Argentina changes economy ministers
BUENOS AIRES, Argentina (AP) — The departure of an independent-minded economy minister is re-igniting questions about Argentina's ability to tame soaring inflation and resolve a farmbelt tax rebellion.
Martin Lousteau, a 36-year-old economic wunderkind, left the Cabinet as the government battles inflation with price controls and attempts to redistribute soaring farm profits stoked by global food prices.
Lousteau reportedly had feisty run-ins with other officials over the direction of the economy after a 21-day farm strike — a bitter fight with the government over how to divide the windfall proceeds of soaring grain prices.
The new economy minister, Carlos Fernandez, who was sworn in on Friday, promised continuity with the government's current economic policies, saying, "With my appointment, nothing has to change." President Cristina Fernandez did not comment on the Cabinet change. The president and the minister are not related.
President Cristina Fernandez did not comment on the Cabinet change. The president and the minister are not related.
Daniel Kerner, a Latin American analyst at the Eurasia Group, said Lousteau was one of the few voices in the Fernandez Cabinet challenging the overall direction of economic policy and growing inflationary imbalances.
He said Fernandez's troubles are slowly changing perceptions that the economy has been bounding ahead year after year.
"This is changing under Cristina as the government is affected by one crisis after another," he said. "This will reinforce the sense of chaos, a sense that Cristina cannot control political and economic dynamics."
Argentina, an agricultural powerhouse, is both profiting and suffering from the global food crisis, as farmers benefit from a price bonanza and the poor — a quarter of the nation's 40 million people — contend with skyrocketing food costs.
The government has been using price-control accords with beef suppliers, dairy producers and bakers to hold back inflation, first under President Nestor Kirchner and now under his wife, who took office in December.
Inflation rose 8.5 percent by official estimates last year — but independent estimates say it was more than twice that. International Monetary Fund managing director Dominique Strauss-Kahn met the new president in December when she took office and urged her to address complaints Argentina was not accurately tracking consumer price inflation.
Juan Jose Vazquez, senior analyst at Bull Market Brokers in Buenos Aires, said Lousteau had recommended raising energy rates for residential customers, increasing public expenditures to fight inflation and being more conciliatory with farmers.
By appointing a "status-quo minister, the government has shown no new flexibility in fighting inflation and in reaching accords with farmers," Vazquez said.
On Friday, Argentine bonds dropped sharply and the benchmark Merval stock index was off 1.3 percent on jitters over long-term prospects for the country's economy.
Critics of the government say price accords have lost effectiveness against inflation. But former President Kirchner defended them Thursday — in a speech that some say may have triggered Lousteau's departure.
"There should be no more talk about cooling the economy," Kirchner said — apparently an allusion to Lousteau's recommendation a few days earlier that the government try decelerate growth as an anti-inflationary measure.
Some opposition leaders called the personnel change an attempt by the former president to keep power over economic decisions by bringing in a member of his inner circle.
"The ex-president is out of control," said Gerardo Morales of the Radical Civic Union. "There continues to be a dual leadership."
Under the recent strike, shoppers saw widespread shortages when farmers blocked trucks from delivering beef, chicken and produce.
The strike was suspended in early April, but farmers are threatening to resume highway barricades in May if the government does not offer concessions on a recent export-tax hike on soybeans and other crops.
President Fernandez insists the export taxes are vital to the economy, redistributing farm profits to less fortunate Argentines and encouraging growers to produce fewer soybeans and more food that would be eaten at home.
Anguished farmers say they are barely getting by under the duties, now as high as 45 percent, on a business that reaped Argentina some US$13.5 billion (euro8.5 billion) last year.
But many consumers side with Fernandez that farmers should be more generous with the windfall to subsidize basic foodstuffs and keep prices low.
"A lot of times I hardly get enough to eat," complained Norberto Monastirsky, 54, who hawks pens on subway trains and complains farmers are fat with profits from grains and beef sold abroad in dollars and euros. "If they could, they would export the whole cow, not just steaks."
Farm strike leader Luciano Miguens has reported some progress in talks with the government, but said Friday that Lousteau's departure creates a new and "uncertain stage."
Associated Press Writer Debora Rey contributed to this report from Ferre.
