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Argentine senate rejects farm tariff bill
Financial Times
July 17, 2008

By Jude Webber

Argentina's vice president Julio Cobos has dealt the government a major defeat by rejecting a controversial export tariffs bill in the Senate.

Mr Cobo heads the senate in his capacity as vice president and was called upon to cast the deciding vote in the early hours of the morning after a marathon debate and two rounds of voting produced a tie.

Visibly moved he told senators he was not betraying President Cristina Fern ndez, but he could not back her plan to impose a sliding-scale of tariffs on Argentina's farm exports, the country's top foreign exchange moneyspinner.

"History will judge me. I apologise if I'm wrong, but I can't back this bill," he told the senate. He said it had been one of the most difficult moments of his life.

The vote marks a watershed for Ms Fern ndez and the authoritarian style of government she inherited from her husband and predecessor, N stor Kirchner. Until now, under their administration, Congress had a minor role, decisions were taken by the presidential couple and a few trusted advisers and the vice president was an unquestioning loyalist. With a majority in both houses of Congress, the government was used to getting its way.

But the export tariffs issue has opened up deep divisions in the country and in the ruling Peronist party.

Ms Fern ndez had sent the bill to Congress in an attempt to end fierce dispute over her resolution imposing a sliding-scale of export tariffs on farm exports which producers said unfairly penalised them and removed incentives to diversify crops. Argentina is the world's third largest exporter of soybeans and the top producer of sunflower oil.

The president and argued that farmers and the rural "oligarchy" were simply reluctant to share the windfall profits from record commodity prices, and said the tariffs were vital to redistributing wealth and building hospitals and roads. Opponents saw the tariffs as a way to raise money for a government that is increasingly cash-strapped, and whose spending is outstripping tax revenues.

The bill now returns to the Chamber of Deputies but the government would need a two-thirds majority to change it highly improbably given the fact it squeaked the bill through the lower house by a handful of votes.

But constitutional experts said Ms Fern ndez should now formally revoke the export tariffs resolution.

In a rally outside Congress on Tuesday, Mr Kirchner said the government would abide by the Senate's decision but there was no immediate reaction to Mr Cobos' revolt or indication of what it would do next.