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France's 'Yellow Vest' movement has spread to Argentina as anger grows at economic crisis

Tom Belger
Finance and policy reporter
Protests are on the rise in Argentina. Photo: REUTERS/Marcos Brindicci

Demonstrators in yellow vests are taking to the streets of Argentina in growing numbers, banging pots and pans in a distinctively South American brand of the French protest movement.

Tens of thousands of Argentines have taken part in marches over the past month alone, sparked by rising discontent with the government over its handling of an economic crisis.

Dozens of men and women wore high-visibility jackets at one rally on Friday night in a middle-class district of the capital, Buenos Aires, with passing cars beeping in support as they chanted and drummed on their kitchenware.

“The vests represent the struggle we are in,” Ricardo Medina, 37, one of the demonstrators holding up a giant Argentinian flag, told Yahoo Finance UK at the protest. “We are not a political party, just the people. They did it first in France, and we want to do the same thing here.”

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Argentina has been rocked by economic turmoil over the past year, throwing into doubt the future of right-wing president Mauricio Macri and of Latin America’s third largest economy.

Last year saw the price of bread rose more than 80%, the peso currency lose almost half its value against the dollar  and interest rates peak at 60%, the highest in the world.

Figures suggest a third of Argentines are now in poverty, with the most desperate parents and children begging or scrambling through bins, young people sleeping rough and some grand, European-style buildings lying empty even in the heart of Buenos Aires.

Argentine yellow-vest protestor Ricardo Medina. Photo: Tom Belger / Yahoo Finance UK.

2018 was the year investors took fright at what the president called “endless storms,” including Argentina’s chronic inflation problem, a drought that devastated crops and the lure of higher US interest rates, as Reuters reports.

The government accepted a humiliating bailout and austerity package from the International Monetary Fund (IMF), widely blamed for immiserating Argentinians in the world’s biggest sovereign debt crisis in the early 2000s.

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But any hopes the new year might bring a brighter future are already fading fast. The spark for the latest ‘tarifazo’ protests is a new round of eye-watering hikes in prices for state-subsidised transport, electricity and other utilities over the next few months.

Higher utility charges will raise revenue, helping president Macri curb the government’s deficit and maintain IMF support in propping up the still-vulnerable peso. But they are also fuelling a political backlash and deepening the inflation crisis he once promised to end.


 

One 62-year-old pensioner in a yellow vest said she spent a third of her 9,000-peso (£184) pension each month on electricity.

“If you pay the tariffs, you don’t live. I can’t buy things – the only time I come out is to protest every week,” she said, carrying an anti-Macri banner in the capital he once governed as mayor.  “The majority of people can’t pay. Macri takes wealth from workers and pensioners to pay the IMF. He doesn’t represent us, or spend money on the people.”

She said people banged pans to “wake up the Argentinians who seem to be asleep,”  using the kind of ‘cacerolazo’ or stew-pot protests that symbolised public anger during the last major economic crisis.

A year ago a US dollar hovered around the 20-peso mark, but the Argentine currency had slid to just under 37 pesos to the dollar by the end of January, 2019.

Some analysts say the utility charges and cuts to public services later this year could come at a fatal political cost.

Edward Glossop, an economist at Capital Economics, said inflation would likely hit 30% this year, protests would probably escalate and investors feared the populist left could return to power.

He told Yahoo Finance UK: “There’s going to be a ramping up of austerity ahead of presidential elections in October. Large swathes of the population are probably going to be affected.

“We think that opens the door to a shift to the left.”