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OPINION AND ANALYSIS | 30-05-2020 09:16

Lockdown: complainers will complain

The debt drama will escalate if the talks fail to make progress and some bondholders decide to accelerate the situation, which could see them eventually taking the republic to court in the middle of a pandemic that is crippling for the economy.

Argentina's coronavirus lockdown has been extended until June 7, but look closer and the drama is mostly unfolding in the metropolitan area: Buenos Aires City plus Greater Buenos Aires. Look even closer and the growing concern is about contagion in Argentina’s sprawling low-income neighbourhoods, the slums in the capital and surroundings. 

The first cases there were initially reported on Villa 31, a settlement in Buenos Aires City, but now over 100 cases have been detected in a slum in Greater Buenos Aires. The challenge for the authorities is to control and contain the spread so that the health system does not collapse. The barrio in Greater Buenos Aires, Villa Azul, has been sealed off by the security forces while aid is brought in and tests are carried out following orders of Buenos Aires Governor Axel Kicillof, a progressive Kirchnerite.

Polls show support for the work of the authorities, regardless of their political hues – Buenos Aires City Mayor Horacio Rodríguez Larreta is a prominent member of the opposition Juntos por el Cambio centre-right coalition. Despite the positive poll ratings, however, complaints about the lockdown, which has been in place since March 20, are ringing loud and clear, because they are being voiced by powerful lobbies. A tiny demonstration against the quarantine took place at the Plaza de Mayo on Tuesday, while another motorcade protest was staged in Tigre, a relatively affluent northern district in Greater Buenos Aires that’s home to luxury gated communities. Supreme Court Justice Ricardo Lorenzetti was quoted as saying that the lockdown can't go on forever as well.

The extension of the quarantine was announced last Saturday night at a long press conference headed by Peronist President Alberto Fernández, flanked by Kicillof and Rodríguez Larreta. The president displayed graphs comparing the situation with other Latin American nations (Brazil and Chile, ruled by neoconservatives, are currently hurting badly). But it turns out that some of the data in the graphs was incorrect – the national government quickly apologised after Chile complained that the death rates were wrong. It’s not a huge mistake, but it could be a small sign that the national government is stretched and struggling as the peak of the epidemic looms.

The complainers see themselves as champions of the free market. concerned that crucial liberties are being curtailed with the coronavirus as an excuse. What comes with the lockdown, according to the complainers, is more state intervention in the economy and heavier policing of citizens. Kicillof has announced that the use of a special coronavirus app will be compulsory in Buenos Aires Province.

States are flexing their muscles the world over to rescue aching companies. Here 2.4 million workers in the private sector are now having up to 50 percent of their salaries paid by the state. The national government has also tabled a special wealth tax bill, which is moving slowly in Congress. One Kirchnerite lawmaker has even implied that government contributions to private companies in the future should allow the state to take a stake in them.

The volatile economic context is dominated too by the national government's decision to extend negotiations with bondholders, who own nearly US$70 billion in debt that the government is seeking to restructure. The government and the bondholders have now signed a confidentiality agreement for the talks to continue now that Argentina is technically in default after failing to make a US$500-million payment due last week. The debt drama will escalate if the talks fail to make progress and some bondholders decide to accelerate the situation, which could see them eventually taking the republic to court in the middle of a pandemic that is crippling for the economy. 

Coronavirus cases in Argentina are growing roughly at an average of 700 cases a day now with the vast majority (more than 90 percent) in the densely populated Buenos Aires metropolitan area. The curve has yet to be flattened. Practically all of the rest of Argentina is breathing easier, but the tension is palpable now that the working-class neighbourhoods are being hit. Health Minister Ginés González García, a veteran health expert respected across the political board, was rushed to hospital on Wednesday after complaining about numbness in his left arm. The minister said tests showed he had an "old" bruise on the head that could be the reason behind the numbness and that he was in good shape. He was released from hospital on Thursday.

The complainers are currently a minority, but the complaining may get louder. The ruling Peronist coalition is intact. The question is if cracks will begin to show in what is a complex coalition that includes Kirchnerismo, but also Peronist sectors that until recently were critical of current Vice-President Cristina Fernández de Kirchner.

Some officials want out. The head of the federal penitentiary service quit but his resignation was not accepted immediately. Prisons were recently hit by loud protests and revolts by inmates fearing contagion. The inmates’ demonstrations sparked massive pot-banging counter-protests against the demands of their demands.

Amid all of this, polls show that the public welcomes the sight of a Peronist president working side-by-side with a centre-right mayor. Yet the joint effort is not without controversy – Fernández and Kicillof have thrown thinly veiled jabs at what they have described as healthcare cuts made during the preceding Mauricio Macri presidency from 2015 to 2019. Kicillof also criticised his predecessor, former Buenos Aires Province governor Maria Eugenia Vidal, who made a point of declaring during her four-year spell in office that she would not open any more state-run hospitals in Greater Buenos Aires.

Some leaders of Macri's centre-right coalition, which is also showing signs of splintering, are reacting to the criticism. But the opposition may soon find itself on the defensive again after the national government said in court it has found evidence that intelligence services illegally  spied on politicians, journalists and trade union leaders – including some of their own stripe – during the Macri administration’s time in office. The controversy, and criticism, never stops.

Martín Gambarotta

Martín Gambarotta

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