How To Grow The Black Market Premium: A Practical Guide From Argentina
There’s a general feeling that Argentina is on its way to the gutter, once again. It’s a sensation that can be easily perceived on the streets of Buenos Aires, which are becoming gradually more populated as people sip drinks at coffee tables at impromptu sidewalk cafés, speaking about the astronomical price of the blackmarket dollar-peso exchange rate (“dólar blue”) or the latest coronavirus infection tally and death toll.
It is enabled and made evident by a media that flits between hating on Mauricio Macri and Alberto Fernández, and in the latest televised and very public appearances of the former president and of his successor in office. Their language, their message, their general attitude appears so distant now from the utopian promises of campaigns past and present, during which they preached unity and an end to “la grieta,” the deep polarization that haunts the nation. And it forces Argentina’s population to ask themselves once again whether there’s a future here, whether it is possible to escape what feels like an endless spiral of decrepitude. All of this, of course, is exacerbated by the effects of the global Covid-19 pandemic, which has thrown another grenade into an already imploded economy, weighing down the nation’s psyche.
Whatever is attributed to her, throughout all this Vice-President Cristina Fernández de Kirchner has remained quiet, with the exception of her theatrical and provocative appearances as the President of the Honourable Senate of the Argentine Nation, and a recent letter where she hates on Macri, but also asks for all political forces to unite to defeat “bi-monetarism.” The former head of state appears to have learned that her best political strategy is to appear in public as little as possible. This has been her modus operandi at least since the 2017 midterm elections, in which Cambiemos, the ruling coalition at the time, handed her an electoral defeat to a practically unknown candidate (Esteban Bullrich), a chain of events that started many to scribble her political obituary. In fact, she marginally won the election, and remained quiet for another two years, making her big comeback with the announcement that Alberto Fernández would lead the presidential ticket that would go on to hand Macri an electoral beating in the 2019 PASO primaries, securing the bout.
Cristina’s silence has pundits speculating about which of the government’s policies she’s designed, whether her followers are ideologically colonizing the rest of the Frente de Todos ruling coalition, and when she’ll finally get rid of the president and take over. But it’s not Cristina who is fanning the flames of antagonism (at least not publicly), but Alberto and Mauricio.
Over the past several weeks, Argentina’s president from 2015 to 2019 has raised his public profile, giving interviews to friendly journalists in which he’s essentially outsourced blame for his abject failure leading the Republic. According to Macri, he didn’t do enough to let the country know how bad things really were after he took over from Cristina, instead trying to work on the positive emotional response his presidency sparked for those who were sick and tired of 12 years of Kirchnerismo. Things went downhill when, after the 2017 midterm elections were won, his government tried to lead a reform agenda that was blocked by the Peronists in the streets, in particular during the provisional reform in which protesters faced off with police in a pathetic “battle for the plaza.” After that, Macri lost his capacity to “communicate,” after which exogenous shocks left him shell shocked, at least until the final days of the campaign in which he went on his “Sí se puede” rallies throughout the country. Also, it was the Peronists within his coalition – such as former lower house president Emilio Monzó and ex-interior minister Rogelio Frigerio – who failed to generate the strategic agreements with the opposition to guarantee governability. In short: everybody else’s fault but mine, to riff on the song.
The mirror image to all this is Alberto’s timely responses to Macri over the past few weeks at every public appearance he’s been at. Speaking to his predecessor in first person, he reminded him of the calamitous state of the Argentine Republic after four years of a rightist government that he charged had “forgotten the people” in order to play to the benefit of speculation and financialization. The Macri administration is to blame for the paralysis of public works projects in key areas including housing and hospitals, President Alberto claimed, as well as the defunding of science and healthcare. The Peronist leader said Macri’s government took on reckless amounts of debt only to incentivize capital flight to the benefit of the big corporations, as well spying on the political opposition and rigging the Judiciary to politically persecute Cristina for her ideology.
Such lines are a version of the usual spiel we hear from Cabinet Chief Santiago Cafiero: everything the previous administration did was wrong and morally corrupt. It is becoming pathetic, to the point where the president is lying with things that are easily verifiable such as his claim that natural gas production fell during Macri’s four years in office. As a quick search in the Internet can tell us, the Macri administration had to roll back generous subsidies for natural gas production which were monopolised by Tecpetrol — property of billionaire Paolo Rocca — given the level of production he had achieved at the Vaca Muerta shale formation, and the lack of infrastructure to transport the gas out meant gas flares topped the rigs.
The longer this “he says, she says” situation continues, the broader the gap between the official exchange and the black market rate will become. And the bigger the black market premium is, the greater the pressure on both the official exchange rate and inflation. At an extremely troublesome moment for the world, Argentina is engaging in ridiculous self-inflicted shocks of uncertainty. A truce between the administration and the opposition would do a lot to help “calm down the economy,” Economy Minister Martín Guzmán (always) says, even more than the “holistic plan” everybody asks him for, and which he suggests he will eventually unveil, though never does. A meeting between Macri and Alberto, with a picture and a smile, might go a long way.
This piece was originally published in the Buenos Aires Times, Argentina’s only English-language newspaper.