Argentina's Fernandez faces her first general strike

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By Alejandro Lifschitz and Nicolás Misculin | November 21, 2012 2:21 AM EST

Public transportation in Argentina as well as grain shipments from the agricultural powerhouse halted on Tuesday for a 24-hour strike over taxes called by a union boss once allied with the government.

The work stoppage by bus drivers, train conductors and port, airline and bank workers follows wide protests held on November 8 over high crime, soaring inflation and the policy response of President Cristina Fernandez.

The Peronist leader has seen her popularity tumble since easily winning re-election in October last year, as inflation runs at about 25 percent despite a slowing economy, according to private economists. The government publishes much lower inflation data, long dismissed by the markets as inaccurate.

"The strike is a consequence of slow economic growth and high inflation, which the government does not recognize and therefore does not reflect through adjustments in the sliding income tax scale," said Ignacio Labaqui, who analyzes Argentina for emerging markets consultancy Medley Global Advisors.

The International Monetary Fund has given Argentina roughly until the end of the year to improve its murky inflation reporting or risk sanctions.

Farmers also joined the protest led by Hugo Moyano, a gruff former truck driver once closely linked to Fernandez but now a leading opposition figure. As head of the country's CGT labour federation, Moyano wants lower taxes for workers to help compensate for inflation.

This is the first general strike that Fernandez has faced in nearly five years in office and the first to hit the country in a decade.

The work stoppage increases the stakes in the political battle between the president and Moyano. Ties between the two turned sour following the death of Fernandez's husband and predecessor as president, Nestor Kirchner, in late 2010.

Moyano's CGT federation split in two earlier this year, with his allies re-electing him as leader in a vote rejected by rival union bosses aligned with Fernandez. The fracture in the umbrella group risks deepening labour unrest as double-digit inflation stokes wage demands.

"This general strike raises the possibility that she is losing control of the street and it puts the unions that are allied with her in an uncomfortable position," Labaqui said.

Fernandez is moving to shore up her base. Her allies in Congress last month lowered Argentina's voting age to 16 from 18, a change that could help the politically ailing president court the youth vote ahead of 2013 mid-term elections.

Argentina is the world's top exporter of soy oil, needed to make biofuels, and soymeal used to feed cattle as far away as China, where the emerging middle class is clamouring for beef steak. The South American country also is the second biggest corn exporter after the United States.

"This (strike) was necessary, unfortunately," said Eduardo Buzzi, who heads the Argentine Agrarian Federation, which represents small-scale farms. "There is no way to dialogue ... This is the most anti-farm government Argentina has ever had."

The agricultural sector has long quarrelled with Fernandez over the 35 percent export tax her government puts on soybean exports and curbs it places on corn and wheat shipments.

Calls went unanswered at the main grains port of Rosario and the usually noisy, truck-jammed entrance to the port of Buenos Aires was still, with activity expected to resume on Wednesday. The local stock and bonds market was also unusually quiet.

(Writing and additional reporting by Hugh Bronstein; Editing by Bill Trott)

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