THINKING

Argentina: Changes in the Ministry of Productive Development

A few hours after Alberto Fernández asked the Minister of Productive Development, Matías Kulfas, to resign, the Government announced the appointment of Daniel Scioli for this position.

This demand for Mr. Kulfas’s resignation -one of the main ministers of the current administration and a personal friend of President Fernández- can be interpreted in many different  ways; however, it is clear that the replacement has nothing to do with the functioning of the portfolio but rather with the configuration of political forces within the ruling coalition.

WHAT ARE THE IMPLICATIONS OF SCIOLI’S APPOINTMENT?

  1. The premature replacement of Matías Kulfas with Daniel Scioli reveals the fragility of the government alliance and the extreme friction between the different factions.
  2. The resignation of the Minister of Production has two immediate consequences: the onset of an investigation by the opposition focusing on the tender process of the Nestor Kirchner gas pipeline, and a new accusation against La Cámpora, an organization allegedly involved in the “personalized writing” of the bid.
  3. The former ambassador to Brazil will surely set a new pace for the Ministry of Productive Development, generating a more agreeable and fluid dialogue with the business sector. However, it is unlikely that he will be able to take his task further, since public policy in terms of production is closely linked to imports (inputs and finished products) that depend on scarce dollar reserves. In this way, foreign trade policy is currently subject to the Central Bank rather than to the Ministry of Production.
  4. The replacement also generates internal realignments. The position of Economy Minister Martín Guzmán is strengthened due to his excellent relationship with Daniel Scioli, while Sergio Massa’s situation is weakened after unsuccessfully attempting to appoint a person of his trusted circle in his capacity as president of the Chamber of Deputies. Finally, Vice President Cristina Fernández de Kirchner will be empowered, after stating that Kulfas was a “public servant who fails to serve”

Read the full report here.