Argentina Crisis Deepens as Vice President Blasts Fernandez

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Argentina’s powerful Vice President Cristina Fernandez de Kirchner slammed President Alberto Fernandez in an open letter, heightening the political crisis that has roiled the government since it lost an election Sunday. 

Kirchner, who governed Argentina from 2007 to 2015, published a letter Thursday blaming Fernandez for a “political catastrophe” she says was caused by his economic strategy. Their coalition’s loss in the Sept. 12 midterm primary vote was largely due to the government’s mistaken policy of fiscal austerity, she said, adding pressure on Fernandez to ramp up spending. She also called for an overhaul of the cabinet. 

On Friday, Fernandez told a leftist web outlet that he would reshuffle his cabinet without providing more specifics. His press office didn’t respond to requests for comment. Argentina’s overseas bonds slipped about 1.3%, with bonds due in 2035 edging 0.5 cents lower to about 35 cents on the dollar. U.S.-traded stocks for Argentine companies were mixed in early trading.

In the letter, Kirchner wrote that she repeatedly warned in meetings with the president ahead of the vote about spending cuts “that were negatively impacting economic activity and society, and which would undoubtedly have electoral consequences.” 

Read More: Key Takeaways From Argentine VP Kirchner’s Open Letter

Kirchner chose Fernandez to lead their Frente de Todos coalition ticket for the 2019 presidential vote. Just two months from the final midterm vote on Nov. 14, the letter blows open the political divide between the two factions: Kirchner and the radical Peronist officials close to her; and Fernandez’s more moderate cabinet allies.

The internal feud comes after the ruling coalition was soundly defeated in most of Argentina’s provinces Sunday, including Buenos Aires, a key battleground. 

With no access to international credit markets, the government cannot easily heed Kirchner’s calls to ramp up spending without the central bank printing money and worsening one of the world’s highest inflation rates. 

Canceled Trip

After the letter went online, the president canceled upcoming trips planned to Mexico and New York for the United Nations General Assembly, according to one of his spokesmen, who declined to comment on the letter itself. The president plans to announce new economic measures soon, the official added. 

The dispute will make it harder for Argentina to reach a deal with the International Monetary Fund to reschedule payments on $45 billion of debt, said Daniel Kerner, a managing director for Latin America at the Eurasia Group. 

“Kirchner wants control of the government and Fernandez doesn’t want to give in at this point,” Kerner said in response to written questions. “A deal with the IMF is really hard right now.”

Argentina owes the IMF $1.9 billion on Sept. 22, the first principal repayment of a record bailout from 2018. Kirchner’s call for more government spending could also complicate the talks. 

Argentina is emerging from three straight years of recession and remains afflicted by 50% annual inflation and double-digit unemployment. 

Harsh Words

In the letter, Kirchner accused government officials of being oblivious to Sunday’s results and said their refusal to resign is impeding the big change in direction that is needed.

The vice president added that she suggested to Fernandez on Tuesday that he pick new officials for key roles, such as the governor of the province of Tucuman, Juan Manzur, for the role of cabinet chief. Manzur met Fernandez on Thursday afternoon in the presidential residence in the outskirts of Buenos Aires city, but no changes have been announced so far. Tapping Manzur for the job would mean firing Cabinet Chief Santiago Cafiero, one of Fernandez’s most loyal lieutenants.  

Read More: Argentine Leader Vows to Unify Coalition After Offers to Quit

Before Friday, the president had resisted making cabinet changes, setting the stage for several ministers and officials aligned with Kirchner to offer letters of resignation Wednesday and escalating the political crisis. On Thursday, he tweeted that he would “guarantee the unity” of the coalition. 

Kirchner finished her letter reminding Fernandez that she personally picked him for the top job. 

“I just ask the president to honor that decision,” she said. 

©2021 Bloomberg L.P.

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