Argentine farmers take tax battle to parliament

 

ARGENTINA:A 100-DAY confrontation with farmers that has seen roads blockaded, food shortages, exports disrupted, and mass nationwide demonstrations, some violent, has moved into Argentina's parliament.

In a bid to rally support for controversial export duties on farm prices, the government of Cristina Fernández de Kirchner has gambled that a parliamentary vote can cut the ground from the angry farmers. Both the latter and supporters of the government have now pitched tents outside the parliament to lobby deputies.

Ms Fernández took over the presidency last December from her powerful husband Néstor Kirchner, now head of the populist ruling Peronist party, and since coming to power has championed "a fairer redistribution of the nation's wealth". Record commodity prices made the farming sector an obvious target.

But farmers reacted angrily to a new sliding-scale of export duties announced on March 11th that linked export duties to global commodity prices, and which, for example, have pushed soya bean tariffs from 35 to 46 per cent, making cultivation unviable, say farmers.

Large numbers protested in rural towns, supported by the Buenos Aires middle classes who marched on the president's office, beating pots and pans in scenes reminiscent of December 2001 when the then president, Fernanado de la Rúa, was forced to flee from the roof by helicopter.

On March 25th protesters in Buenos Aires were met by stick-wielding pro-government supporters lead by former civil servant Luis d'Elía. Once again Argentina seemed to be slipping into a cycle of boom, bust and chaos.

Since then protests have continued and grain producers have periodically refused to sell grain to exporters to deny the government of revenue. Roadblocks have resulted in severe food shortages in the capital, driving public demand for a quick end to the conflict. Mr D'Elía recently claimed that former caretaker president Eduardo Duhalde was behind a plot to topple the government.

On June 17th, although unnecessary under customs law, the government decided to send a Bill on the duty increases to parliament. It initially hoped it would be quickly rubber-stamped, undermining the campaign against it, but activists in the Peronist party forced a more extensive debate.

Farmers welcomed the move, hoping to persuade rural deputies to vote against or amend the Bill whose fate depends on whether the ruling coalition can keep its deputies in line.

For many the conflict has brought back painful memories of 2001 when the country's economy crashed and millions were plunged into poverty. Fear of a repeat is driving Argentinians to change pesos into dollars rather than risk losing their savings again. This has forced the government to buy up pesos using precious foreign reserves to maintain a stable currency.

The country's foreign debt has now returned to 2001 levels of around $145 billion (€92 billion) and many outside investors have put projects on hold.

A recent poll showed Ms Fernández's popularity is now at 26 per cent, down from 54 per cent in February. Parliament's decision hangs in the balance and now the supreme court is considering the constitutionality of the legislation, but farmers say they will resume roadblocks if parliament passes the Bill unamended.