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Monday, October 3, 2016

Unrest Threatens Reforms In Argentina

Unrest threatens reforms in Argentina

Protests against austerity could complicate Macri’s efforts to kick-start economy
© EPA
A clutch of protesters camping out in the historic Plaza de Mayo in downtown Buenos Aires amid banners emblazoned with Marxist slogans are vying for the attention ofPresident Mauricio Macri, whose office is just metres away.
“Enough austerity, more taxes for the rich!” yells a woman over the din of drums and cymbals, shaking her fist at the Casa Rosada presidential palace on the other side of a riot fence.
Almost 10 months since taking power, social unrest is one of the biggest threats facing the centre-right Mr Macri. Argentines complain that their income is being swallowed up by hefty tariff hikes and inflation expected to reach about 40 per cent in 2016.
“If the government doesn’t change its policies, we are on the brink of a general strike,” says Roberto Baradel, the secretary-general of the Buenos Aires teachers’ union. “This is a government that governs for the rich and only responds to corporations and multinationals. It doesn’t care about the workers.”
With trade unions threatening to call a general strike in October, their demands for higher wages pose a challenge for the government’s attempts to keep inflation under control and stabilise the economy after 12 years of populist rule.
Complicating matters, unions have been controlled by the Peronist party — Argentina’s dominant political movement, now in opposition — ever since they propelled its founder, Juan Domingo Perón, to power in 1945 with a massive rally in the Plaza de Mayo after the then labour secretary was imprisoned by the military regime.
If the government doesn’t change its policies, we are on the brink of a general strike
Roberto Baradel, Buenos Aires teachers’ union
Argentina’s powerful trade unions represent one of the biggest barriers to Mr Macri’s efforts to turn Argentina into a more open and competitive economy, which has long been one of the most heavily protected in the region.
“The top concern in Argentina now is labour unrest. If Peronism regroups, will they use the unions to paralyse the country? When they are not in power, Peronists create problems,” says Jimena Blanco, an analyst at Verisk Maplecroft. She argues that the economy is less of a concern now that it appears to be on a path to recovery.
Peronism is in flux since its defeat in last year’s elections. Different factions are jockeying for position ahead of important midterm legislative elections in October 2017, which analysts say will be decisive for the future of the Macri administration.
The top concern in Argentina now is labour unrest. If Peronism regroups, will they use the unions to paralyse the country?
Jimena Blanco, analyst at Verisk Maplecroft
In particular, a strong performance for Mr Macri’s party would embolden foreign investors waiting for clearer signals that the improved economic environment brought about by the new government is here to stay, and that there will not be a relapse into populism.
Maria Victoria Murillo, an Argentine political scientist at Columbia University in New York who specialises in labour relations, questions whether unions will strike in the short term. “It is not clear to me that it is in their best interest to strike,” she says, while conceding that “the risk of forcing wage increases that would make companies uncompetitive are there.”
Ms Murillo argues that a bigger challenge for the government is to control protests in general, given that they have been the undoing of all non-Peronist governments. “Unions are just a part of that story, and not necessarily the largest at this point,” she says.
That concern was underlined when the reformed state statistics institute revealed last week that 32.2 per cent of Argentines are living in poverty, after a decade of unreliable statistics released by the previous government, which last year claimed poverty was at 5 per cent — lower than in Germany.
Ms Blanco warns that labour and social unrest could worsen early next year when annual wage negotiations begin, especially if workers dissatisfied with deals struck by more moderate private sector union bosses join more radical street protesters.
Since protracted strikes and street blockades could deter foreign investment and damage the government’s chances of performing well in the midterm elections, Ms Blanco expects it to resort to “pragMacrism” by pumping cash for infrastructure works into the economy to reignite growth.
Certainly, Mr Macri will want to avoid at all costs the kind of violent riots that brought down the previous non-Peronist government during Argentina’s 2001 economic crisis, when the president was forced to flee the Casa Rosada in a helicopter.
In the Plaza de Mayo, Héctor Molas, a street seller wearing a trilby, observes the small group of protesters with bemusement. “Maybe they want some kind of miracle. But the only answer is hard work,” he says, nodding at the sugary pastries he is selling, before asking: “Why is it that we Argentines always seem to think we can get something for nothing?”
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