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Lavagna, who planned to restore economic confidence by building up the
"the twin surpluses." He used a tax on soybean exports to produce a
budget surplus in a chronically deficit-ridden government. Applying
capital controls and heavy intervention on currency markets, Mr.
Lavagna kept the peso undervalued, stimulating exports and helping
build a huge trade surplus. It happened that Argentina got a
providential tail wind from China's economic boom, which has led to
higher prices for Argentina's agricultural commodities.

Argentina habitually tweaked the international financial
establishment. Mr. Kirchner infuriated international financiers by
paying bondholders only about 30 cents on the dollar after a massive
default. He paid off Argentina's entire $9.8 billion debt to the
International Monetary Fund, just to have it out of his hair, and
began accepting assistance from the Venezuelan leftist Hugo Ch=C3=A1vez.

The combination of high commodity prices, extra resources from
stiffing creditors, and Mr. Lavagna's "twin surpluses" put Argentina
on a roll again. Shoppers and tourists filled Buenos Aires boulevards
that not long before had been occupied by pot-banging protestors.
Banks, previously boarded up to keep out demonstrators, began
competing to hand out credit cards and consumer loans.

Then in 2005 Mr. Kirchner dumped Mr. Lavagna and started taking a more
hands-on role in running the economy. Mr. Kirchner has ramped up
spending, helping to fuel inflation. The government's fiscal surplus
is rapidly shrinking due to subsidies for energy, as well as goodies
for pensioners, some public-sector workers and other key
constituencies. There are also inflationary pressures from the higher
international prices for Argentine agricultural commodities, which are
blowing back to cash registers at home.

With Mr. Lavagna gone, Mr. Kirchner bet heavily on Mr. Moreno and a
new Internal Commerce secretariat to keep a lid on inflation. Mr.
Moreno has used his sweeping powers to thrash out ostensibly voluntary
price-control agreements with a range of businesses from supermarkets
to soft drink bottlers. Businesses that resist the agreements can find
that they really aren't so voluntary after all. Mr. Kirchner often
excoriates business people who get too greedy as "rogues who want to
earn a little more and do damage to the country."

Mr. Kirchner has carried on a running feud with the Argentine unit of
Royal Dutch Shell PLC, which has a refining operation and hundreds of
service stations here. Shell's problems started in 2005 when it raised
pump prices in line with rising international oil prices. Mr. Kirchner
immediately used his bully pulpit to call for a boycott of Shell,
urging Argentines to refrain from buying "even a can of oil." The
company quickly rescinded a gasoline price increase after
pro-government protestors marched on its service stations.

Things got hotter for Shell last December when the government accused
it of failing to stock sufficient supplies of diesel fuel. Using the
1974 antihoarding law promulgated under Mr. Per=C3=B3n, Mr. Moreno has
levied fines of almost $20 million against the company and sought jail
time for the company's local president, an Argentine citizen. Shell,
which says it did nothing wrong and is contesting the charges in an
Argentine court, maintains it is being singled out for harsh
treatment. Shell says it has been the target of close to two-thirds of
the about 800 Internal Commerce inspections in the fuel business,
though it accounts for only 13% of the diesel market.

Government controls have also caused havoc in the beef industry.
Argentines are the world's biggest beef eaters -- annually consuming
around 140 pounds per person -- and the government made a priority of
trying to keep low-coast beef in supermarkets and butcher shops.

The government last year banned beef exports for a time. Continued
restrictions will limit beef sold abroad this year to around 60% of
2005's volume, the industry says. Mr. Moreno also took control of
Argentina's main cattle market for several months and tried fixing a
maximum price. He only succeeded in stimulating a black market for
cattle. When beef producers balked at price constraints early this
year, the government temporarily shut down three slaughterhouses over
a variety of alleged administrative or bookkeeping violations.

The interference has been the last straw prompting some cattlemen to
scale down their herds and turn their lands over to the more lucrative
cultivation of soybeans and wheat. "It is impossible to design a
business plan with policies that are so changeable," says cattleman
Alberto Lasmartres Moyano, who has reduced his herd to 2,000 head from
8,000. Meanwhile, Argentine supermarkets and butcher shops still have
periodic problems with the supply and quality of meat, with more expected.

Mr. Moreno increasingly seems like the boy with his thumb in the dike.
Consumer groups say that some businesses have been outfoxing price
controllers by putting products in smaller volume packages. Mr. Moreno
has touted an agreement with bakeries to produce "economical bread" at
about 35 cents a pound. But the taste was so bad few bakeries could
sell it.

Working Argentines are beginning to find inflation offsetting some of
the past years' prosperity. With a recent weather-related spike in
some food prices, the poorest fifth of Argentine families would have
to spend all their income just to maintain normal consumption of
tomatoes, squash and potatoes, according to consumer activist Pedro
Bussetti. Marina Pardo, a housewife and mother of four, says she's
substituting rice for fresh produce. "There are some foods we can no
longer afford," she says.

Unable to halt the march of inflation, the Kirchner government moved
early this year to cover it up, according to a prosecutor conducting
an administrative misconduct inquiry. The prosecutor's report says Mr.
Moreno's new statisticians began "accommodating the numbers to
political necessity," in a way that was "deceiving." Mr. Moreno
wouldn't comment for this article, but recently told Argentine
reporters that the index "reflects reality" and has denied any
manipulation.

Increasingly, consultants and consumer groups are preparing their own
inflation indexes, which tell a different story. Amanda Ruybal, a
price surveyor for the independent Center for Education of the
Consumer, might have been in an alternative universe for all her
recent supermarket survey had in common with the government's. The
official price index showed a dozen eggs cost 3.13 pesos; Ms. Ruybal
found them for 4.45. Officially, a package of ravioli cost 4.45 pesos
but she found it at 6.49. "You have to trust your own eyes these days,
not the index," Ms. Ruybal said.

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Walter Lippmann
Havana, Cuba
"Un para=C3=ADso bajo el bloqueo"
http://groups.yahoo.com/group/CubaNews/
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