Tuesday, March 24, 2015

Argentina, the rift between the Court and the President

At the end of her second term, Argentina's President Cristina Kirchner accuses judges, and especially the Supreme Court, of plotting against her. For their part, and after long years of awkward silence, some judges and public prosecutors seem to have recovered their eyesight and are investigating cases of embezzlement, money laundering, and abuse of power that reach the president, her son, as well as some very fortunate new millionaires who are said to be their front-men. On top of that, Alberto Nisman, the prosecutor appointed to investigate the bomb attack perpetrated in 1994 against the Jewish community AMIA building, accused Cristina Kirchner of plotting together with the Iranian government to cover-up the crime. Worst of all, the day before Nisman had to present his charges in Congress he was found dead in his apartment. The government never sent a word of solidarity to his widow and two little daughters.
All that is in the news. Nevertheless, the present rift between the federal judiciary and the President should not hide the fact that the Supreme Court has decided every key case in favor of Kirchner's government. It is important to set the record straight. Those who admire the Kirchner's regime will be less inclined to criticize the Court. On the other hand, those who deplore their government will be more realistic in their evaluation of the Court's role.

How the new Supreme Court was born

In December 2001 a civilian coup toppled President Fernando de la Rua. Congress was dominated by his enemies, both in the Peronist party and even more virulently in his own party, the Radical party (which, in Argentina, is a center-left moderate party). There was some haggling over the succession, and Argentina had 4 presidents appointed successively by Congress in 10 days. Though people in the streets demanded elections to replace the fallen government, it was decided not to risk it. Instead, and by an overwhelming majority, Congress finally chose the candidate who had lost the election against de la Rua, the Peronist Eduardo Duhalde.
The new government decided to take the dollars people had in their bank accounts. That was rather unexpected because, beside other grievances, the immediate motive for the protests against de la Rua -which led to his demise- had been the limits his government had imposed on the amount of cash people could withdraw from their bank accounts -limit that concerned cash, but not other ways of disposing of their savings. Instead, the newly elected government took people's dollars and gave bonds in exchange. A law to that effect was duly approved in Congress by the same combination of forces that toppled the former president.
Perhaps already longing the times when they protested against mere limits on cash withdrawal, many Argentines went to the courts reclaiming their dollars, and they won their cases. After a while, appeals reached the federal Supreme Court. The judges said that in taking the dollars, the government had violated article 17th of the federal Constitution which states that "property is inviolable". One of the first cases was "Smith" and it was followed by "San Luis" (link to the Court's site1). This latter case was peculiar because it involved a provincial government suing the federal government in order to recover its dollars –the federal government had taken even the dollars that belonged to one of the states (provinces) that form Argentina. The Supreme Court decided in favor of San Luis.
By that time Eduardo Duhalde had been replaced by Néstor Kirchner, also a Peronist, elected president in 2003 with president Duhalde's patronage. In fact Kirchner had lost the election's first round, but then the winner –Carlos Menem– retired from the contest and Kirchner was appointed president without a second run. Meanwhile, with their decisions confirmed by the highest court of the land, lower courts were piling up thousands of sentences against the government and in favor of the right of people to their savings in foreign currency. Then Kirchner, again with the support of both the Peronist and Radical parties, decided to change the Supreme Court.

The new Court changes course

Then Congress accused some of the judges of the old Court of having been subservient to a previous (Menem's) government. Nevertheless, some argued that the real problem was that they had refused to be subservient to the new government. Under pressure, three of the judges retired –one argued “moral exhaustion”, another denounced an attempt against his life. Two others refused to retire and were removed by Congress, still dominated by the same forces that brought down Fernando de la Rua's government. The Attorney General, whose legal report to the Court had supported the saver's claims, resigned too and was replaced by a former Peronist minister. Newspapers, TV channels, and radio unanimously celebrated those decisions. Now Argentina would have a Court that would be independent from a previous government!
The first three seats thus emptied where filled by appointing judges Maqueda, Highton, and Zaffaroni (the first had been President of the Senate after the coup against de la Rua). The new majority in the Court reversed the course and declared that taking the dollars was according to the Constitution (case "Bustos" 10/26/2004). The judges used the occasion to harshly criticize the former decisions of the Court. They said that they had caused economic and legal chaos. They scourged the savers who had gone to the courts and had already recovered their dollars saying that they had obtained an unfair privilege. They criticized the economic measures of the two previous governments. They declared that the so-called property over dollars was “a big fallacy” and gave two reasons to support that conclusion (paragraph 9, majority's opinion):
1. Argentines don't earn their salaries in dollars
2. To exchange Argentine pesos for dollars in currency exchange offices was possible only in border countries, but not further away
I mention this reasoning because it is a good example of the kind of economic analysis often displayed by the Argentine Supreme Court. Certainly, the first argument should have alerted other courts around the globe of similar fallacies: Swedes don't earn their salaries in dollars, nor do Russians, Chinese, Japanese, or Lithuanians. They might be told that their savings in foreign currencies have been transformed into bonds by the force of a syllogism.
The second argument was considered by many Argentines a decisive proof of the fallacy. The Court simply repeated that piece of popular wisdom. I remember that a man told me that at Paris airport he had tried to pay for a cup of coffee with pesos, and that the waiter had refused them and demanded Euros. The man adopted that shrewd expression Argentines show in the many occasions in which they unearth such global conspiracies and told me that evidently the parity between peso and dollar had been a big lie concocted by banks and the media for more than ten years. Of course, he as well as the judges confused the readiness with which a currency is accepted and its exchange value. They didn't realize that they couldn't have paid for the cup of coffee with Swiss Francs, Yens, or Swedish Krona. Moreover, what was that supposed to prove? That all those currencies not accepted by waiters have no value, zero value? The waiter in the story didn't ask for a more favorable exchange rate, he simply rejected the foreign currency. I failed to convince the man that he was mistaken. No doubt, the savers failed to convince the judges.
Concurring with the majority, judge Zaffaroni, the closest to the new government among the new members of the Court, said that those economists who had given advice to the two previous administrations should be criminally persecuted.
After further places had been emptied, two new judges, Lorenzetti and Argibay, filled them. Then, the new Court in full ratified the precedent "Bustos" and again declared that taking the dollars was right (precedent "Massa"). But these two new judges weren't so assertive in their support to the government's right to the savings of the population. They produced very odd opinions: using only general words, judge Lorenzetti warned that it would be necessary to think carefully about the negative consequences of the Court's long tradition of "tolerance" (his word) for emergency laws that make inroads into property rights. He recalled the example of old cases in which, although in single dissenting opinions, a few judges firmly supported property rights. Nevertheless, he sided with the new majority.
Judge Argibay's opinion was even more peculiar: she explained at length why the presidential decree that commanded banks to give dollars in private accounts to the government was against the Constitution and even declared that the saver had the right on his side. Nevertheless, in a short final paragraph she said that for "institutional reasons" (her words) it was "prudent" (idem) to reject the claim. That was perhaps one of the strangest opinions ever issued in the history of the Supreme Court.
More perplexities were added when in 2007 the Court admitted –with one dissenting opinion– a claim for the dollars that had been deposited in a bank during the course of a trial (case “EMM S.R.L.”). It often happens that in a trial some party has to deposit money in a State owned bank, sometimes to pay for expenses, sometimes as a caution, etc. Money in those accounts cannot be extracted without authorization of the judge in charge of the case. In “EMM”, the Supreme Court said that the government couldn't take these dollars from their bank accounts without violating the Constitution. What was the difference with common bank deposits in dollars? The Court declared that judges have to protect the goods put under their custody –a duty which apparently they limited to such goods. And they added that if the government took those dollars, it would violate not only property rights but the independence of the judiciary.
In my Spanish blog I have included a detailed analysis of the Court's ruling2. In short, we must conclude that in “EMM” the judges considered that their duty of protecting deposits in foreign currency made during trials was different from that other –which they must have deemed much weaker– of protecting dollars deposited in any other bank account, or of property in general.

The government takes retirement savings

A law passed in 1994 allowed workers to choose between a State managed retirement system and private accounts administered by companies known in Argentina by the acronym AFJP (Pension Fund Administrators, similar systems exist in many countries). While in the first scheme money enters a common fund that the government uses for many purposes besides paying pensions, in those privately administered ones each saver had an individual account. The law stated that money in those accounts belonged to each saver and that they could be left as property to heirs.
These private funds had invested in Argentine bonds –a law had forced them to do it, so the future pensioners were among the main creditors of the State's defaulted debt. In December 2007, at the end of Néstor Kirchner's term, Cristina Kirchner was elected to replace her husband. A year later, she decided to take the retirement savings held by people in their individual accounts. In this way, together with many other assets, the government took possession of its own bonds and the debt was wiped out.
Some savers sued the government and in March 2013 one of these cases reached the Supreme Court (this was of course, the new Court). The judges rejected the claim3. Their decision is remarkable for its brevity, just three lines. The judges said that they shared the Attorney General's advice against the saver. Certainly, it isn't unusual that in very simple cases and for brevity's sake the Court just asserts that it shares the Attorney General's reasoning. But never before had a case of such importance been decided that way. Though the case directly concerned a single saver, in fact it decided the fate of about ten million future pensioners, thousands of millions of dollars, assets in Argentina as well as investments abroad, and in fact the future of the whole pension system.
Just three lines. And what was the reasoning provided by the Attorney General that the judges found so convincing? He said that though the law stated that savings in individual accounts in pension funds belonged in property to each saver, that wasn't really property, so the government wasn't really violating the Constitution's clause that protects property (art. 17 “...property is inviolable...”). Why wasn't it property? It wasn't because saving for future retirement was compulsory. Though such savings remained in a private account that the law distinctly declared as property, it wasn't money that the saver could use immediately, he couldn't touch it before he retired, and that proved –according to this argument– that the account in the pension fund wasn't really property.
The case received little attention in the media and only a few perfunctory articles were published about it in law reviews.

The battle for the control of mass media

In June 2009 Cristina Kirchner's government lost the legislative elections and therefore its hegemony in both houses of Argentina's Congress. Her husband and former president Néstor Kirchner had lost the elections in the most important province, Buenos Aires. Two months later, the government presented a draft for a law to regulate the mass media: television and radio. This was called “the mother of all battles”. As it was announced, the purpose of the law was to fight the few so-called monopolies that shared the biggest part of the audience in detriment of others –the State owned channel being among those less favored by the public. The government proposed to limit the number of viewers and listeners that each broadcasting company could reach, thus establishing a fair partition of the audience among them. The law was approved in Congress though most of the opposition chose not to be present. Nevertheless, as it has been the case in many other issues, their objections didn't concern the main points in the law and were related to matters of form.
A major media company, the Clarín group, sued in defense of its broadcasting license. After having supported the Kirchner's government for some years, they had become one of their main critics. The case finally reached the Supreme Court. By a majority of 4 to 1 (and 2 others in between, with partially dissenting opinions) the judges decided that the law was constitutional.4
The objections against the new statute covered both its main technique of dividing the audience among companies and the fact that it violated broadcasting licenses still in vigor. The law forced Clarín to “disinvest” (that was the word in the new statute), to shrink its size, well before its licenses had finished. As mentioned, 4 judges said all was unobjectionable, 1 said both things were against the Constitution, 1 said that though the main system was OK, the government had to wait till the licenses granted under the previous law had finished, and 1 also said that the government had to wait, but that it was better for the Court to postpone its decision about whether the system was constitutional till that time. That last opinion was judge Argibay's and was remarkable because there won't be any future occasion to discuss the matter. Judge Argibay must have understood perfectly well that, as all the other judges gave their views concerning the objections against the main system, the plaintiff won't have another chance to challenge the statute.
In total, there were 5 judges who said that the limits to the number of people who can view a TV channel or listen to some radio broadcaster don't affect freedom of expression. Judge Fayt said it did (judge Argibay dodged the issue). The majority's argument was that the size of the public anyone can reach isn't relevant. Judge Maqueda asked, isn't it true that the freedom enjoyed by a little local radio station is no different from that of a big media company? Both are free. So if a law forces the latter to shrink to the size of the former, freedom of expression in itself isn't violated. As long as some way of expressing one's opinions is preserved, there is no constitutional objection, only a matter of size. The majority said that as long as a media company isn't “asphyxiated” by regulation (their word, pages 11, 38, 94 of the sentence), freedom isn't affected.
Furthermore, the judges distinguished between what they called individual and collective freedom of expression. The first is simply the right to voice one's opinions. The judges acknowledged that in that respect, restrictions must be carefully scrutinized. On the other hand, there is a collective freedom: that of those who may listen to those opinions. In that respect, State regulation may be more “intense”(the judges' word, page 38).
The judges used yet another distinction: they said that there are two ways to fight monopolies. Government can suppress them if and when they appear, or –without waiting for that– it can regulate beforehand how people can access information so that they receive a well balanced stream of information (page 36). I have dedicated two articles to the Court's decision in my Spanish blog. There I argued that in fact, these aren't two different techniques, but two different goals. To monitor and shape the kind of information the population receives (checking whether it is fair and balanced, according to the authorities) is a goal very different from that –much more limited– of fighting monopolies. In his dissenting opinion, judge Fayt said that to replace people's judgment with that of the authorities is the essence of unconstitutional paternalism (page 338).
Judge Zaffaroni, always more prone to ideological pronouncements, concurred with the majority and said that nobody can doubt that the mass media has an influence on people's ideas, tastes, fears, stereotypes, aesthetic judgment, even people's language and existential goals. He said that dominant economic groups may make people more culturally homogeneous, in detriment of diversity. He concluded that in a time in which technology changes communication in revolutionary ways, a government that leaves that power to monopolies commits “cultural suicide” (page 77).

General indifference, no debate of ideas

Most Argentines have shown no interest in the cases here reviewed. Journalists have covered them as battles where the only relevant question is, Who is the winner, who has managed to impose his will? Though the Court's decisions are easily accessible on the web, journalists never cared to look at them and examine the reasons presented by each side. Only a few academics published some articles in law reviews.
The Argentine legal philosopher Carlos Santiago Nino, many times cited by the Court itself, wrote that Argentines suffer from anomie, a lack of interest about their own future.5 Nino died before any of these Court controversies took place, but in them he would have found ample justification for his remark.
This post is not the place to analyze why so many Argentines limit their attention to soccer. Nevertheless, I will add that even among politicians and academics, the debates seldom tackle fundamental questions. And when there is a rift, it often takes place between people who share the same fundamental view. They only dispute who is better prepared to realize it. People who have struggled together for power often become bitter enemies once they conquer it.

1These and other cases commented here can be found in full text in the Argentina's Supreme Court web site (in Spanish): www.csjn.gov.ar/data/em_econom2.pdf. This is a document that collects most of the cases related to emergency decrees and laws.

3Case R. 37. XLVI. RHE; ROSSI PABLO ARIEL c/ ESTADO NACIONAL - MINISTERIO DE TRABAJO EMPLEO Y SEGURIDAD SOCIAL Y OTROS Y OTRO s/AMPAROS Y SUMARISIMOS; 26/03/2013. Unfortunately, there is no direct link to the decision. Nevertheless, it can be retrieved from the search page of the Supreme Court: http://servicios.csjn.gov.ar/confal/ConsultaCompletaFallos.do?method=iniciaConsulta
4There are two detailed articles about this decision in my Spanish blog, as well as a link to the full text of the sentence (all in Spanish): http://arielbarbero.blogspot.com.ar/2013/11/conceptos-juridicos-del-fallo-clarin.html and http://arielbarbero.blogspot.com.ar/2013/11/derechos-adquiridos-y-ley-de-medios.html

5Nino, Carlos Santiago: Un país al margen de la ley [A country outside the law] published in 2005, many years after his death.

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