Between the Virus and the Economy: the Situation of Argentina in Times of Covid-19
Last December, Covid-19 news emerged from China and, as the epicenter of the pandemic moved to Europe in February, and then to the United States in March, the news hotspots moved there too. However, there has been only a few global news streams about how South American countries, and Argentina in particular, are fighting against the pandemic. As a country with a new president, who has started this year with a preexistent economic crisis, it is worth giving a look at the current local situation, along with some of the policies implemented by the government, both to preserve the public health system and to overcome the economic struggles caused by the virus.
Covid-19 hit Argentina during the first 100 days of the government of Alberto Fernández. A former Chief of Staff to Presidents Néstor Kirchner and Cristina Fernández de Kirchner (2003 - 2008), he won the elections against incumbent President Mauricio Macri with a coalition between different factions of Peronismo: the Governors, the kirchneristas groups that answer to Cristina Kirchner (now Vice President and President of the Senate), and other groups that answer to Sergio Massa (Speaker of the Chamber of Deputies). Fernández took office last December amidst an economic recession (2.5% and 2.1% of fiscal deficit in 2018 and 2019 respectively), high inflation (over 50% in 2019) and a hefty foreign debt, both with private creditors and the International Monetary Fund (IMF).
Fighting the pandemic: the domestic struggle
In Argentina, since March 20th, people are not allowed to leave their homes except for running basic errands, and less than a third of the jobs are considered essential and performed in situ. In terms of public health, the results seem to be positive so far since, without an upsurge in the number of fatalities, the country has gained time to increase the number of beds in hospitals, doctors on duty, and other health variables. Following these numbers, after 4 weeks the quarantine started to ease in the provinces with the lowest rates of Covid-19 cases, and the national government started delegating the control of the situation to the Governors.
As of today, Argentina ranks in the middle of South American countries in all Covid-19 statistics (around 4,500 cases, 220 deaths and 2,000 tests per million people at the time this piece was written). Except for Brazil, all countries in the region have imposed strict lockdowns and quarantines in late March, right after the first cases started to appear.
With a projected fiscal deficit of 8% for 2020, the national government has already invested around 6% of the GDP in social policies and economic stimulus to business and commerce to fight the economic halt caused by the coronavirus. The President announced a series of public investments to help businesses pay for salaries, increased unemployment insurance and strengthened social programs, as well as launched a subsidized line of credits for small companies. However, after almost 45 days of lockdown, these sectors are starting to argue that public money has not arrived yet, and they would not be able, without a lift of the quarantine, to pay neither salaries nor taxes in May. In his last press conference, President Alberto Fernández asked the business sector for patience and responsibility. He has also reaffirmed that the government is prioritizing health and not economy because “the economic crisis can be reversed, but the deaths can´t”.
Besides the health and economy discussion, another output of maintaining people in their homes is a lower crime rate. However, the only type that has not decreased in Argentina is femicides. Since the lockdown has started, there has been 1 femicide every 29 hours (“the other pandemic”) and a 39% increase in calls to report cases of gender-based violence. The government took several decisions to tackle this problem: increasing the public attention to this issue through radio and tv ads, opening new ways for women to seek help, and giving permission to violate the quarantine for those women living with their aggressors. However, these initiatives were outshined by the debate about the possibility of releasing several inmates in order to reduce the threat of contagion of coronavirus in prisons. These situations coupled with media misinformation and some polemic judge rulings have alerted victims of crimes linked to gender-based violence to be in danger once again.
Fighting the pandemic: the international stage
Since this pandemic is a global issue, international cooperation became fundamental during the last weeks. Even though the Ministry of Foreign Affairs is still mainly focused in repatriating almost 10,000 Argentine citizens (from an original number of 35,000) that are abroad, on a global scale Argentina has taken different actions related to the coronavirus crisis.
President Fernández took part in the Extraordinary G20 Leaders’ Summit convened on March 26th by the Saudi Presidency to address the pandemic, where he proposed creating an emergency fund against coronavirus. In the joint adoption of Leaders’ Statement on the Covid-19, they promised to do “whatever it takes to overcome the pandemic”, and they agreed to inject $5 trillion into the global economy. The premier forum also launched the Access to Covid-19 Tools (ACT) Accelerator Initiative, a platform for the accelerated development, production and equitable access to new pandemic tools. Certainly, the pandemic changed the priorities settled for the next Riyadh Leaders’ Summit in November and it will be an opportunity to revalidate the relevance of this mechanism.
At a regional scale, Mercosur became the epicenter of political discussions. On the one hand, on April 3rd, the South American bloc (Argentina, Brazil, Paraguay and Uruguay) approved a U$D 16 million emergency fund to be used for coordinated combat against Covid-19. On the other hand, the Ministry of Foreign Affairs announced that Argentina has decided to withdraw from trade negotiations being undertaken by Mercosur, as it will turn its focus on the growing economic crisis at home. The Argentine decision affects the ongoing commercial negotiations between Mercosur and South Korea, Singapore, Lebanon, Canada and India, but excludes the negotiations already concluded, such as the free trade agreements signed last year with the European Union and the European Free Trade Association (EFTA). After the controversy that this decision triggered, the Ministry issued an unclear statement in which it seems to be reversing.
That same week, President Fernández attended a virtual meeting of the Grupo de Puebla, where former presidents such as Lula da Silva, Dilma Rousseff, Evo Morales and Rafael Correa, among others, claimed the importance of the government's’ role in guaranteeing social rights, stressed the need to strengthen the World Health Organization, rejected the continued economic blockades (such as those in Cuba and Venezuela), and criticized how Brazil, Chile and Ecuador are managing the pandemic. It is worth noting that forty leaders participated in this summit, with Fernández being the only President in office. The statements caused troubles with Chile, so Fernández had to call President Sebastián Piñera in an aim of making a substantial turn in bilateral relations with the border country.
Post-Pandemic: The path forward
Argentina shares the same objective with all the countries around the world: to avoid deaths by Covid-19. In the light of the numbers released daily by the Ministry of Health, and comparing with global statistics, we are on the right path. The public health system seems to be ready to tackle the peak of the cases, expected by early June.
What lies beneath the health discussion is how to move forward after the pandemic ends. Given the economic context in which President Fernández took office, it is important to carefully monitor the impact of the policies taken against Covid-19. With an already fragile financial situation, and on the edge of defaulting the public debt, the post-Covid Argentinian economy will face very difficult times: a very high fiscal deficit, entire business sectors in bankruptcy, and a growth in the poverty and unemployment rates.
This would require putting the Argentine’s most valuable skill to the test: resiliency. Our regular economic, social, and political crises, which are considered our main weakness, could provide an opportunity in this context. We hope this would not be the exception and, by the end of the year, could be back on track again.
Julian Colombo and Antonella Pelizzari are alumni of the Atlantic Dialogues Emerging Leaders Program (2018 and 2019 respectively).