Now for the bad news … from Argentina

Last week, I wrote about a wave of good news for political and market stability in several Latin American countries. Then there’s Argentina. Faced with an increasingly uphill struggle in financing a highly expansionary fiscal policy and with no desire to reduce government spending, Cristina Fernandez de Kirchner’s government has refused to back down. They’ve ...

By , the president of Eurasia Group and GZERO Media.

Last week, I wrote about a wave of good news for political and market stability in several Latin American countries.

Last week, I wrote about a wave of good news for political and market stability in several Latin American countries.

Then there’s Argentina.

Faced with an increasingly uphill struggle in financing a highly expansionary fiscal policy and with no desire to reduce government spending, Cristina Fernandez de Kirchner’s government has refused to back down. They’ve now doubled down on a bid to reassert political control by claiming ownership of central bank funds with no clear room for compromise. The ruling Peronist party has already lost control of congress, and now it has drawn the judiciary into the fight over funds.

Argentina’s opposition doesn’t agree on much, but there is consensus that the Kirchners have now forced a fight worth having. A government battling for its survival won’t have much time or political capital to spend on anything else. The current political crisis might even delay Argentina’s plans to restructure the $20 billion debt in default.  As early as next week, both houses will probably reject a presidential decree establishing a "Deleveraging Fund" that the government hopes to use to tap $4.3 billion in central bank reserves to meet the debt obligations.

This is the most serious political crisis in Latin America. Fernandez de Kirchner’s term will end in December 2011. She’s determined to prove she’s no lame duck, but her aggressive style may prevent her from even reaching the finish line.

Ian Bremmer is president of Eurasia Group.

Ian Bremmer is the president of Eurasia Group and GZERO Media. He is also the host of the television show GZERO World With Ian Bremmer. Twitter: @ianbremmer

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