Current Events: Government vs Producers

What’s happening in Argentina these days? Well, since December 10 of last year, we have a new president, Cristina Kirchner, wife of the last president, Néstor Kirchner. The first few months of her government haven’t been easy. Some say that this government is actually (and rather unusually) slightly to the left of the majority of the population. In particular, with regards to human rights issues and, arguably, social welfare. What’s clear is that the Kirchners have their enemies. They also (up to this point) have widespread popular support. (Although this is noticeably less so among the somewhat conservative voter population in the capital city and the media, both national and international.)

About three months into her presidency, the government decided to raise export tariffs on soy, sunflower and other grains that are increasingly profitable on the world market and are an extremely important aspect of the national economy. According to the government, the increased revenues would be used for social programs and other measures that promote an increased distribution of wealth. It was met with surprising opposition. In part, due to some blunders by the government in presenting the new reforms (grouping, for instance, all producers together rather than giving small producers special conditions and exceptions) but also due to political maneuvers on the part of fairly powerful interests represented by several agricultural organizations. In very simple terms, this country –from its very beginnings- has seen a great division between “haves” and “have-nots”. Land was not divided into small stakings as in most of the US and Canada, but rather huge tracts of land were given to (or purchased or consolidated by) a powerful, wealthy elite. As Argentina developed into a major agricultural producer, these few landowners grew more wealthy and more powerful and this historic inequality has essentially been maintained. Today... although this is a simplification, the structure essentially remains the same. (To give you an idea: half of the country's arable land, 84 million hectares or roughly 207 million acres, is owned by just 4,000 people.) There are also, obviously, other, more complex, factors at play as well. But basically, the agricultural sector, producers and exporters, are fairly powerful economic players here. Not surprisingly then, when the government proposes raising export tariffs, the response of the “countryside” (el “campo”) is staunch resistance. In their view, the profits earned have been earned by them and are theirs to keep. In response, the agricultural sector goes into lockdown. In March we saw empty shelves, no rice, no flour, no meat, no milk because producers were on protest and decided not to ship key products to market. This lasted a few weeks and my impression is that it was pretty unpopular. However, it also looked bad for the government who seemed unable to resolve the conflict.

There’s another element at play here as well. And that is that there is a sector of the middle and upper middle class that opposes the government for various reasons. (Although often these reasons are not expressed in very clear terms. Accusations that the government is dictatorial ring patently false, for instance. But the opinions of this sector are largely formed by and reflected in the major media outlets –two major newspapers and several television channels- of the country, owned, not surprisingly, by interests that oppose the government’s agenda. In some senses, the opposition of much of this sector is ironic since they would be/are also benefited by many of the government’s policies and proposed reforms.) When the conflict between the government and the agricultural sector broke out, key opposition figures jumped at the chance and used the conflict as a rallying call to generate a more widespread opposition to the government in general. Basically, an attempt to destabilize the current government.

We’ve recently passed one hundred days of continued conflict. Lockouts, negotiations, protests in the streets (both supporting and opposing government and the producers). The conflict doesn’t seem to be nearing an end. The producers, despite everything, have had a record year (because of world food prices) and can afford to sit back and wait this out. The government, on the other hand, has much more at stake. Although it’s entirely debatable (and as the cliché goes, only the future will tell), the government ostensibly wants to make deeper changes than those the country has seen for decades in terms of a shift towards economic distribution on a national level, combating the chronic inequality. In truth if the idea is to work towards greater equality in wealth, much, much, much more is needed. This is a scratch on the surface. But this scratch (although fraught with clumsy moves by the government) has provoked a massive protest and served to unite the fairly fractured (mostly center right and right-wing) opposition to the government. Some argue that moves towards greater change could be political suicide. So while the government defends its moves and the agricultural sector defends its profits, the country sits and waits. Perhaps, again this week, with empty shelves.

Update: Just when the protest seemed to elude any resolution, the government proposed last week to take the debate to Congress. This move was supported by the producers and now we are waiting to see what the result of the debate will be. Most likely the proposal will be passed although it may have to undergo changes and concessions in the process.