip the president’s popularity in Argentina, but certainly it is far from compromising her permanence in power. On the other hand, her husband is in clear control of Judicialism, the only party alive and with a real ability to build power in Argentina. At least for now.
The third factor in question, having seen the economic reasons and cultural confrontation, are the conditions of political accumulation that produce the crisis between the government and rural sector in Argentina.
“Kirchnerism now simply excludes duplicitously” The worrying side of Fernández’s and Kirchner’s political practice is not so much its immediacy but rather Argentine policy’s conditions of construction, which leave deeper holes than those that a tractor makes in an aerated field.
Argentine policy, as the government has declared during confrontations with producers, has been changed into the territory of reductionism, where little priority is given to the need for preserving trust in the quality of institutions. It is an either with us or against us situation, an imitation of another president whom at the moment I have conveniently forgotten.
This reductionism is exclusive, marginalizing, and the cause of major tensions whose payment is postscripted. When the omnivorous power of Menemism camped in the Argentine political field, the so called progressive sectors questioned their exclusion by the right. Kirchnerism now simply excludes duplicitously.
AN IMPERFECT FUTURE
If politics are a construction of political factions, sectorial alliances that make up social, economic, and political blocks which in turn lend sustainability to an ideological group, then in Argentina this type of construction is not dialogic but fanatic. “No matter how far Peronism stretches the limits of its definition, first with Menem and then with Fernández and Kirchner, it does not represent the totality of Argentine politics, nor all of the nation’s present and future” Antagonisms are quickly converted into hatred, and any chance for dialogue ends trampled by insults, blows, and widespread foolishness.
The problem is that, even with its hegemonic aspirations, Judicialism, at least from Menem on, has not recognized the existence of opposing or anti-hegemonic voices. Or it has excluded, absorbed, or destroyed them. When those hegemonic aspirations drill into the opposition (a phenomenon whose equivalent in the business world is the dream of monopoly), autocracy is only a step away.
There is a second underlying problem, which is the fallacious totalizing tendency of Argentine political debates. An entire library’s worth of history could be brought in argument against such a claim, but the fact is that Argentina’s present and future, based in the either with us or against us philosophy, and the hegemonism without limits of Fernández and Kirchner, is not promising.
“The wear and tear to both sides of the road will be difficult to quantify in the long-term” Peronism defines itself as a movement, a device created by Perón to bring together under his gigantic teruteru’s wing various emerging ideas, whether right-wing, centrist, leftist, or even at the far extremes. But no matter how far Peronism stretches the limits of its definition, first with Menem and then with Fernández and Kirchner, it does not represent the totality of Argentine politics, nor all of the nation’s present and future.
A government is, also, the Polaroid of an epoch. And president Fernández’s unsound rigidity, Kirchner’s ultra-hegemonic control of the only party operating as a viable political faction and, going outside of symbols, Luis D’Elía’s militant street protests, do not present the best democratic credentials.
Neither do the tenderizing measures of the rural protest produce any gain. The evident conclusion of the conflict, therefore, is that with such a zero-sum game, everyone loses. The wear and tear to both sides of the road will be difficult to quantify in the long-term.
ELECTIONS IN RÍO CUARTO: THE FIRST REFERENDUM OF THE AGRICULTURAL CRISIS?
Fabián Bosoer, in an article for Safe Democracy, wondered about the possible emergence of an agrarian party in Argentina. Perhaps part of the answer can be found in Sargiotto’s statistics, or even in his lifestyle. A son of rural farmers, the journalist is also an astute reader of the Argentine countryside’s interior.
In little more than a month a vote will be held in Río Cuarto, the 17th largest Argentine city but the first in rank with regards to the number of rural producers. Its GDP is largely based in the production of the surrounding fields. Located in the province of Córdoba in one of the richest areas in the country, Río Cuarto could be the first great referendum of the agricultural crisis, Sargiotto told me in a conversation on Messenger, which has become a kind of modern 24/7 journalism that is also used in the countryside.
Yes, the spirit of the countryside is alive in Río Cuarto, but its 190,000 inhabitants were only 110,000 a decade ago (immigrants have come from neighboring areas) and many of them sell goods and services to farmers and other inhabitants. Like most of Argentina, even the most agricultural city has urban aspirations. And, Sargiotto says, even living in the countryside and investing in it, the inhabitants of Río Cuarto do as well. If the agricultural sector stops, they suffer. And they complain. And throw insults, become angry, and search for those responsible.
What will Río Cuarto decide? What will be its mixture? A profound reading of the results, going further than the simplistic reductionism of the political leadership, could provide a point of reference for Argentina’s political future if the election in Río Cuarto is nationalized, Sargiotto says. It will be a question of looking through the magnifying glass and, perhaps, doing so in the direction opposite from where the teruterus sing.