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All change in Argentina?
Financial Times
July 20, 2008

By Jude Webber

Cristina Fernandez, Argentina's president, is widely reported to have wanted to throw in the towel after last week's humiliating defeat in the Senate for her farm export tariff regime. In public, however, she shrugged off the defeat as nothing of the sort, surrounded herself with loyalists, and revoked the tariff measure in typically combative language.

But burying her head in the sand is not a long-term option for Ms Fernandez. Even some diehard supporters, like Daniel Scioli, the former vice-president, are calling for reflection and self-criticism and the signs are growing that the president will take heed of the clamour for a change of style.

She and Nastor Kirchner - her husband, political partner and predecessor as president - are analysing a raft of measures designed to boost their sinking popularity. Their first moves may be announced this week and could include boosting the minimum wage. Increases in domestic utilities charges which have been fixed since the 2001 economic crash, resulting in a dire shortage of investment could also, finally, be on the cards, though the government has been reluctant to rush them because of high inflation and concerns that they could depress consumer spending. As for export tariffs themselves, farmers are pushing for more changes and the government or Congress could introduce a new bill on the subject.

But as Ms Fernandez seeks to relaunch her stumbling seven-month-old presidency, she must also urgently reshuffle her cabinet. Despite campaign promises of change, her cabinet was almost entirely composed of her husband's old guard. Her innovation was Martin Lousteau, the architect of the farm tariffs plan, who quit early in the conflict with farmers.

Changing faces will no longer be enough. Ms Fernandez's tariff misadventure must now herald proper policy changes and an end to Argentina's tangled web of subsidies. Other urgent tasks include renegotiating the country's Paris Club debt and settling conflicts with bond holdouts who rejected a swingeing debt swap. Only when these issues are settled will Argentina look like a more reassuring place to do business.