Macri cleared the enigma in a few days. The economic direction of Cambiemos is every day more evident.  Hardly a week in government and the Argentine right has hurried to leave no doubt as to the economic model that they’re proposing for the coming years. The first and main act was to position themselves on the side of the Argentinian countryside, that is to say, of the few big agro-exporting enterprises. The measure has been to raise the tax retentions on wheat, maize and meat, and lower five points on the tax rate paid on soya.  This means that President Macri is allowing the big agro-exporting firms additional profits of between 4 and 8 billion dollars. From now on, we return to the epoch of the petition. What will prevail is a petition to these big economic powers to be "good and generous" and be willing to help the Republic by contributing part of this new plunder. Sovereignty is totally buried in this new/old idea of "asking, please" those who truly hold considerable economic power. The dollars are returning to the hands of the owners of the large properties of the Argentinian countryside. It will be they who really make exchange policy. What they call the market, but which isn’t really.  Rather it is a question of a few persons, the big names, who are returning to flaunt their monopoly power over foreign currency in Argentina. They will decide when and how it is spent, on what, for what, in favour of whom, under what economic model. The objective is a revival for the XXI century of an economic model depending on the agro-exporting sector, once again concentrated in a few hands, with a model of unequal insertion in the world.

In order for the economic-political equation to be perfect, it was necessary to remove the exchange contraints. This means freeing the exchange market.  Once again, the euphemism of freedom does its damage. Freedom means that only those who have great economic power have the real capacity to determine exchange rates. But the public discourse is something very different. The picture they are selling is that now all Argentine citizens may have equal access to dollars, up to two million monthly per person. It is hardly necessary to say that this amount is only within the reach of a few, of very few. Who else has access to this amount monthly?

In this way, they have eliminated the limit established in the Kirchner epoch, that aimed to manage the access to dollars for citizens in a controlled manner. It is obvious that that this measure was highly controversial because no one likes to see their access restricted to all the dollars that their buying power allows. Nevertheless, this was very necessary, fundamentally, because it allowed for a policy of assignation of foreign currency that was more effective in favouring a more inclusive economic model, guaranteeing social rights, more sovereign in strategic sectors, and better prepared to undertake industrialization designed to substitute imports. The use of the dollar is the key to discussing this issue seriously. It is a question of deciding whether dollars can be withdrawn by whoever wants them, how they want them, when they want them, or whether, on the contrary, measures are established in favour of their use for internal development.

Macri leaves no place for doubt. What he wants is for the dollar to be freely accessible for all those who can have access. This does not mean all Argentine citizens. This implies that immediately, from this moment onward it is a select few, those with great economic power, who can mark the new exchange rate. It will be they who decide the price of the dollar. The Central Bank is substituted by no more than ten big businesspersons (from the countryside). Thus devaluation is guaranteed. The trap is perfect. The same people who gain from the elimination of tax retention from the countryside (more dollars in their pockets) are those who can determine the foreign exchange rates; and obviously, they are the ones who gain from a devaluation. Thus, if today one can exchange 10 Argentine pesos for one dollar, from tomorrow and onward this relation will be growing. We can foresee that the minimum base of this exchange relation will be 14. Thus the exporters gain since they can exchange every dollar that they export for a higher value. And on the other side are those of always, the majorities that will see their buying power affected.  The devaluation makes imports more expensive: for every dollar imported, now everything will be more expensive because more pesos will be needed to buy the same item. So the economic model is clear: devaluation that screws the majority to favour a minority.

To cap this vicious circle, Macri promises that there will be sufficient dollars in the country. How? Where will they come from? Very easy. He will borrow dollars from the big international private banks (already promised by JP Morgan, Deutsche Bank, Citibank, HSBC, Goldman Sachs). This means that this whole fiesta will cost the Argentine people more external debt, that is to say, eternal debt.

Thus it is that Cambiemos (let’s change), the Macrista alliance, has begun to change Argentina, putting her in debt, making her dependent on very few agro-exporting companies and no doubt making the majority poorer through an unjust devaluation.

There are no loose ends in this Macrista route of the dollar.

(Translated for ALAI by Jordan Bishop)

- Alfredo Serrano Mancilla is Director of CELAG, Doctor in Economics, @alfreserramanci

http://www.celag.org/electroshock-economico-de-macri-por-alfredo-serrano-mancilla/