CONTACT INFORMATION PUBLIC POLICY, RISK & STRATEGY Ing. Antonio Arcos 1830 Juan Cruz Díaz [email protected] Ciudad Autónoma de Buenos Aires C1428AFB Megan Cook República Argentina [email protected] REPORT [email protected] Katrina Cohen Cosentino www.cefeidas.com [email protected] Agustina Jabornisky +54 (11) 5238 0991 (ARG) [email protected] +1 (646) 233 3204 (USA) Political Climate Report - ARGENTINA June 1, 2021 POLITICAL CLIMATE IN THIS ISSUE Recent weeks were dominated by political debate over the Page 2 COVID-19 response becomes government’s response to the second wave of COVID-19, especially political battlefield a dispute between the national government and Buenos Aires City Page 4 about in-person classes. Meanwhile, internal tensions within the Government and opposition coalitions see internal tensions ahead of midterms government coalition have generated challenges for policymaking Update on Argentina’s vaccination and undermined its authority but do not seem to threaten its unity campaign ahead of the midterm elections. At the same time, a fresh conflict Page 5 has occurred between the national government and the agricultural Government increases intervention as inflation fails to slow sector due to government policies aimed at curbing inflation, which remains high. On the international front, in early May, the president Page 7 Government travels to Europe, embarked on a tour to Europe, seeking support for efforts to seeks to postpone Paris Club restructure its debt and avoid default. Meanwhile, congressional payment activity has picked up, with a few key bills under discussion, Page 8 including a public health emergency law, update of the biofuels Congress active as government advances agenda framework, reform of the public prosecutor’s office, corporate Page 9 income tax reform, and a bill to postpone the midterms. While the Mercosur remains divided over latter bill has received support from the opposition, advancing the changes to key policies other measures will require further negotiation. Overall, this situation is testing the government’s ability to administer conflict on diverse fronts as elections approach. Second wave of COVID-19 hits with force, leaders divided over best response Argentina is currently amid a full-fledged second wave of COVID-19, with daily cases and deaths exceeding the peaks seen in late 2020. After hitting then-record daily cases numbers in mid-April, in early May cases seemed to have stabilized—albeit at high levels of around 22,000 cases—but have since hit new highs. New daily records of 35,543 cases and 744 deaths were recorded on May 18, with the record quickly being eclipsed on May 27 with 41,080 cases. Total cases and deaths now exceed 3.7 million and 417,000, respectively, as of June 1. During the week of May 20, cases were 26 percent higher than the previous week. Further, the epicenter of the pandemic is expanding beyond the Buenos Aires metropolitan area, and ICU bed occupation in recent weeks has been at an all-time high. Seventeen of the country’s 24 jurisdictions have more than 70 percent of beds occupied, with occupation at concerningly high levels of more than 90 percent in several districts such as Santa Fe, Río Negro, Formosa, Neuquén and San Juan, according to the national Health Ministry. Amid this dramatic worsening of the situation, on May 20, President Alberto Fernández announced that much of Argentina would return to a strict lockdown for Find more about our services Follow @CefeidasGroup nine days in an effort to halt the The announcement came after meetings, spread of COVID-19. The measures are first between the president and the leaders especially aimed at restricting circulation of Buenos Aires Province and City, and ARGENTINA – in districts with the most contagion and then with governors from across the apply in districts classified as “high-risk” or country, to discuss measures to be PCR “emergency” based on epidemiological implemented and seek their support. factors. This includes Buenos Aires City There had been some political debate and the metropolitan area as well as much over how strict the measures should of the rest of the country. These be. However, health ministers seemed restrictions will last three weeks and will united in calling for a stricter be divided into two stages: first, nine days lockdown than had been in place, and of strict confinement and then 12 days in the increasing caseload and burdened which restrictions will return to this current ICU figures seems to have tipped local period, according to indicators related to governments in favor of supporting ICU bed occupation and caseload. these restrictions. Indeed, during this second wave, it is clear that the epicenter The first stage was in force from midnight of the pandemic is expanding beyond the on May 22 through May 30 and involved a Buenos Aires metropolitan area. Several full suspension of all in-person social, provincial governments had already economic, educational, religious and sports announced that they would implement activities as well as a shutdown of non- further restrictions to reduce circulation. essential businesses and restricting circulation to the timeframe of 6 AM to 6 Given this situation, the latest PM. The second stage is in force from May restrictions received political support 31 to June 11 and includes a return to the from local governments, including previous restrictions applicable in high-risk from opposition leaders such as districts, including a curfew from 8 PM to 6 Buenos Aires Mayor Horacio Rodríguez AM but with most activities authorized Larreta. Following the president’s during the daytime. In an effort to further message, Rodríguez Larreta gave a press reduce infections, activities in the most conference in which stated that the critical areas will be restricted again during measures had been agreed between the the weekend of June 5 and 6. national and local governments and would be enforced in the city (including the Analysis suspension of in-person classes for a week). He noted that the contagion rate in President Fernández announced the latest the city is high and calls for stricter restrictions through a cadena nacional measures. Although he marked (nationwide broadcast that media are differences with the national required to carry), only the second time in government (including by allowing his presidency he has used this tool. non-essential businesses to function Fernández reiterated that Argentina is with take-away and by highlighting experiencing the worst moment of the the need for more vaccinations and pandemic, with the highest-ever daily testing), the speech marked a return number of cases and deaths, as he called to a more moderate and cooperative for Argentines to redouble prevention form of opposition following a period efforts. At the same time, the president of higher tensions (see below). emphasized that measures must be applied nationwide and complied with, an COVID-19 response becomes political indirect criticism of Buenos Aires City, battlefield which had resisted some of the government’s recent measures, notably The government’s response to COVID- the suspension of in-person classes (see 19 has generated political difficulties below). for it, both internally and with the 2 opposition. In April, restrictions became a this autonomy for public health flashpoint with the opposition, especially reasons. Buenos Aires City Mayor Horacio Rodríguez ARGENTINA – Larreta (see March PCR for background). However, pushing the debate to the While Larreta agreed to collaborate and courts has not de-politicized it, but in PCR implemented a curfew throughout April fact exacerbated its politicization as and most of May, the city government each side has accused the other of continued to push for in-person classes, finding friendly courts to support its taking the matter to the courts. The city position. The national government argued has founded its position on the argument that it was inappropriate for the city to that Argentina’s 1994 Constitution gives seek to challenge its decree in a local court provinces, not the national government, without jurisdiction in the matter. jurisdiction over education, while the Subsequently, the national government national government has argued that it is criticized the Supreme Court’s decision as the authority with responsibility for politically motivated with President responding to the extraordinary public Fernández suggesting that the ruling was health situation. made to offer political support for the opposition and defended the measures On Sunday, April 18, just a few days after necessary to protect public health. In a the national government announced that sign of political support, the bicameral in-person classes would be suspended, a committee charged with reviewing Buenos Aires City Appeals Chamber executive decrees subsequently approved endorsed a judicial challenge presented by the president’s executive decree. the city government, suspending the part of the national government’s decree that As analyzed previously (see here for had halted classes and ordering the city to background), internal coalition pressures use its autonomy to continue in-person and the desire to differentiate himself from classes. Larreta portrayed the ruling as a the government in an electoral year win and quickly organized a press influenced the tone of Larreta’s debate conference, saying that in-person classes with the national government over in- would be held the following morning. person classes. However, polls suggest However, several days later, a federal that the fight over in-person classes court determined that the local court did had a negative impact on the support not have jurisdiction in this type of case of both the president and mayor, who and ordered the city to halt in-person consolidated support among their classes in compliance with the presidential bases but alienated moderate and decree until the Supreme Court could rule swing voters. on the underlying issue.