A History of Argentina in the Twentieth Century: Updated and Revised Edition

Chapter 11: A New Opportunity, 2005–2010

Late 2005 marked the beginning of the period dominated by Néstor Kirchner; it would conclude with his death in October 2010. In December 2007, he completed his presidential term and was succeeded by his wife, Senator Cristina Fernández de Kirchner, who took office with Julio Cobos of the UCR as her vice president. Thus began a singular and unprecedented political period, in which former president Kirchner maintained an important role in directing the government’s affairs. In 2008, the intense conflict with the organizations representing rural interests ended with a severe defeat for the government and the resurgence of an opposition. Following a year of confrontation, the opposition obtained signi ficant success in the congressional elections of June 2009. By then, the international economic crisis, and especially the fall in soybean prices, was felt in the economy and in government revenue. Following the defeat, kirchnerismo strengthened its ranks and divided the opposition, which was incapable of capitalizing on its success. Throughout 2010, the government’s prestige recovered considerably, and Néstor Kirchner was preparing his presidential candidacy when, to everyone’s great surprise, he died of heart failure in October of that year. In late 2011, Cristina Kirchner won reelection. With regard to the continuation of kirchnerismo, some important changes had begun to appear. eleven A New Opportunity, 2005–2010 . . . . . 355 The Economy: Soybeans and Subsidies Until 2007, in the final two years of Néstor Kirchner’s administration, the economy maintained its rate of growth. From that point on, growth at “Chinese rates”—some 8 or 9 percent annually of GDP—weakened a bit. In 2009 there was a sharp drop, followed by a recovery in 2010. Soybeans continued to lead the pack as China bought them in addition to vegetable oil and pellets, the latter used principally as animal feed. Prices and the volume of exports rose together, doubling in 2007 the levels reached in 2003, though declining somewhat in 2009 with the global economic crisis. Technological improvements extended the area under agricultural cultivation for soybeans as far as Santiago del Estero and Salta provinces, without reducing the areas for corn and wheat, which retained their traditional markets. The production of cereal and oils taken together in 2010 reached close to 100 million tons, breaking the record of 70 million tons in 2005. The principal beneficiaries were the big producers or consortiums, but the bonanza also reached small and medium-sized farmers as well as towns and cities, where there was a visible abundance of money. The situation was not as good for meat and dairy producers, as the government limited these exports to increase the domestic supply and therefore lower prices. Industrial exports accompanied those of soybeans. Steel, aluminum, chemicals, and automobiles—whose production was integrated with that of Brazil—contributed to the spectacular trade surplus. The large business groups of the industrial sector, who had already benefitted with the rise on the dollar’s value, received government subsidies, and the so-called Techint Law of 2004 allowed industrial firms to defray the cost of imported industrial inputs. The effects of industry on the overall economy were less, due to the low employment of labor and industrial firms’ limited reinvestment of profits . Those industrial sectors geared toward the domestic market, on the other hand, began to experience a reversal of the strong boost that had occurred following the economic crisis. As there were no policies of support for small and medium-sized enterprises, nor investments that would improve productivity, the recovery reached a ceiling around 2008. In the context of a cheapening of the dollar, imported industrial products began to appear in the market. There were few changes to the structure of industry as it had been configured in the 1990s. The split into two sectors, far from lessening, grew deeper. One sector was fully integrated into the global economy, obtained important A Histor y of Argentina in the Twentieth Centur y 356 . . . . . benefits from the state, and was able to influence economic policy. But its links to the whole economy were limited, and it had a muted impact on employment , the fundamental issue in Argentina following the crisis. The other sector, more directly tied to the creation of jobs and increased consumption, was scarcely competitive, lacked organizational clout, and received scant attention from the government. The process begun in the 1990s—industry’s increasing concentration...