Argentina’s Nestor Takes On the World

He doesn’t have the innate charisma of Venezuela’s populist president, Hugo Chavez, or the compelling life story of leftist struggle and sacrifice that Brazil’s Luiz Inacio Lula da Silva can claim.

But the president of Argentina, Nestor Kirchner, is outdoing both leaders when it comes to willingness to play hardball with international bankers and corporate executives.

A longtime Patagonian governor who became president in 2003 after months of political uncertainty following Argentina’s economic collapse, Kirchner has made the defense of the country’s sovereignty in the face of foreign interests a central theme of his presidency.

For months he has tangled with the World Bank, the International Monetary Fund and various European-owned utility companies. And last week Kirchner won an important concession from his latest foe, Shell Oil Co. About a month after the president called for a boycott of the firm, Shell lowered the price of its gasoline.

“Let’s make this a national crusade and not buy anything from them,” Kirchner said March 10. “Not even a can of oil.”

Last Wednesday’s 3.3% price drop in Shell gas, to about $2.65 per gallon, was “a victory for the Argentine people,” said Kirchner, whose approval rating stood at 71% even before the latest face-off. “The companies have had to see reason.”

Shell drew the attention of the president when it became the first company to increase its prices in response to the rising price of oil on global markets. The government fears that higher fuel prices will accelerate the country’s already rising annualized inflation rate, which hit 9.1% this month.

Hours after Kirchner called for the boycott, a group of unemployed activists allied with the government vandalized two Shell stations in Buenos Aires, the capital.

Even though other companies have also raised prices, Shell has borne the brunt of consumers’ wrath, with sales down about 30%.

Esso lowered its prices after the government threatened to revoke its tax exemption on imported diesel fuel.

Early this year, Argentina completed a renegotiation of about $103 billion in defaulted debt. Under the new terms, bondholders received on average one-third of their original investments. Many of the bondholders were Europeans and Americans. Kirchner argued that a more generous settlement would have been a burden on Argentine taxpayers.

Larry Birns, director of the Council on Hemispheric Affairs, a Washington think tank, said Kirchner’s tough stance with creditors could mark a turning point in the relationship between developing nations and the financial community.

“Kirchner has gone from being an obscure governor of a minor province to being one of the most transformative figures in Latin America since Fidel Castro,” Birns said.

Dissenting voices have been limited mostly to the financial press, with some economists expressing concern that Kirchner might be scaring off foreign investment.

“You can’t run an economy by slapping people,” Carlos Rodriguez, a former official in the Economy Ministry, told the newspaper El Cronista Comercial. “These are demagogic acts, bread and circuses for the people, like Nero and Hitler. We are distancing ourselves from the Western nations. Every two days we have a new enemy.”

Today the government is facing off against another foreign entity: the World Bank’s International Center for Settlement of Investment Disputes.

The arbitration board is hearing several utility company complaints, filed in the wake of Argentina’s devaluation of its currency, the peso, in 2002, before Kirchner became president. A government decree ordered that utility bills would be priced in pesos instead of dollars, in violation of their contracts, the companies said.

The devaluation cost the firms billions of dollars. By treaty, Argentina must accept the arbitration board’s verdicts. But the government is backing a proposed law that would give the country’s Supreme Court the right to overturn the verdicts. Leaders of the ruling Peronist party as well as the opposition Radical party support the bill.

These days, only a few conservative voices dare speak critically of the government, and they usually do so indirectly.

Last week, just before he left for Pope John Paul II’s funeral in Rome, Buenos Aires Cardinal Jorge Mario Bergoglio criticized Argentina’s “adolescent progressives” and “democratic gurus of unitarian thought.”

His comments were widely seen here as an attack on Kirchner.

“For some, having convictions makes you an adolescent,” Kirchner responded a few hours later. “I prefer to be an adolescent for the rest of my life.”