Culture of corruption that erodes democracy


Instead of reforming institutions the Kirchners used the enhanced power of the executive to push ahead with a populist economic response, writes TOM HENNIGANin Buenos Aires

WHEN ARGENTINA’S economy began to implode a decade ago, furious citizens knew who to blame. As the financial crisis turned into meltdown, tens of thousands took to the streets of major cities banging pots and pans and demanding of their politicians “Que se vayan todos!” – Clear out the lot of you.

For a while it looked as if their demands would be met.

First to quit was President Fernando de la Rúa, who fled the Casa Rosada in a helicopter as protesters battled police below in the Plaza de Mayo. His replacement, Adolfo Rodríguez Saá, only lasted a week, just enough time to declare history’s biggest ever sovereign default before resigning.

He was succeeded by Eduardo Duhalde, whose first task was to manage a chaotic devaluation of the peso. The brutal downward readjustment in living standards meant protests continued all through 2002. When two protesters were shot dead by police during a demonstration that June, Duhalde announced he too would leave power early, bringing forward elections to April 2003.

The country’s traditional political system was in crisis. The Radical Party of de la Rúa had disintegrated following his resignation. Its main rival, the Peronist Party, was also deeply divided, running three candidates in the presidential election.

Emerging the winner from that contest with the task of restoring faith in the country’s institutions was Néstor Kirchner, an obscure governor from a sparsely populated Patagonian province with no national power base of his own who had taken just 22 per cent of the vote.

Many observers expected him to last little longer than his immediate predecessors. That he overcame such inauspicious beginnings, serving out his full term and managing to have his senator wife Cristina elected his successor in 2007, is a testament to his ruthless political skill.

But his restoration of executive authority has come at the expense of Argentina’s other institutions. Since taking power in 2003 the Kirchners have benefited from the fallout of the crisis to aggressively undermine opposition to their rule, creating one of the region’s most confrontational, authoritarian regimes, always seeking to concentrate ever more power in the presidency.

To do so they have relied heavily on emergency powers passed at the height of the economic crisis which President Néstor Kirchner inherited. These give the presidency sweeping control over the budget, free from congressional oversight.

Such powers allowed the Kirchners to buy support and cow opponents in congress and in the traditionally unruly provinces.

Following Néstor’s sudden death last October, his wife and successor has employed a less confrontational tone in public, but still resolutely refuses to rescind decrees congress intended to be temporary, even though the economic crisis has passed.

Faced with an aggressive presidency armed with such powers and financed by a boom in commodities, the rest of the country’s political system has struggled to recover from the crisis. “Of all the legacies of 2001, the political one is the one in the worst situation right now. It hasn’t improved in the least,” says Marcelo Leiras, chief investigator at Buenos Aires think tank Cippec. “The political roots to the crisis are still there. If the country faced as challenging a problem as we did 10 years ago, the solution would be pretty much the same – or even worse.”

Shorn of its most important role, the congress has as a result become little more than an annex of the executive. A decade on, national political parties have yet to re-emerge from the wreckage of 2001. Despite holding the presidency for eight years, the Peronist movement remains as divided as it was in 2003. In the 257-seat lower chamber of congress there are 35 political groupings, most ready to sell their votes to the highest bidder. “In Argentina today you have a spot market for political co-operation, for votes in congress, for get-out-the-vote efforts. That is a very shaky foundation to build anything upon,” notes Leiras.

The protesters who banged their pots and pans in 2001 had hoped the crisis would at least lead to political regeneration. They have been sorely disappointed. Levels of corruption have soared again in the last eight years, untroubled by either a neutered congress or a judicial system that has, since the crisis, become little more than another tool of the executive.

“Corruption cases against the Kirchners and their allies are quickly dismissed, while cases against opponents go on forever,” notes Samuel Amaral, a historian of the Peronist movement. “In that way the presidency is able to keep opponents under control. It will take a long time to have an independent justice in this country.”

Instead of reforming the country’s institutions, the Kirchners used the enhanced power of the executive to push ahead with a populist economic response to the crisis. Whether driven by ideological conviction or political opportunism, it has allowed them to concentrate ever more economic punch in the presidency to go with its enhanced political weight.

Since 2003 the postal service, railways, airlines and water utilities have been nationalised. Multiple barriers to imports have been erected to protect local industry. Public expenditure has increased, and over one in four Argentinians are now dependent on the state for an income.

With the country shut out from international capital markets following the 2001 default and a flawed debt restructuring in 2005, President Cristina Kirchner suddenly nationalised the country’s private pension system in 2008, placing $30 billion under her control just as the government was struggling to maintain increasingly profligate state spending.

Congress rubberstamped the move and now the government is installing supporters on the boards of private companies in which the pension funds have stakes, further enhancing state control over the economy.

An emergency decree last year removed the central bank governor after he baulked at the government’s plan to use $6.6 billion in reserves to pay off foreign debt. His successor handed over the money and then replaced it by printing more pesos, fuelling inflation.

Such moves have won support among many on the left and traditional populists among the Peronist base who blame the disastrous experiment in free-market policies of the 1990s for the crash of 2001. This support and government largesse means President Cristina is favourite to win re-election in October if she decides to run for a second term.

But many in the middle class hold a deep antipathy for her government, even though no group has benefited more from the recovery. “The well-off sectors of society are doing well. But they maintain a distance from the government because they do not like the style of Kirchnerismo, because they do not believe it respects institutions,” says local pollster Analía del Franco.

Despite the boom, more than 800,000 Argentinians emigrated between 2001 and 2009, most of them well-educated young people.

Moves such as the recent blockade of opposition newspapers by pro-government unions have only reinforced this antagonism. In 2008, many in the middle class supported farmers protesting at tax increases on soy exports. When they took to the streets they were confronted by groups of unemployed government supporters in a major escalation of social tensions.

These have since subsided somewhat but remain below the surface. So far no political movement has emerged to be able to build on middle class discontent and provide a serious challenge to the Kirchner experiment in populist authoritarianism.

“The opposition cannot get its act together but this is usually the case when you have successful populist administrations,” says Sergio Berensztein, a local political analyst. “The commodities boom is like giving the government a Marshall Plan every year with no questions asked, and this commodity cycle has been exceptionally long. Populism always works when there is money. But when you eventually have to pay the price it is already too late.”