Is the government facing a crisis of governability?

  • Translated from TN and excellent article from Sergio Berensztein:

    A governance crisis is characterized by the dysfunctionality of the institutions that make up a political system. When the demands of a society accumulate, without the governing bodies offering satisfactory answers, the representation system can begin to creak. When the crisis (whatever its nature) infects the political system, delegitimizing its institutions and actors, it becomes a crisis of governance with unpredictable adverse consequences: democratic interruption, presidential resignation, institutional breakdown, emergence of outsiders, turn towards radicalization of the left or right. No one knows ex ante how reactionary the political system would. Crises of these characteristics do not erupt suddenly without specific factors that have led to it. On the contrary, they are the result of a series of difficulties that progressively erode the political system. In this sense, the Frente de Todos government may be incubating a future governance crisis without being fully aware of it.

    Despite the fact that President Alberto Fernández and his cabinet have been weakened as a result of the multidimensional crisis the country is going through, no one doubts that the government retains full political legitimacy and a certain amount of strength, mainly in the face of its electorate more pure. In fact, a few days ago he received a massive show of support during the mobilization for October 17. However, governance crises occur like the melting of the Perito Moreno glacier: the ice sheets are gradually falling, until one day the entire glacier collapses with a loud crash. The same thing seems to be happening with the government, every day that passes a new layer of ice is shed in the face of the total confusion of officials. When the glacier finishes collapsing it will be too late and there will be nothing left to do, so the government must act quickly.

    This accumulative process and the creation of difficulties that converge in dangerous crisis of governance is not an unknown phenomenon for Argentina. Although many remember the crisis of 2001 due to the events that occurred in December (with the cacerolazos, the resignation of Fernando de la Rúa and the five presidents who followed each other in eleven days), the breakdown of the political system was the result of a series of conditioning factors. previous. The country had a high fiscal deficit, a profound loss of competitiveness and a heavy burden of external debt inherited from the previous decade. Furthermore, at the beginning of 2001 poverty reached 35% of the population (after the crisis it exceeded 50%). The economic instability caused constant changes in the Ministry of Economy, without anyone managing to reverse the trend. José Luis Machinea negotiated the "Shield" with the IMF, but was unable to regain the confidence of the markets or reactivate the economy. Ricardo López Murphy (who succeeded Machinea) tried to implement a fiscal adjustment program that would balance public accounts, but was met with strong social and political rejection, and a few days later he resigned. Finally, he was replaced by Domingo Cavallo, who initiated a restructuring of the foreign debt (“Megacanje”) and restricted the withdrawal of deposits (“Corralito”), but also failed. Political discredit was added to the economic collapse, mainly after the virtual bankruptcy of the Alliance with the resignation of “Chacho” Álvarez to the vice presidency in October 2000. In this case, political and economic factors combined to converge in the worst crisis governance of Argentine history.

    Raúl Alfonsín also faced a governance crisis towards the end of his government, for which he had to advance the elections and the presidential succession. The Austral Plan, implemented in 1985, was successful at the beginning of his mandate and allowed to reduce inflation. However, the macroeconomic situation deteriorated towards the end of 1987. In August 1988, the Primavera Plan was launched, which did little good, and the following year a hyperinflationary process was unleashed that ended up delegitimizing the Alfonsín government. In his case, the strong economic imbalances were combined with an iron Peronist opposition (including the CGT) that hindered the initiatives of President Alfonsín.

    In the case of the current government, the economic situation has been deteriorating drastically as a result of the pandemic and the mistakes made by the government of Alberto Fernández. In the midst of the foreign exchange maelstrom, his administration sends rickety and contradictory signals. As a consequence, and despite the intervention through state agencies, the exchange gap between the official dollar and the CCL is around 110%, unsustainable in the medium term. Country Risk, which fell sharply after the debt restructuring, regained ground and exceeded 1,400 points. The social context is extremely fragile with poverty that reached, according to INDEC figures, 40.9% in the first half of the year. But it is not only the economic situation that is pressing. Added to this is the outbreak of violence and insecurity (mainly in the Buenos Aires suburbs, but also in interior cities such as Rosario) and the phenomenon of land seizures that are multiplying throughout the country.

    If the situation continues to worsen, as it has been happening, an element of convulsion could light the fuse to trigger a governance crisis: an inflationary flash (as happened to the government of Raúl Alfonsín), the breakdown of the ruling coalition (as happened to him). Fernando de la Rúa) or an alternative trigger that we still ignore. Such a shock could further precipitate the crisis, infecting the political system, with unpredictable effects for the government of Alberto Fernández and Peronism. The governance crisis suffered by the De la Rúa government ended up discrediting the UCR seal: the importance and territorial extension possessed by radicalism is unquestionable, but it does not retain the size or ascendancy it had prior to the 2001 crisis In this sense, a governance crisis during the government of the Frente de Todos could put the Peronist brand at risk. Until now, the PJ has emerged unscathed and has managed to remain synonymous with governance in the face of adverse scenarios. The deepening of the crisis could eliminate this assumption.

    In the framework of this pandemic that affects the entire world and of an Argentina that has been dragging a decade of stagnation, the administration of President Fernández cannot afford to commit more unforced errors. The government still has time to correct the economic course and regain confidence. Once a governance crisis is unleashed, the consequences can be irreversible, so the time to take the initiative is now. The main stakeholder in avoiding a governance crisis should be the government itself, because it will be the first to be harmed in the event of an outbreak.

    Original at TN