Argentine Dispute Takes New Twist

In a further twist in the conflict with farmers over taxes, Argentine President Cristina Fernandez de Kirchner announced on Thursday that revenue from the levy on soy exports would be shared between the federal, provincial and city governments.

According to the announcement 30% of income levied on soy exports will be deposited in an emergency fund destined for Argentina’s 23 provinces. This means an estimated 1.8 billion US dollars annually will be invested to build hospitals, schools, water systems and other infrastructure projects, easing the impact of the world economic crisis, Mrs. Kirchner said during a televised news conference.

The move represents an annual 11% increase in outlays to provinces a year, and was harshly criticized by the opposition that argued it was evidence of the government’s attempt to buy support ahead of national elections later this year.

The government will take the remaining 70% of the tax.

Earlier in the afternoon farmers were dismayed after being unable to muster sufficient votes in Congress to repeal the export taxes as had been planned. A majority of the ruling coalition simply was not present and therefore there was no quorum to address the issue.

The new move which will now be implemented with a decree, thus avoiding Congress completely, made it clear once and for all that the Argentine government has no intention of reducing export tariffs.

In some parts of the country furious farmers reacted taking again to the roads blocking traffic, echoing protests last year over government plans to raise farm tariffs and which ended with the Senate rejection.

"This is a new declaration of war on the agriculture sector," said opposition Senator Gerardo Morales. "Farmers see this as an attempt to buy the support of cash-strapped provincial governors" some of whom are close to farmers.

"They’re putting soy money directly into the campaign," Argentine Agrarian Federation head Eduardo Buzzi was quoted in the Buenos Aires television.

The Senate appears set to next week approve Fernandez’s bid to move elections to June 28 from Oct. 25, a move she says is needed to free her up to focus on the economic crisis.

And we all believe that one don't we?