Brazil, Argentina Both Face Troubles, But Similarities End There.
By Frida Ghitis, on , Column
One can picture Argentinian President Cristina Fernandez de Kirchner watching the recent protests in Brazil with more than a little satisfaction. After all, Argentina and Brazil, perennial rivals in countless fields, are both facing challenging times. And Brazil’s president, Dilma Rousseff, has had strained relations with her neighbor across the border.But don’t confuse the troubles in Brazil with those in Argentina. Fernandez’s woes are to a large extent of her own making, and that’s a view that Rousseff has expressed to her Argentinian counterpart. Both countries may have experienced slowing growth and mass protests, but while Argentinians protested against the president, Brazilians demanded policy changes.
When the two Señoras Presidentas met in Buenos Aires a few weeks ago, the public atmosphere was as one might expect from a presidential summit of neighboring countries: cordial smiles and pledges of friendship. Behind the conventionally staged trappings of the encounter, however, lay strong crosswinds and competing ambitions.
According to reports circulating in Latin America, the meeting of the presidents was tense and acrimonious, solving none of the conflicts that are causing strife between the two countries. The visit was so contentious that the Brazilian president returned home ahead of schedule.
The meeting was remarkable, if nothing else, because it brought together an unlikely pair of leaders: two women who have risen to the most powerful position in their respective countries in a region, Latin America, where the term “machismo” came into being. Dilma and Cristina, as they are known, share the bond that comes from belonging to the very exclusive club of women heads of state in Latin America. But they also preside over countries that, as the region’s two largest economies, have a long-standing rivalry, extending most famously to soccer, but also to politics and economics.
Today, both Brazil and Argentina are experiencing sharp slowdowns from their recent torrid economic growth. And they are both ruled by leftist governments that focus on the plight of the poor.
But that’s where their paths diverge.
Recent days have seen Brazilians—as many as 200,000—taking to the streets to protest the millions spent on hosting the 2014 World Cup amid inequality, rising prices—particularly for public transportation—and a slowdown in growth. But only weeks earlier, 1 million marched in Argentina in a loud protest against the president herself.
Cristina is under fire, her approval ratings collapsing. Dilma remains popular, if under increasing pressure.
Rousseff succeeded the hugely popular Brazilian President Luis Inacio Lula da Silva, who became iconic for his economic model of social programs alongside a welcoming environment for foreign investors and the private sector. Fernandez succeeded her husband, Nestor Kirchner, who made his mark with deeply unconventional economic policies and a generally hostile attitude toward the private sector that, combined with strong government intervention in the economy, had shades of Hugo Chavez’s Venezuela.
In rough strokes, Argentina and Brazil embody the competing leftist models in Latin America. Cristina and Dilma are today’s Chavez and Lula.
When the global economy was growing at a strong clip, developing economies boomed on the strength of high prices for their commodity exports. But the global slowdown has sent their export prices plunging, creating headwinds for the likes of Brazil and Argentina.
The last time Argentina stepped off the economic precipice, back in 2001, the governments blamed each other for the crisis. Argentina defaulted on its debt, the largest sovereign default in history, and has had trouble borrowing ever since.
The Kirchner/Fernandez administrations launched a program of price controls, nationalizations and data manipulation. With commodity prices surging, the economy grew. But the atmosphere for business deteriorated. Businesses—including Brazilian firms—started losing confidence in Argentina.
The International Monetary Fund, for the first and only time in its history, censured Argentina for producing phony economic statistics. The government claims inflation stands at about 10 percent, while everyone else puts it at about 25 percent.
A black market in foreign currency developed, and one of the country’s biggest investors, Brazil’s mining giant Vale, stunned the Argentinian government with its decision to pull out of a $6 billion potash mining project over currency concerns. It may also have been worried that the government might confiscate its property, as Buenos Aires has done to other resource extractors, such as Spain’s YPF. Argentina, desperate for investment, was furious.
The summit last month reportedly included demands from Fernandez that Brazil’s Vale reverse its decision and calls from Brazil that Argentina lift restrictions on currency and trade—all apparently unheeded.
Argentina’s economy has gone from boom to lethargy, with growth slowing from 9 percent in 2011 to 1.9 percent last year and unemployment climbing. The populist president’s approval has plummeted to 29 percent.
Fernandez is also beset by a growing scandal, with claims by former associates that they laundered money and moved huge bags of cash in and out of enormous vaults in the presidential palace and at the Kirchners’ Patagonian home, all funded by kickbacks on behalf of the president and her late husband.
In Brazil, the economic miracle has also run up against reality, with a similar economic slowdown, but to some degree the problems are aftereffects of strong growth, including inflation and higher wages, which have started making the country less competitive just as global demand slowed.
In contrast to Argentina’s combative appeal to nationalism, Rousseff is mostly sticking to her pro-business stance, while vowing to listen to protesters’ demands. With her background as a leftist revolutionary, Rousseff has expressed support for protesters, who are so far not targeting her personally.
Brazilian insiders say the administration is enormously concerned with developments in Argentina, a top trading partner whose strife can have repercussions in Brazil. Brasilia worries that another high-profile economic disaster in Argentina, which some Argentinian economists are predicting, could taint the region and scare away investors during what is already a difficult time.
Rousseff’s approval ratings have edged slightly lower, according to some polls, but they remain quite high and have not experienced the magnitude of decline that Fernandez has suffered in Argentina.
Popular protests, as we have seen elsewhere in the world, can move in unpredictable directions. But in the perennial competition between Argentina and Brazil, the facts indicate Fernandez should not take too much comfort in Brazil’s woes. Times may be challenging for both presidents. But the fundamentals for Buenos Aires look much worse.
Frida Ghitis is an independent commentator on world affairs and a World Politics Review contributing editor. Her weekly WPR column, World Citizen, appears every Thursday.
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