For those who expected her to mention the name of their preferred candidate, Cristina Kirchner’s speech in the Plaza de Mayo may have been disappointing. However, as always, the leader of Kirchnerism managed to send signals. And in this case, the most important thing is maintaining his alliance with the economy minister, Sergio Massa.
To begin with, for his gesture of inviting him to a podium where the president had not been invited Alberto Fernandez nor where there were faces close to the pure ruling party nor of the leadership of the CGT. There Massa stood out together with “kidney” Kirchner leaders, including some who had been very critical of the minister, such as John Grabois.
From the design itself, a careful choreography, so that it is not interpreted that Massa had lost positions in the ranking of preferences. She was in the first row, next to Axel Kicillof, Máximo Kirchner and Eduardo De Pedro.
As a signal to the IMF, Cristina Kirchner avoided mentioning a candidate
The other gesture from Cristina is the very fact that she has not talked about candidacies. If he had done so – and especially if the person mentioned was not Massa – that could complicate the minister’s negotiations with the International Monetary Fund. After all, the confidence that the minister arouses as an interlocutor for the agency’s staff is his condition as a “strong man” of the Government and the influence it exerts as a potential presidential candidate.
If, in the midst of the negotiations, a leader with a strong critical profile of the IMF is confirmed as a Peronist candidate -someone like Kicillof, for example, who always spoke out against the signing of the 2022 stand-by-, the current negotiations they could get bogged down by the doubts that the political factor would introduce into the relationship.
Massa himself, through the communiqué of its Renewing Front, He had warned about the need not to send wrong political signals that could jeopardize the fragile financial stability achieved after the latest currency runs.
Cristina Kirchner avoided referring to the candidacies at the Plaza de Mayo event and focused her speech on criticizing the debt.
“What we want is that this action is not affected by internal differences that put at risk the economic stability necessary to complete this stage of government and start the new path of growth and development that Argentina needs,” the text said. in an indirect allusion to the need for there to be no political interference in the task that Massa is currently engaged in, which is urgently obtaining dollars.
Kirchnerism acknowledged receipt of that request. First, with the meeting of Máximo Kirchner and the top staff of the Renewal Frontsecond with the invitation to Massa for the act and with the confirmation that the leader of La Cámpora will get on the plane that will take Massa to China, where he will manage the extension of the currency swap and request the authorization of loans from the bank of investment from the BRICS group.
But, above all, what Cristina took care of was Massa’s request that candidates not be chosen “by hand” in another context that was not that of a political table of the Frente de Todos.
Thus, while the militants clamored for the umpteenth time “Cristina for president”, now accompanied by the chant “one more and we don’t fuck around anymore”, Massa limited himself to smiling from the far right of the stage set up in the Plaza de Mayo. He had managed to “buy time” to advance in the negotiations with the IMF in the coming weeks and secure the crucial financial aid of US$10,000 million that would make it possible to reach the PASO in August with relative stability.
What did Cristina Kirchner say about the debt?
Of course, Cristina Kirchner’s alliance with Massa does not guarantee the minister the absence of problems. She may be careful, in her speeches, to exonerate him personally for soaring inflation and low wages, but many of her proposals could end up hurting the IMF deal.
Cristina reiterated in the Plaza de Mayo one of her most controversial proposals, that of tying the volume of the country’s payments to the export performance, and she did so by quoting the famous phrase of Néstor Kirchner during the renegotiation of the sovereign debt in default: “the dead do not pay the debts”.
In the latest negotiations with the IMF, Massa asked to be allowed to use the currencies to control the exchange rate.
And he reiterated his concept that, as the loan decided in 2018 was “political”, the solution sought now must also “be political”. That is, go outside the classic manual of renegotiations.
Cristina objects to the high amount approved to help then President Mauricio Macri -US$57,000 million, of which US$44,000 million were executed-, which exceeded the quota that corresponded to the country. And he also criticized the permission that part of those dollars will be used to defend the exchange ratesomething that is expressly contraindicated in the postulates of the IMF itself.
That is why the Kirchnerist leader argues that the “stand by” negotiated in 2022 is not only inflationary -because it leaves the economy without anchors, by forcing the rise of the “crawling peg”, interest rate and utility rates – but which predicts that it will be priceless.
“If we, listen to me carefully, do not achieve that this program that the IMF imposes on all its debtors is set aside and allows us to develop our own program of growth, industrialization, technological innovation, it will be impossible to pay for it no matter what they say what they say”, Cristina said, in one of her most celebrated phrases on the rainy afternoon of May 25.
Although the Fund did not officially respond to the proposal that payments be linked to the volume of the country’s exports, former officials who managed the agency’s policy for Latin America did, such as Alejandro Werner and Claudio Loser. Werner called Cristina’s argument “totally insane”, while Loser said he couldn’t help but laugh when he read the speech.
But where they surely did not laugh was in the legal department of the IMF, because Cristina’s position implies a contradiction: Argentina is demanding that the agency give it financial assistance under conditions similar to the same ones that it had described as illegal when the loan was granted to the Macrista administration.
Although she avoided mentioning him as a candidate, the vice assured that Massa was in charge of grabbing “the hot potato.”
Cristina and the flag of exchange rate delay
The defense that Cristina made about her own government management implies, in addition, a whole definition of exchange rate policy. The vice compared the amounts of GDP for 2015, 2019 and 2022, measured in dollars, to conclude that the best salaries and pensions in the region were paid during her term.
Of course, in the case of his government and that of the current one, in which exchange rate traps were in force, measured GDP in terms of the official exchange rate. In this way, he mentioned how the country’s production had plummeted from US$647,000 million to less than US$400,000 million towards the end of the Macrista administration and how it had recovered to a level of US$633. .000 million.
If, instead, the calculation had been made to the value of the parallel exchange rate from the financial market, the comparison would have been very different: Cristina’s GDP would be reduced to US$450,000, and the current one to just US$310,000 million.
This single argument, in a speech in which he raised the need to commit to a government program of a statist and interventionist nature -that maintains exchange controls to solve the problems of the “bi-monetary economy”- It implies a whole definition of the exchange rate delay as a way of boosting the income of workers.
And it is a program that clashes head-on with the diagnosis that the IMF itself has made about the Argentine economy current: it considers that a lag in the exchange rate is accumulating, to the point that the peso could be overvalued by 25%.
Massa is trying to get the Fund to abandon its classic demand in these cases: a devaluation that makes exports more competitive and naturally limits imports. And, as if that were not enough, he is asking that he be allowed the exceptional situation of using part of the aid money to intervene in the exchange market.
CFK’s speech defended the use of exchange rate policy as a way to improve wages and distribute the national income.
It is already, in itself, a difficult subject to digest for the IMF technicians, who do not want to repeat their bad experience of 2018, when the voluminous loan disappeared in a matter of weeks, due to a wrestling that the Central Bank lost against the market .
Now, in addition, Massa carries on his shoulders a political alliance with a leader who repudiates the “stand by” and who longs for the days when the economy ranked high thanks to its backward exchange rate.
It does not seem, at first sight, the best help for a minister who is negotiating from a position of weakness. Although, as always, the analysis can change depending on the lens through which you look: perhaps the “hawks” of the IMF interpret that, precisely because of the harshness of Cristina’s speech, is that they must bet that Massa manages to stabilize the financial situation until the elections.
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