Kirchner starts confronting the "summit" results
By Marcelo Bonneti
25.11.05 | The Argentine President’s unusually intimidating behaviour at the recent hemispheric “Summit” in Mar del Plata -where he seemed to value more his relation with the “bolivarian” Hugo Chávez than the friendship with the United Sates of America- is generating some early problems.
The Colombian FARC devoted a special editorial in its web-page to thank its three “heroes” for their behaviour at the referred to “Summit”: (i) Castro (that did not attend, because he normally is not invited to the “Summits” in view of his terrible human rights track record); (ii) the “bolivarian” Commander Hugo Chávez; and this time, (iii) Mr. Néstor Kirchner himself, the new friend of the Colombian FARC. Unfortunately, all Argentines will probably end-up having to pay dearly for the attitudes of their President.
Particularly in connection with the repayment of Argentina’s huge debt with the International Monetary Fund (IMF).
Apparently, Mr. Kirchner has now decided to borrow heavily from the “bolivarian” Hugo Chávez to be able to repay, at maturity, what it owes to the IMF.
Argentina will therefore issue to Venezuela 9% interest bearing bonds to raise the money necessary to repay the IMF, which has a much lower interest rate (4%). It is a harsh price that Kirchner will now force the citizens of Argentina to shoulder. For the sake of resentment and ideology. Very sad, but true.
In the next few weeks, Argentina has to repay 1,6 billion US dollars to the IMF. And in the next three years the various IMF maturities which cannot be rolled over by Argentina amount to approximately 10 billion US dollars. The big question is, why would Chávez be willing to finance this? Or, in exchange for what would the impoverished people of Venezuela finance Argentina?
In the meantime, Mr. Kirchner, following Mr. Chávez continues to attack local and foreign investors.
In the last two days he accused the large Argentina public construction companies of been “cartellized”, i.e. colluding to defraud Argentine citizens. Some suggest that the real reason for this attack is that the big companies of this particular sector do not allow Kirchner friends’ smaller construction companies from Patagonia to come into the alleged “cartel” on an equal footing with them.
But Kirchner also attacked the Supermarket sector accusing it of provoking inflation. In this connection he publicly told a local businessman (Mr. Coto) that he will be “carefully followed” by Kirchner’s administration and suggested that Mr. Horst Paulmann (a large Chilean investor in Argentina’s food sector) is corrupt. The shares of Mr. Paulmann Chilean company (Cencosud) in the Chilean Stock exchange plunged immediately, 4% in a single day.
While he flirts with Chávez, Kirchner does not stop breeding resentment and preaching the need for “class struggle”. His “bolivarian” mentor is probably writing the backbone of his speeches.
Many will probably cry for Argentina as a result of Kirchner’s policies. Most of them will be Argentines. Investment alternatives in Argentina are slowly fading away. When investors do have a choice -like the pulp and paper industry has recently evidenced- they prefer not to invest in Kirchner’s Argentina. Several ongoing big pulp and paper projects (from Finland, Sweden and Spain) have recently preferred Uruguay to Argentina. The river that separates both countries in fact separates two very different attitudes. Uruguay respects certitude and protects the rule of law. Argentina, on its side of the border, irritates investors with Kirchner´s constant and histrionic bullying.
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