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Protests held on November 8, 2012 in Buenos Aires. (Photo: jmalievi)
Monday, November 19, 2012
Perspectives

Argentine Protests Erode Fernandez’ Power


Public discontent with the Argentine government is eroding its grip on power.

BY CARLOS CAICEDO
Exclusive Analysis

On September 13, 2012, 100,000 demonstrated in front of the Presidential Palace. On November 8, 2012, the largest protest in 30 years took place. Increasing frustration with US dollar controls, rising crime, corruption, high inflation and President Cristina Fernandez's alleged plans to amend the Constitution to allow for her re-election resulted in over one million Argentines taking to the streets.

The next nationwide strike, scheduled for November 20, is likely to compound already high political instability and civil unrest risks. This nationwide strike is likely to severely disrupt cargo and poses a high risk of violence at the Presidential Palace in Buenos Aires.

RISK IMPLICATIONS

The November 20, strike is expected to prove very disruptive as the CGT union’s secretary general Hugo Moyano has secured the support not only of the Argentine Agrarian Federation (FAA), but also of other labor federations. These groups have the capability to enforce stoppages in key economic sectors, including banking and utilities, as well as the transport sector. Lorry drivers in particular could be affected.

In Buenos Aires, the risk of the November 20 protest turning violent is high following the decision of CTA and radical groups such as Barrios de Pie y la Corriente Clasista y Combativato to hold a demonstration in front of the Presidential Palace.

OUTLOOK FOR 2013

We believe that the 20 November one-day strike is the beginning of a string of protests against the government of President Fernandez. New strikes, lasting longer and proving even more disruptive, are expected in the first quarter of 2013, when labor unions would start negotiating salaries. However, there are no discernible leaders of these protests, and the mainstream opposition has so far failed to capitalize on the growing discontent. As a result, we expect the government to ‘muddle through’ until 2015.

President Fernandez's mandate could be cut short if street protests resulted in the killing of dozens of demonstrators. The killing of 25 protesters in December 2001 forced the resignation of President de la Rúa.

Growing discontent and a further loss of confidence in Fernandez's leadership would likely result in electoral defeat in next year's congressional elections. This and her slim chances of re-election would likely turn Cristina Fernandez into an ineffective political leader. Without a congressional majority, she would likely resort to state interventionism, singling out business leaders considered hostile to her government, and introducing stringent regulatory measures directed at media groups, utilities, telecoms as well as foreign companies accused of evading taxes.

BACKGROUND ON NOV. 20 STRIKE

On 18 November 18, 2012, Eduardo Buzzi, the head of the influential Argentine Agrarian Federation (FAA) warned that the 24-hour, nationwide anti-government strike, taking place on November 20, would be one of the most disruptive since 2001. The FAA is joining forces with the CGT and the CTA, the country's two main labor federations. Buzzi said that the FAA would set up road blockades similar to those of the 2008 farmers' strike that paralysed the country for three months and halted grain exports. Several airlines have announced that they would cancel all flights on November 20. The strike is being driven by workers' demands for better salaries in the face of around 25 percent inflation and also by farmers' rejection of heavy export taxes.

Carlos Caicedo is head of the Latin America division at Exclusive Analysis, a UK-based global risk consultancy. This column is an excerpt from the company's recent reports. Republished with permission. 

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