Argentina finds itself embroiled in a deep political crisis, a contrast to the best economic situation it has been in for several decades. Involved in a dispute around deductions, Argentina has faced a broad opposition: from factions on the far left to sectors most associated with the repression of the dictatorship that have joined forces to defend the agricultural sector in the face of the increase in reductions in exports of certain agricultural products. Faced with this scenario which at times has taken on a destabilizing hue, the government has committed a number of errors of political strategy and even, at times, has raised what was hidden behind the debate on deductions, that is to say the discussion around an economic and social model.
Within this framework the intention of settling the question of sending the project to parliament, where the executive power held the majority in both chambers, led to an even deeper crisis. The pressure of the agrarian corporations on deputies and senators resulted in giving the government a victory in the House of Deputies and a tied result in the Senate. There, the decision of Vice President Cobos to break the deadlock by not recognizing the increase in deductions proved to be a hard blow to the executive.
The debate served as a polarizing element and has ended up transforming itself into "the mother of all battles." Undoubtedly, the opponents (including those that "technically" should be supportive of deductions) knew how to join forces within this polarization in all demonstrations against the government.
The Keys to the Defeat in the Senate
Firstly, it was a mistake to present the discussion as an "all or nothing battle" for the sake of a resolution that accepted certain "touch-ups" without ever questioning the content. Such a radical confrontation gave the opposition a banner that took them away from the disorganization and lethargy in which they found themselves, following Cristina Kirchner’s wide electoral victory. The crusade for the moveable deductions revealed itself, finally, as a strategic error that altered the political scene in the long run.
Secondly, it revealed a significant problem in the communication strategy. The official message appeared to be a lot less articulate, deep, and mystical than that of the "poor agricultural producers impoverished by the eagerness of mean politicians." Various principal means of communication were far from having a neutral role, although this was hoped for and the official strategy had to find itself within this information and in mechanisms to counteract it. Nor was it a sound decision to debate, at the same time, a proposed broadcasting law whose first version would affect the commercial interests of major journalists’ groups.
Nevertheless, the main problem derived from having badly demarcated the field of combat. The deductions have a high impact on the distribution of income, but they are a secondary theme in the debate on the model of the country that is taking shape in the long term. The opposition succeeded in mounting a coherent argument, simplistic yet far-reaching: global prices today mark the advantage of agricultural production; the reductions make the producers poor, meaning they neither invest nor produce; therefore we cannot take advantage of the favorable global situation and we will once again lose the specialization momentum in terms of what the world is demanding, even if beef ends up costing us 80 pesos.
In the face of this, the government tried to show that the producers are not losing out and the distributive justice needs moveable deductions. These are certainly valid arguments, but they will not be convincing in the end, because they are not founded on an explicit explanation of the productive model of the country that is needed. All this hides the triumphs of, and support in, the government in the dispute. If we agree that the government won the vote in the Chamber of Deputies, it lost by half the votes in the Chamber of Senators, it mobilized half the population on a massive scale, and received the explicit or implicit support of workers, industrialists, and the banking sector, it is striking that the idea that "half the country is against the official project" has prevailed above and beyond the argument that "half the country is in favor," a question of, at the very least, equal weighting and force.
The Model for the Country
The main problem in the discussions was the absence of an alternative productive model, a theme associated with the weaknesses of the long term official project. The president emphasized very well in her last speech to the public the weaknesses of the old Argentina as an exporter of agricultural products, with its consequences of unequal distribution of wealth, unemployment, waste, and volatility.
This is the starting point for the discussion: an Argentina specialized in agricultural products is a country for only the few and for a particular situation. For this, the most intelligent course of action is to take advantage of the high international prices in order to finance an integrated model of development, building strong bases of industry, services, and infrastructure. This model should have been at the center of the debate and this is now the major shortfall of the government.
The politics of the Kirchners have had a power that cannot be hidden. From an Argentina in the fourth level of hell, we have moved to a country that is growing at an increasing rate, generating employment, gradually reducing poverty, and one that has the tools to confront the run on the banks and now, after many years, there is both fiscal and external stability. This is significant. But it is also clear that there is still a lack of a structural policy for development. These two sides were very clear during the four months of controversy.
The essential question for the debate was how to transform the positive external situation into a push toward development. And this is achieved with structural politics that point to concrete objectives: the development of a powerful and integrated infrastructure, a robust internal market, a diversified and innovative industrial sector, and an agricultural sector involved in but not leading the model.
Active and integral policies should form a plan that has, among other axes, the following: a strong, energy development component that explores all traditional and non-traditional alternatives, "normal" and dense communication networks throughout the country, integration of the chains of production and the networks of innovation, massive mobilization of credit toward productive activity, a strong impulse toward research and development, material and conceptual revolution in education, tax, and distribution of wealth reform.
There have been some advances on all fronts in the last few years. We have even gone from being a country of financial speculation to one that is rebuilding employment and production that represent half the battle. But uncoordinated and partial achievements with various false steps—such as the high speed train project between three cities when the rail system remains unreconstructed in an integrated manner after having been dismantled in the 90s—is not enough. The linking of all these aspects should have been the axis of official debate. Paradoxically, it constitutes the base of reconstruction of the governance on the part of the executive.
The first declarations of the failed activists are the invocation of a debate on a national agricultural plan. The counter defense is the integration of an agricultural policy within a consistent development policy. In that, the deductions play an important, but not principal role. Technically, included are absolutely replaceable by, for example, types of multiple changes with reductions in sales tax and increases on taxes on profits. But the theme is not to venerate the instruments of political economy without being clear on long term objectives. This is the discussion that the government should now raise and the measures that follow should converge to that end. It is, also, the path which will allow the sectors that represent work and production to regroup which will in turn demand, undoubtedly, a strong political initiative on part of the president and which will also demand very clear objectives.
What some of the first reactions of the government demonstrate is that even if they have not been understood correctly, the bid of the internal groups and the discussions on charges have tended to prevail over the underlying discussions. It is to be hoped, however, that following certain logical adjustments in calculations, there will be an integral reconsideration of the profile of the government.