DEVELOPMENTS

Argentine President Cristina Fernandez de Kirchner prevailed in a prolonged power struggle over the country’s central bank earlier this month when Mercedes Marcó del Pont was appointed as the institution’s new head. The ascension of Marcó del Pont, an ally of the president, concluded a month of political maneuvering that began when Fernandez de Kirchner tried to dismiss central bank President Martín Redrado on January 7.

His offense? Refusing the president’s demand of $6.5 billion of the bank’s reserves to help pay the government’s debt.

Redrado’s dismissal was done via an emergency decree with Congress out of session, (a time-honored tradition in Argentine politics). The Supreme Court cried foul, briefly reinstated Redrado, and then ruled that a congressional commission should decide his fate. Undeterred, Fernandez appointed the bank’s deputy governor as interim head and barred Redrado from the bank. Awaiting the outcome of the commission, Redrado submitted his resignation on January 30, which was bizarrely rejected by the president, who speciously insisted the commission reach its conclusion.

The unexpected appointment of Marcó del Pont on February 3 confirmed the obvious: the central bank will be under the president’s control for the remainder of her term. The new bank chief said as much upon taking office, when she expressed the view that central bank independence should be limited.

What might Fernandez have in mind for the country’s near record $48 billion of reserves? A rash of spending will probably be needed for Fernandez to revive her flagging popularity ahead of the 2011 presidential elections – or, in a scenario analysts consider more likely, to position her husband and predecessor Néstor Kirchner for a bid to return to the presidency. Either way, the specter of four more years of kircherismo bodes poorly for the state of Argentine democracy.