Argentine leader's hard line

President takes on corporate executives, international bankers

April 17, 2005|By Hector Tobar | Hector Tobar,LOS ANGELES TIMES

BUENOS AIRES, Argentina - He doesn't have the charisma of Venezuela's populist president, Hugo Chavez, or the compelling life story of leftist struggle and sacrifice that Brazil's Luiz Inacio Lula da Silva can claim.

But President Nestor Kirchner of Argentina is outdoing both of them when it comes to willingness to play hardball with international bankers and corporate executives.

A longtime Patagonian governor who became president in 2003 after months of political uncertainty in the wake of Argentina's economic collapse, Kirchner has made the defense of the country's sovereignty in the face of foreign interests a central theme of his presidency.

For months, he has tangled with the World Bank, the International Monetary Fund and European-owned utility companies. And Kirchner recently won an important concession from his latest foe, Shell Oil Co. About a month after the president called for a boycott of the company, Shell lowered the price of its gasoline.

"Let's make this a national crusade and not buy anything from them," Kirchner said March 10. "Not even a can of oil."

The recent 3.3 percent cut in the price of Shell gasoline, to about $2.65 a gallon, was "a victory for the Argentine people," said Kirchner, whose approval rating stood at 71 percent before the latest face-off. "The companies have had to see reason."

Shell drew the attention of the president when it became the first company to increase its prices in response to the rising price of oil on global markets. The government fears that higher fuel prices will accelerate the country's rising inflation rate, which hit 9.1 percent this month on an annualized basis.

Hours after Kirchner called for the boycott, a group of unemployed activists allied with the government vandalized two Shell stations in Buenos Aires, the capital. Even though other companies also have raised prices, Shell has borne the brunt of consumers' wrath, with sales down about 30 percent.

Esso lowered its prices after the government threatened to revoke its tax exemption on imported diesel fuel.

Early this year, Argentina completed a renegotiation of about $103 billion in defaulted debt. Under the new terms, bondholders received on average one-third of their original investments. Many of the bondholders were Europeans and Americans. Kirchner argued that a more generous settlement would have been a burden on Argentine taxpayers.

Larry Birns, director of the Council on Hemispheric Affairs, a Washington think tank, said Kirchner's tough stance with creditors could mark a turning point in the relationship between developing nations and the financial community.

"Kirchner has gone from being an obscure governor of a minor province to being one of the most transformative figures in Latin America since Fidel Castro," Birns said.

Dissenting voices have been limited mostly to the financial media, with some economists expressing concern that Kirchner might be scaring off foreign investment.

"You can't run an economy by slapping people," Carlos Rodriguez, a former official in the Economy Ministry, told the newspaper El Cronista Comercial. "These are demagogic acts, bread and circuses for the people, like Nero and Hitler. We are distancing ourselves from the Western nations. Every two days we have a new enemy."

Few conservatives criticize the government, and they usually do so indirectly.

Just before he left for Pope John Paul II's funeral in Rome, Buenos Aires Cardinal Jorge Mario Bergoglio criticized Argentina's "adolescent progressives" and "democratic gurus of unitarian thought." His comments were widely seen as an attack on Kirchner.

"For some, having convictions makes you an adolescent," Kirchner responded a few hours later. "I prefer to be an adolescent for the rest of my life."

The Los Angeles Times is a Tribune Publishing newspaper.

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