Argentine Transport Unions Strike Over Inflation, Crime

Argentina’s biggest unions paralyzed metro, train and bus services today and blocked the main entrances into the capital to protest rising prices and crime.

Trash started to pile up in downtown Buenos Aires as garbage collection was suspended and union members blocked Corrientes, one of the main thoroughfares with a sign that read “enough economic adjustments,” a reference to a 19 percent devaluation in January and a sharp increase in interest rates. Other unions from metal to oil workers didn’t join the strike, according to a statement published in Cronista Comercial by the Labor Ministry.

President Cristina Fernandez de Kirchner is facing rising social discontent after devaluing the peso to encourage grain exports and cutting government subsidies as she attempts to shore up international reserves that have fallen near a seven-year low. The 24-hour nationwide strike includes port workers, waiters and some teachers and affects urban transport and flights, the General Workers Confederation, or CGT, said in a statement.

“Prices are going up by the elevator and salaries by the stairs, that’s the real disadvantage we have today with inflation,” said union leader Luis Barrionuevo at a press conference yesterday.

‘Feudal Lords’

Unions blocking the Panamerican highway north of Buenos Aires clashed with police, according to images broadcast by C5N.

Cabinet Chief Jorge Capitanich said the strike is being led by political opponents of the government and is preventing people from getting to work.

Many restaurants and stores in downtown Buenos Aires were closed.

“This is like going back to the Middle Ages with feudal lords,” Capitanich said at a press conference in Buenos Aires. “It’s a huge nationwide picket.”

Consumer prices rose 7.1 percent in the first two months of the year, according to the government’s national index introduced this year. Inflation accelerated to 34.9 percent in February from a year earlier, according to estimates by private economists distributed by opposition lawmakers.

Rising prices triggered looting incidents in several cities in December in which at least eight people died. The looters took advantage of strikes by police who were demanding salary increases to meet rising living costs.

Crime Capital

Homicides in Rosario, whose ports handle about 80 percent of the grains exported from Argentina, rose 45 percent last year. The greater Rosario area had 264 murders in 2013 compared to 182 in 2012, according to figures compiled by the National University of Rosario.

The government ordered 89 raids in the crime ridden city yesterday using 3,000 federal police and seized drugs, cash and weapons, Capitanich said. About 2,000 police will stay in the port city to combat crime.

Shipments of dry bulk, gas and oil products may face severe disruptions as a result of the strike, Lloyd’s List Intelligence said in a report yesterday.

Picketing, roadblocks and strikes by several unions will affect activity at the port of Rosario, Argentina’s largest grain export hub, said Guillermo Wade, an official at the Chamber of Port Activities, in a telephone interview from Rosario. Shipment loading shouldn’t be affected, Wade said.

Economic Changes

A strike in November 2012, the first since Fernandez, 61, took power in 2007, to demand tax cuts and pay increases left garbage piled up on sidewalks and disrupted flights and bank operations.

Since replacing key members of her economic team following congressional elections in which her ruling coalition failed to win key constituencies such as Buenos Aires province, Fernandez has implemented policies that seek to regain access to the international bond market.

She has settled arbitration disputes at the World Bank, revamped the country’s economic data at the request of the International Monetary Fund, begun negotiations with the Paris Club of creditors and agreed to compensate Repsol SA for the expropriation of its stake in YPF SA.

Fernandez, who along with her husband and predecessor, Nestor Kirchner, oversaw average annual growth of 7 percent a year in the past decade by boosting spending, is now rolling back some of those policies.

Slowing Down

Recent steps include easing currency controls and reducing subsidies for gas and water by an average of 20 percent in a bid to save as much as $1.6 billion and narrow the largest fiscal deficit in more than a decade.

The measures will come at the expense of economic growth. Gross domestic product will expand 0.5 percent this year compared to an average of 2.3 percent for South America, according to IMF projections.

While the strike is being carried out by unions opposed to the government and hasn’t captured the support of the general public, Fernandez could face further social unrest as she attempts to correct fiscal imbalances and woo international investors, said Mariel Fornoni, director of polling firm Management & Fit.

Fernandez’s approval rating fell to 25.9 percent in April from 44.4 percent in October, according to a March 29-April 3 Management & Fit survey. About 64 percent of those surveyed thought the country’s economic situation will worsen in the coming months.

The nationwide survey of 1600 people had a margin of error of 2.45 percentage points.

‘Alice in Wonderland’

“The government is doing an adjustment without admitting it while it negotiates with international markets that demand certain conditions,” Fornoni said in a phone interview from Mar del Plata. “Those conditions are going to create a difficult social situation.”

South America’s second-largest economy after Brazil posted its biggest primary budget deficit in 21 years in 2013 and the widest current account deficit since 2000 as debt payments and energy imports drained reserves by about $12 billion.

The government overhauled its inflation and economic growth data after being censured by the IMF last year for underreporting consumer price increases and overreporting gross domestic product figures.

“We hope they’ll address our demands,” union leader Barrionuevo said in an interview today on Radio Mitre. President Fernandez “lives in another world like Alice in Wonderland.”

Before it's here, it's on the Bloomberg Terminal.