Are there reasons to be optimistic about Argentina? Or should we resign ourselves to accepting that either we will have another Mauricio Macri presidency with high-minded messages and little real reforms, or the return of Cristina Fernández de Kirchner, a development which would include debt restructuring and more unsustainable populism? If the irrationality and extreme volatility of markets has anything to do with it, the risk of default has fallen aggressively over the past few weeks, as the emerging markets bond index (EMBI, known in Argentina as riesgo país) indicates. Yet, it remains one of the highest in the world given the underlying fragilities of the Argentine economy and, of course, the fear of a return to populism that is inherent in this year’s elections where the only feasible option appears to be Mauricio or Cristina.
Indeed, the former president’s resilience is surprising. Despite being prosecuted for corruption and having had her pre-trial arrest requested (senatorial immunity keeps her out of jail at present), CFK remains extremely competitive electorally. The government’s own figures, according to Clarín, suggest she’s doing better than the president: Macri’s positive image stands at 37 percent — four percentage points higher than before the G20 Leaders Summit in Buenos Aires — while his negative image is at 60 percent. Cristina: 37 percent positive, 59 percent negative. As could be expected, the government’s disastrous macroeconomic performance has fuelled Cristina’s popularity, meaning she has broken what Ecuadorean political advisor Jaime Durán Barba had called her “hard ceiling” made up by a “strong core” of supporters.
Astutely, the former president has learned that her best strategy is silence. She hasn’t announced her candidacy yet and has held low-key meetings with several relevant leaders of the fragmented Peronist front. Cristina was never fond of the traditional structure of the Justicialist Party, which was closer to her husband’s heart, as she professes a more personal and vertical form of leadership. The former president has sought a direct connection with her fans, either through “modern” mechanisms, such as massive rallies and nationally televised speeches, or “post-modern” mediums like social media. But always outside party lines, as continues to be the case with her current political framework, Unidad Ciudadana (Citizens’ Unity). There are things in which Cristina is innately Peronist, though, such as being willing to create electoral alliances with sworn enemies. Nonetheless, for now she “speaks” only through Twitter, where her last few messages came on December 30 to commemorate the passing of former Foreign Minister Hector Timerman and the following day to post a humorous video to send off 2018. Being one of Argentina’s most relevant female leaders, it’s interesting that she hasn’t even made reference to the #MiraComoNosPonemos movement spurred by accusations of sexual abuse against actor Juan Darthés. Silence is golden.
Cristina, of course, hasn’t and most probably will not offer a political platform beyond criticising the mistakes of the Macri administration. How she plans to reactivate the economy, lower the deficit, tackle inflation, and foster exports remains an absolute mystery. Her track record gives us a glimpse of the damage she can cause.
This, however, is the same thing we can say about President Macri. His surprise 2015 victory over Daniel Scioli – who once again made headlines for his love life this week – was hailed by Western capitalists as a landmark moment that marked the beginning of the end of Latin American populism. Yet, his piecemeal reform agenda, gradualist approach to the fiscal deficit, and policy of foreign indebtedness has gotten the country nowhere. The economic contraction of 2018 erased all the gains of 2017, where an artificially stronger peso allowed for stability and falling inflation.
Macri’s leadership style is the exact opposite of Cristina’s, as he articulated a cabinet of uncharismatic technocrats who shared responsibility for the economy, at many times executing contradictory policies that are a prime example of the lack of a plan. On December 28, 2017, a fateful press conference where then-Central Bank chief Federico Sturzenegger was publicly humiliated by Cabinet Chief Marcos Peña sparked a loss of credibility that, coupled with a complex global environment, has pushed Argentina into its worse recession since the 2001-2002 crash, unmasking how little Macri had done to truly change the composition of the State, mainly exemplified by growth in the fiscal deficit.
Peña and Durán Barba are extremely talented at winning elections, though. They understood, and understand, that the battle is between Mauricio and Cristina. They have done everything in their power to feed polarisation. The Peronists have given them a hand too, failing to rally behind a single candidate, distrusting the likes of Renewal Front leader Sergio Massa while fearing Cristina’s shadow.
But the Macri administration hasn’t presented an electoral platform either. Their winning strategy was to rely on emotion and polarisation, but inflation remains sky-high, the economy is paralyzed, and the dollar’s value continues to be one of the most important everyday issues for Argentines. Deficit reduction and austerity, imposed by the International Monetary Fund, and asking the population to continue to believe, despite falling real wages, rising public service costs, appears to be the plan at present.
Unfortunately, the plan is to hope nothing goes wrong. The first thing that must go right is the harvest, where wheat has already surprised to the upside. Second, international markets mustn’t be rattled by US President Donald Trump and his constant fights, particularly with China. And third, green shoots must flourish before or during the campaign. In other words, it’s as if it didn’t depend on them. Should we be optimistic?
The theory, at least, tells us not to. Fortunately for us, things generally don’t go as prognosticators plan. Just think back to expectations for 2018.