Argentina's President Cristina Fernandez was elected a year ago with strong support and a booming economy, but since then nothing has gone quite to plan and her drive to nationalize pensions threatens new problems. Fernandez is expected to get her proposed pensions takeover through Congress, where discussion on the bill begins on Tuesday, because she has a parliamentary majority and broad public support for the measure. But the plan has sent local stock and debt markets plunging and raised fresh doubts about Argentina's ability to weather the global financial crisis. The pension takeover is just the latest in a series of plans announced with great fanfare by the center-left president, but each one has been bogged down or fallen by the wayside and she has failed to win back the initiative lost during a conflict with farmers earlier this year. Fernandez and her husband and predecessor Nestor Kirchner, who is still a key policy maker, suffered a stunning defeat over a tax hike on soy exports with legislators from her own party breaking ranks in Congress to stop the tax. The global credit crisis raises the stakes over the pension plan. “In times of crisis, everyone changes, but it's hard to know where the government wants to go when it runs things almost like a series of rash outbursts,” said Walter Curia, a journalist and author of a book about Kirchner. “The government is taking a risk whatever happens. A new defeat could have very serious political consequences for the Kirchner project,” he added. When Fernandez took office, riding a wave of popularity over her husbands's stewardship of an economic boom, polls gave her approval ratings of more than 50 percent. But the bitter four-month dispute with farmers pummeled her ratings and she has failed to make much headway since the end of the conflict in July, when her own vice president used his deciding Senate vote to defeat the soybean tax hike. According to the latest monthly poll by the Poliarquia consultancy, 30 percent of Argentines have a favorable impression of her – just two points more than July. Reluctant Fernandez's pensions shake-up was read by foreign investors as a desperate effort to find funds to meet billions of dollars of debt obligations next year and even as a bid to stave off default in Latin America's No. 3 economy. Argentine debt prices have crumbled an average 59 percent on local markets in October, hit by the pension plan and the global crisis. Some benchmarks are trading at prices as low as 17 percent of face value, implying investors think a debt default is highly likely. Some analysts see the pensions reform as a high-risk strategy by the power couple aimed at clawing back their former dominance. If it backfires, the government would be severely weakened ahead of mid-term elections next year. “If the government doesn't manage to get its way on this, difficult times lie ahead,” said Roberto Bacman, an independent pollster and political analyst. The credit crunch has already laid waste to Fernandez's reluctant offer to clear the country's roughly $6.7 billion debt with the Paris Club group of nations and negotiate a deal with “holdout” creditors who rejected a 2005 debt swap. An ambitious plan to build a high-speed rail link, which even government allies criticized, has been put on the back-burner due to the funding crunch. Even the popular move to nationalize the biggest domestic airline, beleaguered Spanish-owned Aerolineas Argentinas, has been problematic as it has soured business relations with Spain, where many companies have investments in Argentina. The pensions plan may increase discontent with her government because it exposes its biggest weaknesses – highly centralized decision-making, the persistent influence of Kirchner and a failure to negotiate with adversaries. Argentina's economic collapse of 2001/02 is still fresh in the memories of ordinary Argentines and some fear five years of growth and relative stability are coming to an end, although many blame circumstances beyond the government's control. “I'm scared that what happened before will happen again,” said retired mechanic Aldo Jose Bacich, 66, saying he supported the government's plan to return pensions to state control. “Maybe it should have been a bit better thought-out and I'm sure they'll take money from the pension funds. We've never had a government that didn't,” he said, reading a newspaper in front of the presidential palace in central Buenos Aires. – Reuters __
