012
28
The Americas
The Economist July 9th 2022
unions would have a right to strike for any reason they see fi t. Limits would only ap ply if a strike aff ects essential public ser vices. When expropriating land, the state will pay a “just price” for compensation, a weaker protection than the formulation in the current constitution, which says that owners will receive compensation for “the pecuniary damage actually caused”. Water rights, previously treated as part of some one’s private property, become a public good. They would be regulated under a new state body that would issue permits. Farmers, who consume 72% of Chile’s wa ter, say this creates uncertainty over the value of their land. The fi nal document shows fl ashes of re straint. It enshrines the independence of the central bank and maintains most checks and balances. It circumscribes re gional governments’ power to borrow and repeatedly mentions fi scal responsibility. But constitutional scholars fret about the creation of a 17member judicial coun cil, which would have a broad mandate. It would nominate all judges; previously the Supreme Court, the Senate, the president and the court of appeals all had a role. Eve ry fi ve years the council would review the work of judges at public hearings (though it would not be able to review sentences). Rodrigo Correa of Adolfo Ibáñez University worries that this could put judges under pressure from public opinion. The draft also tackles many subjects not normally considered constitutional. One article gives citizens the right to “adequate, healthy, suffi cient, nutritionally complete and culturally relevant food”. The text mandates that the healthcare system, courts and police all operate “with a gender perspective”, without elaborating. If voters reject the new constitution, the old one would remain in force. It could be improved. A supermajority in Congress Expounding fathers National constitutions currently in force Word count*, ’000, at July 6th 2022 India ~145,000
↑
Latin America & the Caribbean Rest of world
80
Chile† Ecuador Brazil
60
40 Mexico United States 1789
20
Argentina Indonesia 1850
1900
0 50
2000 22
*As originally adopted †Proposed Source: “Characteristics of national constitutions, version 3.0”, by Z. Elkins and T. Ginsburg, Comparative Constitutions Project, 2021; Centre for Law & Policy Research
could revise or scrap some of its 21 “organic laws’‘ which make tweaking legislation diffi cult. For example, changing education policy in Chile is almost impossible. The country’s Constitutional Tribunal also needs to be reformed. It often protects vested interests: in 2018 it prohibited a law that would have given the consumerpro tection bureau the right to sanction com panies that colluded to fi x prices. Mr Boric will want the new constitution to be approved. His plans, such as creating a more elaborate national health service, would be easier to bring to fruition if it passes. But as the polls have turned against the charter in recent months, his people have stressed that they can implement their agenda even if it does not. Still, it would be a blow for Mr Boric, who champi oned the assembly, if its new constitution is stillborn. n Argentina
Find works; insert spanner; repeat BUE NOS AIRES
Martin Guzmán resigns because of political infighting
F
or several months Argentina’s presi dent, Alberto Fernández, and his more leftwing vicepresident, Cristina Fernán dez de Kirchner (no relation), have publicly aired their diff erences. Since September Ms Fernández has published blog posts that denounce the president’s supposed austerity. When he reached an agreement with the imf in January to restructure a gi gantic debt, she fl ew to Honduras in a huff . To mark remembrance day in March, which commemorates the victims of Ar gentina’s military dictatorship, her son, a congressman, organised a separate parade to rival the president’s powwow. Now the saga has taken its most dra matic turn. On July 2nd Martin Guzmán, the economy minister, published a seven page resignation letter in which he sug gested that the spats between his superiors had prevented him from doing his job. The resignation is a victory for Ms Fernández, who had been pushing for Mr Guzmán, the president’s closest ally, to go. It comes less than a month after Matías Kulfas, the minister of industry and anoth er ally of the president, was forced to re sign after casting doubt on the role of Ms Fernández’s allies in the licensing of a gas pipeline (the case is being investigated; Ms Fernández described Mr Kulfas’ comments as “very unfair”). Both he and Mr Guzmán have been replaced by ministers closer to Ms Fernández. Markets reacted badly to Mr Guzmán’s
departure. The cost of a dollar on the black market, which more accurately refl ects the value of the peso, shot up from 239 pesos to 260 (the offi cial rate is artifi cially main tained at around 125). Some government bonds are trading as low as 20 cents on the dollar. The cost of insuring the country’s debt rose by 6%. Some businesses sus pended sales, because the economic out look seemed so uncertain. Meanwhile an nual infl ation is above 60%. The central bank has scant reserves of dollars. Mr Guzmán was seen as one of the more sensible fi gures in the cabinet. He restruc tured $65bn of debt to international credi tors in 2020 (equal to about a year’s govern ment expenditure). He also cut the fi scal defi cit after a spending boom during the pandemic and led talks to renegotiate the $44bn Argentina owes to the imf. None of this improved investors’ confi dence in the country, which is a serial defaulter, though it did buy the government time. Yet it sparked the ire of Ms Fernández, who re cently said that infl ation is not caused by fi scal defi cits but rather by debt. She also suggested the president should “use his pen” to halt imports. She believes that is the best way to remedy the dollar shortage. Silvina Batakis, the new economy min ister, is a former civil servant. She was the economy minister of Argentina’s most populous province from 2011 to 2015, where she defended the use of price controls and higher wealth taxes. But more recently she said she believed in a balanced budget, agreed to stick with the deal with the imf (though she said “adjustments” were need ed), conceded that price controls alone do not lower infl ation and said that energy subsidies must “rapidly” be reduced—a particular aff ront to the more extreme ele ments in the government. Implementing these measures could stem another crisis. That is, if Ms Fernández allows it. n
Breaking free
