News Center

Argentina Rebuffs President on Farm Export Tax
New York Times
July 17, 2008

By ALEXEI BARRIONUEVO and ALAN COWELL

RIO de JANEIRO In a cliffhanging ballot after more than 18 hours of debate, Argentina's Senate voted early Thursday to reject agricultural export tax increases that inspired months of protests by rebellious farmers.

The outcome a severe setback for the government of Cristina Fernandez de Kirchner was uncertain to the very end, when Vice President Julio Cobos cast a tie-breaking vote to end a 36-36 deadlock between opponents and supporters of the legislation.

Mr. Cobos had angered Mrs. Kirchner in recent weeks by speaking out in favor of the farmers.

The vote was the climax of a saga that began in March when President Kirchner imposed the tax measures. Facing plummeting approval ratings, Mrs. Kirchner took the calculated risk last month of sending the measure to Congress for debate. Supporters of Mrs. Kirchner's Peronist bloc control both house of Congress.

The lower house approved the tax system earlier this month by just seven votes after debating for 19 hours. But approval by the Senate was critical for the government.

The drama unfolded through the night. Argentine television was reporting late Wednesday that one senator, Emilio Rached, a Radical Party member from Santiago del Estero, remained undecided. Mr. Rached has been pressured in recent days by local farmers in his small agricultural town of Pinto, population 7,000, and earlier Wednesday some 40 police officers were stationed outside his home, Argentine newspapers reported.

The new tax system forced farmers to give up more of their profits and they responded by holding a series of crippling strikes throughout the country, shutting down highways for grain trucks bound for exports and causing scattered food shortages.

Mrs. Kirchner and her husband, former President Nestor Kirchner, who leads the Peronist bloc, have justified the higher taxes as important to redistribute the country's wealth and hold down Argentine food prices. But the Kirchners have widened divisions in the country by portraying the farmers' strikes as a political threat, calling farm leaders "greedy" and "coup plotters."

Analysts had not expected the vote to be so close in the Senate but a large pro-farmer march on Tuesday and late lobbying by farm groups appeared to have an impact. In Palermo, more than 230,000 people attended the pro-farmer rally, the newspaper La Nacion reported. The rally attracted many middle and upper class Argentines, some of whom brought picnic chairs and said they had come on their own accord. One woman wore a sign that read: "Nobody paid me to be here."

Outside the Senate on Tuesday, by contrast, an estimated 100,000 government supporters rallied for the measure to pass. The rally was heavy with trade unions and labor groups, and many supporters were bused to the event. Mrs. Kirchner did not attend but her husband gave a speech in which he defended her as a "woman of courage" and cited her decision to seek Congress' approval as an example of her support for strengthening democratic institutions.

As in the House vote, the Kirchners could not rally all of their supporters to approve the measure. "For us, agriculture is the economy," said Ruben Hugo Mariin, a senator from La Pampa who is part of the Front for Victory party, in explaining why he was voting against the tax system. "It pains me to not be able to support my colleagues" in the Peronist bloc.

Argentines everywhere have taken sides in the debate, either with the farmers or with the government. As Mrs. Kirchner hardened her position on the higher taxes, so, too, did farmers. "We will not accept anything less" than a return to the old policy, which taxes grains at a fixed 35 percent rate, Carlos Gonzalez, a landowner from Pergamino said at Tuesday's Palermo rally. "There is no partial solution."