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POLITICS-ARGENTINA: Cristina At A Crossroads

Marcela Valente

BUENOS AIRES, Jul 18 2008 (IPS) - Following a major parliamentary defeat, the Argentine government is pondering whether to accept the reversal and negotiate with farmers’ associations, or to pursue its export tax policy that these organisations have rejected. Experts say this would put government institutional stability at risk.

In a highly dramatic vote, the government’s draft law to increase the export tax on oilseeds was thrown out of the Senate in the early hours Thursday by a single vote. The proposal, which had already been passed by the lower house, contained the provisions of a decree already in force, which raises the tax on a sliding scale.

The decision against the government was left in the hands of Argentine Vice President Julio Cobos, who as the head of the Senate holds the deciding vote in the case of a tie. This is what happened on this occasion as the number of senators in favour and against the motion both numbered 36.

Cobos is a leader of the dissident sector of the opposition Radical Civic Union (UCR), allied with the centre-left Front for Victory (FPV), the majority sector of the Justicialista (Peronista) Party (PJ). He was Argentine President Cristina Fernández’s running mate in the elections they won last year.

The government gained a victory when the lower house voted on the draft law less than two weeks ago, and was confident it would win again in the Senate, where it has 47 legislators out of 72, nearly two-thirds of the seats. However, the importance of agriculture and livestock in the provinces led several lawmakers to heed the farmers’ demands rather than adhere to party lines.

“The government says it wants to carry out social redistribution [of the windfall profits for agricultural commodities], but it is unaware of the fact that here, there is a conflict over the geographical distribution of the profits,” political scientist Marcelo Escolar, an expert on federalism at San Martín National University’s School of Politics and Government, told IPS.

The failure of the law to pass in Congress does not mean that the measure is cancelled. Before sending the draft proposal to parliament, Fernández established the new taxes by decree, which sparked the farmers’ protests. Lawmaker Oscar Massei of the governing FPV said Thursday that the presidential decree “remains in force.”

“The draft law was sent to parliament for ratification, but the decree was in force at all times,” Massei told the state news agency Telam. Unless the decree is annulled, the export tax increase will continue to be applied – without the compensations for small producers that were envisaged in the draft law.

When he cast his deciding vote against the proposed law – presented by his running mate in the presidential elections – Cobos told the tense and expectant auditorium: “they say I have to support [the government], but my heart is telling me otherwise.”

“The president will understand me. A law that does not solve the conflict is no use. May history judge me. Forgive me if I am mistaken, but my vote is not in favour, it’s against,” Cobos finally announced, having kept the Senate waiting on his final decision for some time.

The head of the governing party bloc of legislators, Miguel Pichetto, had warned Cobos that he could not vote against the proposal because if he did, he would inflict a “mortal wound” on the government. But Cobos, who had already shown independence by publicly calling on the government to let Congress decide the matter, was not swayed.

Cobos’ action drew an angry response from government supporters, euphoria from farmers’ leaders who were waiting for the outcome of the vote, and a certain amount of relief in wide sectors of society that were hoping for a solution to the crisis that is hurting the economy and threatening stability.

Agriculture and livestock company owners and producers now expect the president to rescind her decree increasing export taxes on soybeans and sunflower seeds. If she does not, they plan to appeal to the justice system to declare it unconstitutional.

“I shall not resign,” said the vice president. “This issue split even the governing party. I am not a Justicialista, and I can take a different position,” he argued. Cobos was expelled from the UCR for agreeing to be Fernández’s running mate.

“It is surprising that when a vice president has to use his [deciding] vote, he should do so against the government, but it reflects good sense,” political scientist Liliana de Riz of the state University of Buenos Aires told IPS. “Society was demanding consensus, and this government has become accustomed to impose its will,” she said.

According to de Riz, a former adviser to the United Nations Development Programme (UNDP), the government “does not see reality.” It does not understand that the “campo” (rural sector) – even with its unequal distribution – is a category that includes a vast range of towns and diverse occupations that live off its prosperity, she said.

“If the president can take this defeat on board and move forward with flexibility, she should cancel the decree [that raised taxes] and seek a consensus,” the expert said. If, however, “she stubbornly persists in getting her own way, the Justicialista Party itself will take care of removing her,” she predicted.

Laura Alonso, the head of the non-governmental organisation Poder Ciudadano, was also pleased with the result. She told IPS that the vote, including the vice president’s, “should not give rise to a political crisis, quite the opposite, because it’s an opportunity for strengthening democratic institutions.”

The Senate’s intervention shows that “certain issues can appeal to regional interests, above and beyond purely party loyalties,” said Alonso, and in her view this consolidates the stability of the system. “Congress responded very well to this crisis,” she said.

The government has two choices in dealing with this new scenario, according to political scientist Escolar. It can open negotiations on its own terms, or it can “behave as though nothing has happened,” which was its initial reaction in the first few hours after the vote. “This would be very dangerous, because it would paralyse the country again,” he said.

During the farmers’ protests, they blocked roads – creating food shortages and price hikes – and truck drivers also went on strike, among other economic disruptions. The country’s rate of economic growth has slowed, according to experts, and tens of thousands of workers in different sectors have been temporarily suspended from their jobs.

Nevertheless, advisers close to the governing party and even FPV legislators loyal to the government take the view that it is unlikely that the president, and her husband and predecessor Néstor Kirchner (2003-2007), will choose to negotiate a consensus. “They think that to negotiate is to show weakness,” said one, off the record.

“If, instead of cooling the conflict down and trying to reach a negotiated settlement, the government continues to deny the problem and accuses Cobos of treason, we will be in serious problems,” said one of the government advisers.