”Analyse av den aktuelle politiske og sosio-økonomiske situasjonen i Latin Amerika”

3. Country Analyses

The individual country analyses that are presented in the next section make use of the elements discussed in this methodological framework. Thus we aim to identify relevant actors, natural resources and issues/dynamics in the current political and socio-economic situation, in order to ascertain current trends in nine South American countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, and Venezuela.¹

Argentina

The current political and socio-economic situation in Argentina is characterized by stability and economic growth. Since the beginning of his administration in May 2003, President Kirchner has worked towards the consolidation of an economic recovery process so much needed after the financial collapse of 2001. His independent attitude towards international financial institutions and his open commitment to bring justice for human rights abuses committed during the military dictatorship have gained him widespread popularity. With 75% rate in opinion polls, Kirchner is perhaps the most popular president in the region. However, the challenge of poverty, initial signs of a rising inflation, and some tendencies to the concentration of power around the presidency could threaten the prosperity experienced so far.

Actors

Until the last decade the traditional division in argentine politics has been between “peronists” and radicals, the first ones organised in the Partido Justicialista (Justice Party), the latter in the Unión Cívica Radical (UCR; Radical Civic Union). This clear division started to disintegrate gradually throughout the 1990s, leading to the formation of numerous splint-groups in both sides. Former governor of the oil-rich province of Santa Cruz, current President Néstor Kirchner led a centre-left Peronist coalition called Frente para la Victoria (Front for Victory) in the 2003 presidential elections. He had to confront other Peronist leaders from the Partido Justicialista, including former President Carlos Menem. Kirchner’s campaign rejected neo-liberal policies and emphasized production, justice, employment creation, equality and social services. His clean and honest record was one of his strongest cards. In the first round of elections, he obtained only 22% of the vote, two points behind Menem. The former president however, withdrew from the run-off elections, as corruption scandals involving him had increasingly damaged his public image. What started with a rather weak mandate, has developed into widespread support to Kirchner’s leadership, as demonstrated by the positive results his party obtain in the parliamentary elections of October 2005.

UCR and related groups such as Afirmación para una República Igualitaria (ARI) and Recrear constitute the larges political opposition force in Argentina. The political scene is bound to undergo changes this year, given that new presidential elections are scheduled for early 2007. New political fronts have been announced, such as the formation of an electoral list representing the labour union Central de Trabajadores Argentinos (CPA), which is in opposition to what they call peronism-Kirchner style. It is being speculated that former economic minister Roberto Lavagna, one of the main architects of the economic recovery, will soon announce his candidacy to presidential elections. Lavagna was removed from his post by President Kirchner late last year, after disagreements on how to deal with rising inflation.
Among civil society organisations, human rights organizations continue to be the most notorious ones, given their active participation in current prosecutions and investigations concerning human rights violations during the military regime. Argentina’s Supreme Court ruled in June 2005 that amnesty laws protecting former military officers were unconstitutional, clearing the way for the initiation of legal prosecutions. The Mothers of the Plaza de Mayo organisation has played a vital role in moving forward the human rights agenda. Female literacy and higher education rates in Argentina are among the highest in the region, thus accounting for a strong participation of women in public affairs. 30% of congressional representatives in Argentina are women, the second highest rate in the region.
Issues & Dynamics

In macro-economic terms, Argentina has recovered from the financial crisis it suffered in 2001, which occurred after a long period of recession, and several attempts to avoid economic collapse. The situation reached climax in December 2001, with restrictions on bank withdrawals, violent demonstrations and protests, and the resignation of President de la Rua. A series of presidents held office briefly, leading to the appointment of interim President Duhalde in 2002, who eliminated the fixed-exchange rate with the dollar, causing the peso to devaluate. Later that year, Argentina defaulted its debt repayment to the World Bank. The economic crisis left half the population in poverty and enforced a deep mistrust in the political leadership. However, it was during the Duhalde administration that the first measures towards economic recovery were taken.

The administration of President Kirchner maintained right from the start, a position of independence towards the International Monetary Fund. The government was quick to propose a debt-refinancing plan, offering new bonds for old, defaulted ones. In this way, Argentina’s public debt was reduced from USD 80 billion dollars to 35 billion in 2004. In early January 2006, Argentina paid off its USD 9.5 billion debt to the IMF by tapping international reserves that have swelled in recent years as the economy rebounded from recession. Besides its economic significance, the repayment had high symbolic meaning; the government announced that “the country is reclaiming its autonomy.” This has indeed improved Kirchner’s popularity in the country.
While economic growth last year reached 8%, critics of the government argue that the upsurge in the argentine economy is mostly due to favourable international conditions, rather than government’s policies themselves. They point to the continuous low wages (which remain behind the inflation index), and relatively high unemployment rates (currently at 12%). Poverty is still widespread. By the end of 2004, 40% of Argentine lived under the poverty line. Regional differentiation in terms of poverty is also widespread, with the share of poor people reaching 53% in the north-eastern region. Recent inflation surges have been dealt through temporary price controls, which are to expire in June 2006; these may become permanent if inflation is not kept under control. The particular case of utility-prices is discussed in the next section.
The current administration has kept the human rights agenda as a high priority, and pushed forward the renewal of Supreme Court members, whose credibility had been undermined in past regimes. These changes paved the way for a new look to human rights abuses committed by officers during the military dictatorship in the period 1976-1983. Between 10,000 and 30,000 people were killed or disappeared during the “dirty war”. The lift of amnesty laws last year has brought painful memories of the military period back to the public agenda.
In spite of its broad popular support, the Kirchner administration is perhaps taking supporters a bit too much for granted. The President Kirchner has been highly criticized for choosing a national date and place to make a political rally for what many believe will be the announcement of this candidacy for re-election. In fact, Kirchner has chosen the anniversary of the May Revolution (May 25) taking place in the May Plaza to celebrate the third year of his administration. Critics argue that this is an attempt to blend national symbols and values with one particular political party. The government’s attempt to influence public transport firms to let people travel free for the occasion is perhaps an unnecessary movement on the part of a government that is, otherwise, very popular.
The construction of cellulose plants on the Uruguayan side of river Uruguay has become an issue of confrontation between the Argentine and Uruguayan government. Argentina has recently announced that it has filed a suit against Uruguay at the International Court of Justice in The Hague (the first time Argentina turns to the international court). The government has received ample support for this action from governors, mayors, legislators and union leaders across the country. It has further endorsed an environmental agenda aimed to combine “sustainable development with growth and equity”. Environmental organizations however, are more sceptical to this sudden turn, waiting to see concrete results.
Natural Resources

Argentina is one of the most developed countries in South America and as such one of the first to exploit its natural gas. The deposits in the southern and eastern regions were earlier enough to supply consumer demand, industrial activity and exports to Chile and Brazil. It is still the largest gas producer in South America (table 3), but the deposits are being tapped without replacement as new investments and search activity are very limited. This historically contradictory situation is an effect of the economic crisis that hit the country in 2001, devaluating the peso. Multinational companies were invited during the structural adjustment period under President Menem to own and operate at all levels, i.e. production, distribution and utility. The former state gas company was privatized and finally taken over by the Spanish company Repsol. The result was competitive pricing and considerable investments, increasing gas production with 70 % between 1992 and the economic crack in 2002.

The rules of the game changed dramatically under President Kirchner. As part of the crisis economic package utility prices were frozen in the old Peso value, implying a considerable gas price reduction if denominated in American dollars. Home supply has fallen because companies find further investments less lucrative, while consumption demand has risen considerably due to price regulation. The utility price has become a symbol of the current presidency, making it difficult to go back to using the price mechanism to balance the market. The solution has been to cut high priced exports to Chile instead. The Argentinean government is hence not only defaulting on agreed long term contracts and putting their neighbours in a difficult energy situation; they are further willing to subsidize their own consumers considerably. Taxes do not reflect the public share of the resource rent; instead, consumers enjoy artificially low prices at the cost of company profits. Enforced subsidies, however, are considered to be highly inefficient given that prices are not used to balance supply and demand.
Trends

Argentina is undergoing a period of economic and political stability. The administration of President Kirchner has a good chance to secure a mandate for a second term, as long as it avoids the temptation of concentrating power on the executive. Perhaps the greatest challenge for the government is the rising inflation and ultimately, poverty. At the moment however, other candidates that could pose a serious challenge to the re-election are yet to be seen.

Argentina in the region. Argentina is a member of MERCOSUR, yet it has taken an increasingly uncompromising position to neighbouring and co-member country Uruguay, due to a disagreement concerning cellulose plants. Argentine has aligned itself with neighbouring Brazil, and has continued to do so also after the nationalization of the Bolivian gas company, where argentine Repsol has large investments. This position is likely to continue.