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Private sector fears that the conflict will affect the economy
Clarin
March 05, 2010

The decisions and attitudes of the Government do not take advantage of the favorable circumstances for the country as regards its productivity and the foreign front, according to businessmen
By Marcelo Bonelli

Mercedes Marco del Pont was sincere when she spoke in the privacy of the presidential offices: "I am convinced that what I did was right and am prepared to defend it but if we do not take the initiative and avoid a vote to block this, it will be difficult for me stay in this post". Thus she refered to the legal obstructions and the indelible judicial basis for her designation as head of the Central Bank if the Senate persists in its veto. Cristina Fern ndez de Kirchner calmed her down: "you will get all our support in order to carry on heading up the Central Bank".

This happened on Wednesday night in Government House, at the end of the worst day in political history for the Kirchner movement: it lost control of Parliament and the Senate initiated proceedings to oust the president of the Central Bank, no less. Marco del Pont had just felt the rage of the opposition. The Agreements Commission denied her the chance to postpone her presentation and directly ordered that she be removed.

She was a victim of the reaction provoked by the oficialistas: the opposition was firm in its approach with its intention to inflict a clear political defeat on the Kirchnerista movement. The Argentina Union of Industrialists (UIA) maintains that the announcements made in the Legislative Assembly heated up the argument. Thus, what at the beginning of the week was hinted at in confidential reports issued by Wall Street took place. A "paper" issued by Barclays Bank encouraged people to buy Argentine bonds because of the commitment to pay up enshrined in the new decrees which are "legally more orderly" than the Bicentenary Fund. But its author, the controversial Guillermo Mondino winds up with "the political noise created by this move could escalate and bring additional risks".

Goldman Sachs' expert Alberto Ramos is also conclusive. He ponders the decision of paying off the debt and warns that "facilitating Central Bank money delays the necessary adjustment to fiscal spending which is currently unsustainable, helping to keep inflation pinned to a two-digit figure".

The dual stance of Wall Street is due to a piece of information that the banks have but do not reflect in their reports. Amado Boudou had warned them that Economy would be paying off before time the
maturities of the Boden 2012 with the money from the reserves. This is a payment of 2.2 billion dollars scheduled for August which the minister now intends to make in the Southern Hemisphere autumn. But this plan is the victim of the lack of professional expertise of the economics team. The appalling performance of Boudou in managing the expired Bicentenary Fund and his clumsy attempts to remove Mart n Redrado has sparked a crisis that undermines the entire government and whose magnitude has yet to be revealed.

It has been 60 days since the government first gave the signs of uncertainty which allowed the opposition to gain the upper hand. Government House was not even capable of taking advantage of the improvements on the agricultural and productive front.

Instead of recognizing his errors, Boudou took refuge in superficial accusations of internal conspiracies. Even in these dialogues, he questioned supposed operations against him of officials linked to Nestor Kirchner. He accused the secretary of the Treasury Carlos Pezzoa of telling international bankers that Boudou was not a reliable interlocutor. Immersed in these contradictions, and lacking a financial strategy, Boudou is not taking advantage of the way the international financial crisis could favor Argentina. This includes the excellent parameters of indebtedness shown as Europe runs out of control and the decision by the EU not to let the IMF intervene in the case of Greece. In other words, this opens up very advantageous forms of international negotiation and even the possibility of exclujding the IMF from the Paris Club agreement. This is why the political crisis was followed minutely by the business community. In the Businessmen's Association they decided not to comment and their silence is the element in common with the UIA.

The only public gesture from the textiles industry was to support the president of the Central Bank: Ignacio de Mendiguren called her on Wednesday to communicate the industrial union's continued support for her. They also decided to allow themselves to be open to calls and requests from officials. Julio De Vido, Debora Giorgi and even Guillermo Moreno, sounded out, with little success so far, whether the industrial and business associations would support the controversial statements made by Government House. In private meetings, businessmen have been dissecting what's going on in detail. They fear that these episodes be the start of a highly negative process for Argentina. They concluded that

Argentina is facing a serious institutional crisis which has destroyed part of the Kirchnerista power bastion:

This deterioration is the result of the government's own political and instrumental errors. They agree that the opposition needs to set limits on the Government 's scope of activity but fear that its excessive protagonism may lead to a serious problem of governability which will complicate things for the economy.

They admit that there has been a good response on the part of the productive sector, but that the political uncertainties could affect growth. There is much irrationality visible in the political classes and they want to promote a process of dialogue to find a way out of the crisis.

On the basis of this harsh diagnosis, the businessmen want to avoid any greater loss of stability that could affect their business. In the UIA they are concerned chiefly that common sense triumph for once over the Argentine ruling classes' desire for political conflict.

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