Countercurrents | December 13, 2019
Argentina is taking measures to fight out debacles created by implementation of neoliberal policies for years in the country. The measures may appear unusual to many. But the measures show a political leadership’s effort to fight out poverty, lack of medicare for common people. There is also a plan to make current laws related to health and social emergencies ineffective on January 31, 2020.
Argentina’s President Alberti Fernandez on December 12, 2019 summoned the Chamber of Deputies to approve the necessary laws to declare economic, health and social emergencies. In order to carry out this decision as soon as possible, a well-defined schedule of meetings and events has also been set up.
Next Monday, the newly appointed ministers will come to Congress to explain the bills related to economic, health, and social emergencies.
On Tuesday, the Budget and General Legislation committees will hold a plenary to issue an opinion on these bills.
On the next day, the Fernandez bills would arrive in the lower house seeking approval.
This schedule was agreed between President Fernandez, the Coordinating Minister Santiago Cafiero, the Legal and Technical Secretary Vilma Ibarra, and the President of the Chamber Sergio Massa.
During the Monday meeting, the new ministers are expected to argue in favor of the emergency declaration by contextualizing the measure with reference to the current lack of a national budget, which reflects the true state of the public accounts that the former President Mauricio Macri leaves.
Ministers are also expected to remind lawmakers that current laws related to health and social emergencies will no longer be effective on January 31, 2020.
The likely political response of some legislative banks to this whole process, however, may not be very encouraging.
Right wing politicians’ opposition
Some right wing politicians have argued in advance that emergency declarations in these areas would grant President Fernandez “discretion” to manage public resources through “necessity and urgency decrees.” That is their argument to insinuate their possible opposition to the measure.
In that sense, for instance, Maximiliano Ferraro, president of the right wing Civic Coalition bloc, announced that he will not support the Executive initiative arguing that emergency laws could grant the government “exceptional powers that violate the National Constitution.”
Behind this rhetoric, the political motivations seem to be different: right wing lawmakers are reluctant to recognize the magnitude of the social crisis that a neoliberal government, which was led by businesspersons and supported by U.S.-controlled international financial institutions, left in Argentina.
End poverty and misery
Earlier, on the newly elected President of Argentina, Alberto Fernández, called on his fellow citizens to join forces to end “poverty and misery” once and for all.
Alberto Fernández has taken charge on Tuesday.
Alberti Fernandez called for “open borders and spaces so that we all can think together about how to end poverty and misery.”
Fernandez called on all social sectors to work on this goal in order to improve the livelihoods of the Argentinean people.
Fernández, the winner of the elections on October 27, visited the province of Catamarca on Saturday, where he participated in the inauguration of the Raúl Ricardo Alfonsín Urban Park.
Along with Alberto Fernandez were the Catamarca Governor, Lucía Corpacci, the elected Governor, Raúl Jalil; and the Vice Governor Rubén Dusso.
In a message posted on Twitter, Fernández thanked Corpacci for paying tribute to former President Raúl Alfonsín (1983-1989).
“Raúl Alfonsín taught us the importance of the ethics of solidarity, which is to reach out to those who have stayed on the side of the road. This is what we are going to do from December 10 in Argentina,” the elected Governor said in his tweet.
Plan to increase minimum wages and pension
During a meeting with the General Confederation of Labor (CGT) leaders, the next Labor Minister Claudio Moroni mentioned that Alberto Fernandez plans to increase wages and pensions when he takes office in December.
“Promising a decree to ‘level-the-field’ before starting the social dialogue was what workers liked the most. So did the commitment to immediately improve the income of retirees and social plans recipients,” local outlet Perfil reported.
“Increases would not be widespread but would be aimed at benefiting the most relegated sectors.”
Nevertheless, further details of these measures will be announced when the new Argentine government knows how President Mauricio Macri leaves the country’s public accounts.
According to Argentina’s National Institute of Statistics and Censuses, a 4-persons family needed $35,647.66 to get out of poverty in October 2019. That amount was 47.1 percent higher than the equivalent figure in Oct. 2018.
To avoid misunderstandings from the business community, Fernandez’s team members stressed that the ‘level-the-field’ decree will not increase all salaries or create a bonus for all workers.
The new Argentinean government will set an emerging compensation mechanism to ease the burden of inflation while generating a broad social agreement on prices and wages.
The Fernandez decree would be a bridge to assist those workers who have been hit hardest by the macroeconomic crisis as well as by particularly harsh conditions in their particular sector.
Among them are those who failed to negotiate agreements in line with the evolution of inflation, which would reach a 50 percent accumulated increase at the end of 2019.
Trump hits Argentina and Brazil with new tariffs
The U.S. President Donald Trump recently sent shock waves through Brazil and Argentina, announcing he would restore tariffs on U.S. steel and aluminum imports from the two countries in apparent retaliation for currency weakness he said was hurting U.S. farmers.
In an early morning tweet on December 2, 2019 that sent officials from both countries scrambling for explanations from Washington, Donald Trump said, Brazil and Argentina were “presiding over a massive devaluation of their currencies.”
Both countries have actively been trying to strengthen their currencies – the real and the peso – against the dollar. Their currencies have been buffeted by weakness that analysts partially attribute to Trump’s larger trade battle with China.
Trump, who gave no details about his new plan, said the currency weakness was hurting U.S. farmers. The U.S.’ trade war with China has made U.S agricultural products less competitive compared with those from Brazil and Argentina.
“Effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries,” Trump wrote.
Representatives for the U.S. State Department and the Office of the U.S. Trade Representative did not immediately respond to a request for comment.
As they awoke to Trump’s tweet, Brazilian and Argentine officials said they would try to speak with Washington and press Trump to reverse course. Brazil’s main steel industry body said it was “perplexed” by a decision it labeled a “retaliation.”
Emerging market stocks and the highly sensitive Mexican peso slid to session lows following Trump’s post. U.S. and Brazilian steel shares rose.
Brazil’s president, Jair Bolsonaro, an avowed Trump fan who has sought closer U.S. ties, said in a local radio interview that Trump’s decision was not a retaliation, adding that he would call his U.S. counterpart, who he was confident would listen to Brazil’s concerns.
“I don’t see this as retaliation,” Bolsonaro told Radio Itatiaia. “I’m going to call him so that he doesn’t penalize us … Our economy basically comes from commodities, it’s what we’ve got. I hope that he understands … and I’m almost certain he’ll listen to us.”
Argentine Production Minister Dante Sica said Trump’s announcement was “unexpected” and he was seeking talks with U.S. officials. Additionally, Argentina’s Foreign Ministry said it would begin negotiations with the U.S. State Department.
Sica said Argentine government officials had discussed how to deal with the measures on Monday morning and that he was seeking talks with U.S. Commerce Secretary Wilbur Ross to obtain more detail.
“We are trying to get more precision (about the announcement) and what impact it could have” both commercially and administratively, Sica said. “We do not yet know the magnitude (of the measure).”
He said Argentina has exported around $700 million in steel and aluminum to the United States so far this year.
Trump’s accusation that the Brazilian and Argentine currencies were being artificially devalued was met with widespread skepticism.
Argentina put in place currency controls to steady its beleaguered peso.
Trump also urged the U.S. Federal Reserve to lower interest rates so countries “no longer take advantage of our strong dollar. Lower Rates & Loosen – Fed!”
Trump has repeatedly urged the U.S. central bank to lower rates to below zero, but Fed policymakers have been reluctant. Fed policy makers hold their next meeting on Dec. 10-11.
The Instituto Aco Brasil, Brazil’s main steel lobby, said it was “perplexed” by Trump’s decision. It said in a statement that Brazil’s government could not be meddling with the real as the currency is free-floating.
“The decision to tax Brazilian steel as a way of ‘compensating’ the American farmer is a retaliation against Brazil,” it said. “Such a decision ends up hurting the American steelmaking industry itself, which needs semi-finished products exported by Brazil in order to operate its mills.”
Shares of U.S. steelmakers rose on Monday, with United States Steel Corp (X.N) up 3.6% at $13.59 and AK Steel Holding (AKS.N) rising 6.7% to $2.95.
Brazilian steelmakers’ shares fell initially but then rebounded as analysts from JP Morgan suggested buying the sector on any weakness, saying any tariff hike “should not be material” given the relatively small volumes they export to the United States.
Shares of Ternium Argentina (TXAR.BA) slumped 5.5% after Trump’s tweet, with JP Morgan noting it is the most exposed steelmaker in Latin America to the tariff move.