Power cuts, petrol and water shortages, an international scandal over a suitcase full of cash, a bungled hostage rescue mission and inexorable inflation have turned Argentine President Cristina Fernández’s first month in office into a nightmare.
”I didn’t expect such a clumsy beginning,” said political analyst Sergio Berensztein of consultancy Poliarquia.
After residents in several Buenos Aires neighbourhoods protested last week at blackouts and water shortages lasting between a few hours and a couple of days, Ms Fernández was forced into the admission – from a government usually unwilling to admit there is an energy crisis – that there had been 50,000 simultaneous power cuts at one point.
Electricity tariffs have not risen in nine years, strangling investment to boost capacity, while consumers, encouraged by artificially cheap utilities rates, have been buying air conditioning units in record numbers.
Far from announcing fundamental reforms, Ms Fernández´s ineffectual response has been to put clocks forward by an hour and to hand out two free energy-saving lightbulbs per household.
She has also failed to resolve the urgent problems of high inflation and zero faith in official price data after a year of apparent government meddling . A promised new US-style ”core inflation” index designed to restore credibility vital to attract investments and to renegotiate $6.3bn (€4.2bn, £3.2bn) debt with the Paris Club of creditor nations meant to improve Argentina´s image as a defaulter now mending its ways – has yet to materialise.
Instead, the government reported inflation of 8.5 per cent for 2007, while official data show that average wages rose by more than 22 per cent. That tallies with private economists’ estimates of inflation of as much as 20 per cent.
Argentina has a cushion from external shocks in the shape of record $47bn central bank reserves, booming exports and high prices for its commodities.
But conditions are likely to worsen this year. ”The external environment is benign but I don’t think it will remain benign for long,” said Claudio Loser of the Inter-American Dialogue think-tank and a former director at the International Monetary Fund, referring to expectations of a severe US slowdown. ”I expect 2008 will not be a good year.”
In the foreign policy arena, where Ms Fernández had been expected to shine, she has not yet found her feet.
Instead of pursuing closer ties with the US, she lashed out at Washington in December after a US attorney quoted a defendant in a trial in Miami as alleging that a suitcase containing $800,000 intercepted in Argentina in August was destined for her election campaign. The case is still pending.
Two weeks ago she sent her husband as an international guarantor on a high-profile effort to rescue hostages held by Farc guerrillas – a mission which finally succeeded, without the guarantors, last week.
”The government still does not have leadership, concludes Carlos Pagni, a columnist at the daily La Nación.
