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Argentine debt tiff shines light on rebel VP Add to ...

Argentina's president has blamed everyone from ruthless bondholders to unscrupulous judges for blocking her bid to use foreign reserves to pay debt but the sharpest words have been for her rebel vice president.

The accusations have reignited a long-running feud between President Cristina Fernandez and Julio Cobos, who once shared a presidential ticket but now are bitter rivals.

Less than a year after being elected as Ms. Fernandez's running mate, Mr. Cobos cast the deciding vote against her government on a controversial farm tax increase in 2008 and now is seen as a possible challenger to her husband, former President Nestor Kirchner, in next year's presidential election.

"This vice president is doing just about everything but being a vice president ... I think he wants to be president before 2011," Ms. Fernandez said last week.

Ms. Fernandez's plan to use $6.6-billion (U.S.) in central bank currency reserves to service the public debt is mired in legal and political wrangling and she says "coup plotters" bent on destabilizing her government are to blame.

She fired central bank chief Martin Redrado earlier this month for opposing the plan and refusing to quit, and has referred to him as a "squatter" since a federal judge ordered his reinstatement.

In a series of strongly worded speeches, Ms. Fernandez also has blasted the federal judge for issuing rulings "on demand" and accused leading media group Grupo Clarin of striving to taint her image through its news outlets.

But it is Mr. Cobos, whose measured tones and low-key style have made him popular with Argentines tired of Ms. Fernandez's combative approach, who has borne the brunt of her criticism.

Mr. Cobos, who is also the head of the Senate, has denied the claims but, in a clear challenge to Ms. Fernandez, questioned the legality of two decrees she issued to allow the government to tap the reserves and sack Redrado.

"There's a conspiracy against me," he said last week.

Mr. Cobos's popularity has risen since he rebelled against the government at the height of a dispute with farmers over the soy tax. His approval rating is above 50 per cent compared with about 20 pe rcent for Ms. Fernandez and Mr. Kirchner, according to a poll published by Management & Fit consultancy in November.

Some political analysts say Mr. Cobos stands to gain if Ms. Fernandez fails to resolve the reserves fund dispute swiftly.

"Cobos isn't behind this," said analyst Graciela Romer. "He's been upfront about this. He has never been shy about his disagreement with Fernandez's decision ... (but) Cobos is part of the opposition and this is helping the opposition."

The turmoil at the central bank has heightened political tensions in Latin America's No. 3 economy and raised doubts about the cash-strapped government's plan to launch a $20-billion debt swap in the coming weeks.

Ms. Fernandez hopes the swap of defaulted bonds will allow Argentina to return to international credit markets eight years after a massive default.

Mr. Cobos, a 54-year-old civil engineer from the wine-making region of Mendoza, is under pressure to resign as vice president from some opposition leaders, who question him for remaining in the government.

The dispute over the reserves plan is testing Ms. Fernandez just as politicians in the divided ruling Peronist party and the opposition jostle for position ahead of next year's election.

Mr. Kirchner, Ms. Fernandez's predecessor, is tipped as a candidate but he may find it hard to reverse a slump in popularity that set in over the presidential pair's handling of the farm tax conflict.

Mr. Cobos has hinted he would like to run for the presidency and with the reserves fund dispute highlighting his role as the government's No. 1 rival, many voters think it is time for him to make his break with Ms. Fernandez official.

"He's sleeping with the enemy," said Dario Blanco, a computer programmer, standing outside the Central Bank in central Buenos Aires. "I don't think he can change things from the inside. Maybe he should resign."

 

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