The streets of Buenos Aires were crowded on Thursday night with was called the largest anti-government demonstration in a decade. Hundreds of thousands of residents of the Argentinian capital took to the streets to protest the economic mismanagement of President Cristina Fernández de Kirchner’s administration.
The protest was sparked by skyrocketing inflation, now estimated at 25 percent, a recent power outage for which the government predictably blamed private enterprise rather than its own price controls, and suggestions that Kirchner may seek to amend the Constitution to serve a third term.
Since she succeeded her husband, Néstor Kirchner, in 2007, Argentina’s president has won two landslide election victories and pursued protectionist and socialist policies that have made the Latin American country one of the most uncompetitive in the world.
Education and public housing spending increased year by year — financed in part through the printing press, hence the high inflation — but lately Kirchner has had to cut back on social security, angering her working class and unionized constituencies while the Argentinian middle class was always largely opposed to her autarkic economic program.
Kirchner implemented a one for one trade policy which mandates that companies that bring goods into the country match their value with exports. She has enacted more trade restrictions than any leader in the world and taken over entire companies.
In 2008, the airline Aerolíneas Argentinas was nationalized. Earlier this year, Spain’s Repsol was relieved of its majority share in the Yacimientos Petrolíferos Fiscales oil company. Argentina now ranks among the least business-friendly nations in the world and foreign direct investment is naturally scant. Indeed, it is prohibited in certain sectors of the economy.
The government has deployed price caps and export curbs to try to tame inflation. It has also imposed currency and capital controls which include a ban on dollar purchases. Kirchner’s government has fined and sued economists who publicize their own inflation estimates. Official rates put inflation at 10 percent.
Most recently, Kirchner has demanded that the media conglomerate Grupo Clarín, which the government claims has a monopoly, liquidate its assets within a month before the government will dismantle the company that has been among the most fiercely critical of her regime.
Kirchner’s term expires in 2015. Even if she manages to get the law changed to stand for reelection a second time, it’s doubtful that she would win.