Jul 17, 2008, 22:30 GMT
Buenos Aires - The dramatic defeat in the Senate of a controversial bill to increase agricultural export tariffs has revealed deep divisions in Argentine society, and politics.
Early Thursday Argentine President Cristina Fernandez de Kirchner suffered a severe blow after the bill was rejected through the unlikely, yet decisive, vote of Vice President Julio Cobos when senators were tied 36-36.
The crisis that crystallized Thursday would have seemed almost unthinkable just a few months back, if only Argentina had not had a long history of economic and political turmoil that last erupted in 2001.
The fault lines emerged when members of the president's own party - some representing provinces with great agricultural activity, others out of political spite for the president and her aides - opposed the government-sponsored increase in export tariffs for soybeans and sunflower.
'The president will understand me because I do not think a law that fails to solve the problem is useful,' a visibly nervous Cobos said at the end of a 35-minute speech before the Senate. 'Let history judge me.'
Cristina Fernandez de Kirchner succeeded her husband as president only seven months ago. She was elected in the first round of voting, with more votes than her two closest rivals combined, and was riding high on a wave of welfare that had accompanied the previous executive.
The government was so confident that the outgoing Nestor Kirchner, who was president from 2003 to 2007, declined to seek the one re- election that Argentine legislation allows. When his wife became the ruling-party candidate, many suggested that Kirchner was confidently looking at the possibility of succeeding her in 2011.
The country's growth rate was close to double figures and was profiting from the high international price of agricultural produce it exports. However, prices were rising sharply, affected by international increases in the cost of fuel and foodstuff, as well as local factors.
In an effort to conquer a political space beyond traditional party lines, Cristina Fernandez de Kirchner chose a running mate from across the political divide, a centre-right radical. She cruised to the presidency as planned, but her honeymoon period was brief.
The government increased export tariffs on soybeans and sunflower by decree on March 11. For soybeans - of which Argentina is the third-largest producer in the world and exports over 95 per cent of its production - tariffs increased from 35 to 47 per cent, based on the current price.
The farmers' protests echoed loud and clear. They blocked roads, preventing movement within the country, a critical move in the absence of a comprehensive rail network. This stopped produce from reaching the cities, which in turn provoked scarcity and unrest within the urban middle class.
Fernandez de Kirchner argued that there was a need to supply internal markets, and noted that her government had spent millions to sustain an exchange rate that keeps Argentine farmers competitive.
As the pressure mounted, the government backtracked on some crucial aspects of its proposal - first changing it so as not to affect smaller producers, and then presenting a plan setting aside the extra funds obtained from the tariffs for specific social programmes.
The farmers' opposition was unrelenting, and the government's last concession - to send the decree to Congress for approval - backfired.
Cristina Fernandez de Kirchner will have to continue to govern, and she will have to do so alongside Vice President Cobos, who has so far said he will not resign.
She will have to do without the extra funds from farming tariffs, and will also have to re-think her own authority after pushing the stakes, then stumbling and backtracking, and finally falling.
In her favour, however, one factor remains unchanged in Argentina - there is no opposition with any political weight of its own, even though her rivals on the political and economic fronts have united to defeat the tariffs proposal, and succeeded.
The alliance of rich and poor farmers' unions, of dissident trade unionists and of political elements from the far left to the extreme right is unlikely to deliver a serious challenge to her government, just like in the most recent presidential election.
Yet, a vocal, confident and successful opposition - albeit one with little presidential potential - can make Fernandez de Kirchner's day-to-day working very difficult, as has been very apparent in recent months.
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