Argentina officially devalued its currency last week after the previous week of speculative attacks on the peso. But it was a moderate devaluation in line with the government's reindustrialization policy, which requires capital controls to keep the peso at close enough to the free-market rate to keep Argentine products competitive for export but high enough to prevent "imported inflation" in the cost of machinery and raw materials to make it impossible for domestic manufacturing industries to grow and prosper. Argentina if following what in the US in the 1980s was fashionably called an "industrial policy," and it requires the use of capital controls, which is absolute heresy to the Very Serious People at the IMF and elsewhere devoted to the neoliberal gospel. The government even practices a policy of voluntary price controls, something US governments completely forgot about since the Nixon Administration (which had formal price controls).
It's not surprising Argentina tends to get bad reporting in the US business press.
But Cristina and her supporters learned from the severe crisis of 2001-2 and now from the very different experiences of the southern countries in the eurozone that the VSPs are about the last people a country should listen to if they want to keep their economy healthy and their people working.
Part of what's happening right now is that the agricultural monopoly sector is pushing for an ever lower peso to facilitate their own exports. After last week's devaluation, smaller and medium producers resumed exports. But the monopolies are hoarding their to pressure the government to let the peso fall and strike a major blow against the kirchnerismo policy of reindustrialization.
This is the latest chapter in a key, long-running conflict in Argentine politics. The political philosopher José Pablo Feinmann has suggested that the one consistent, defining Peronism in all its forms has been its opposition: la oligarchía, the oligarchy: those monopoly agribusinesses and huge landowners. And the last couple of weeks it been "game on!" for that conflict.
Raúl Dellatorre puts some names to the players in the current oligarchical offensive against Cristina and her Left Peronist project in Especuladores a la mesa Página/12 03.02.2014. He names the companies "Cargill, Nidera, Bunge, Noble Grain, ADM and Topfer" as being "uno de los grupos de presión más firmes en contra de las políticas económicas oficiales" ("one of the pressure group most firmly in opposition to the official economic policies") of Cristina's government. He writes that those six groups control three-quarters of the export market for grains and oleaginous. The Mesa de Enlace is the leading business group representing the big growers and ag exporters.
Cristina has that Ulysses Grant factor. Lincoln stated Grant's value succinctly: "He fights." And so does Cristina Fernández. And she usually fighting for the right people and against the right enemies. And this time it's another classical Peronist vs. la oligarchía match. Here from TV Pública argentina getting in the oligarchy's faces by announcing increasing in retirement benefits and support for education. She doesn't follow the Obama strategy of trying over and over and over to compromise with opponents who hate her guts and always will. She fights. Here in this speech from the Casa Rosada, she explicitly rejects the "liberal" (so-called free-market) alternative to her policies. She gives a good statement of how Keynesian economic policies work to increase aggregate demand and defends her reindustrialization policies. Visión 7: La Presidenta anunció incrementos para jubilaciones y ayuda escolar 04.02.2014:
The holding back of products for exports is a kind of capital strike against the government, because the national government also needs the dollars that exports bring into the national treasury for things like energy purchases.
Dellatorre mentions a couple of groups representing smaller producers, Movimiento de Jóvenes Agrarios and Agrupación Grito de Alcorta, that are calling for a governmental export agency that would prevent such actions by the big growers. Both those groups participate in the umbrella agricultural organization Federación Agraria along with big growers.
Two state (provincial) Governors, Peronist Sergio Urribarri of Entre Ríos and Maurice Closs of Misiones of the Frente Renovador (allied with the Peronists), are also promoting the idea. ("Hay un ataque especulativo" Página/12 04.02.2014) Urribarri has a name for the institution he's proposing, the Instituto Nacional de Comercialización Agropecuaria. Even Hermes Binner, Governor of Santa Fe and leader of the Socialist Party that generally supports the oligarchy against Cristina's government, is distancing himself from the obvious policy of destablization promoted by the growers and the Mesa de Enlace. (Para Binner la oposición no apunta a desestabilizar al Gobierno Los Andes 04.02.2014)
Tags: argentina, cristina fernández
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