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ECONOMY | 22-10-2021 21:58

The ‘Pact’

The real question isn’t about macroeconomics or philosophy, but rather about whether Team Mauricio and Team Cristina can actually leave aside their differences and work together.

The severity of the electoral defeat in the PASO primaries has injected the Fernández-Fernández administration with a vigour that hadn’t been seen in the nearly two years it has been in office. Apart from a flurry of short-term measures aimed at “putting money in people’s pockets,” the pan-Peronist Frente de Todos front has now officially acknowledged it will seek a pact with the opposition and other central actors of Argentine society in order to look for long-term solutions for the country’s deep-seated structural problems. This admission, apparently, is supported and even encouraged by Cristina Fernández de Kirchner, without whom the ruling coalition simply does not function. While Cristina has tried to tell us President Alberto is truly in charge, and that he is the only one capable of exercising presidential power, she has shown time and time again that she exerts both direct and indirect pressure on the Executive — including the entire Cabinet — and that ultimately she is the one calling the shots. Whether Alberto is trying to please her by trying to appropriate a failing agri-business giant or claiming Venezuela isn’t a dictatorship, or is directly following orders such as when he was forced to shake up his Cabinet. He’s relinquished his free will and is merely a placeholder keeping the ruling coalition in place. Thus, no matter what happens in the midterm elections, the remaining two years of this government are now unequivocally Mrs. Fernández de Kirchner’s responsibility. Which ultimately forces one to deduce that the social pact with the opposition – negotiated by Lower House Speaker Sergio Massa and the vice-president’s son Máximo Kirchner and formally led by Alberto – is also on CFK’s plate.

It isn’t entirely clear what the ruling coalition means when they talk about reaching a structural agreement with Juntos, the opposition coalition that includes former president Mauricio Macri, which came out strengthened by the primaries. Though Macri is an important actor, but not the centre of power, his approval of said pact is a necessary condition for its success, as is Cristina’s. As Gustavo González has been writing in his weekly columns in Perfil, even in their mediocrity both former presidents remain the protagonists of the Argentine political scene. Their antagonism has been the defining feature of the fractured democratic process over the last decade and a half, granting each of them key electoral victories at different points in time but eroding the capacity to govern effectively (at least since Cristina’s second mandate).

On the surface, the first issue would be tied to the macroeconomic disaster that is Argentina. Specifically, how to contain inflation that is running at an annual rate of 50 percent in the context of a massive fiscal deficit, troubling levels of indebtedness and no access to external financing. The proposed solutions to these issues are a prerequisite to any substantial conversation with the International Monetary Fund. The multilateral lender’s officials have already digested the fact that Economy Minister Martín Guzmán has lost his teeth and that his original plan — which was in line with certain orthodoxy that would please the board — of fiscal consolidation is no longer acceptable for the ruling coalition’s major stakeholder, at least not until after the election.

The macroeconomic debate has an ideological aspect to it tied with a certain orientation regarding the role of the market and the interference of the state. And while Fernández de Kirchner continues to insist on the centrality of the proactive state in determining prices, and Buenos Aires City Mayor Horacio Rodríguez Larreta — the de facto leader of the opposition — responds by claiming price controls have never worked, both ruling coalitions have proven to be relatively similar from a methodological standpoint: short-termism to try and make it to the next electoral cycle, both with extremely negative medium-to-longer-term effects.

Yet, the real question isn’t about macroeconomics or philosophy, but rather about whether Team Mauricio and Team Cristina can actually leave aside their differences and work together; whether the two former presidents can cover their nose for long enough in each other’s presence to convey the message that this time all of the unity talk is for real. And whether they can suspend the mutual distrust at least for enough time for their respective coalitions to agree on a series of points and set the plan in motion before it can be blocked by the more extreme elements of each side. The evidence suggests it will be pretty difficult – they bickered over the handover of power in 2015 (Cristina didn’t attend) and acted up in 2019, when Alberto received the presidential band from Macri. Both sides have decided the other is responsible for the totality of the country’s problems, and both believe the Judiciary is lent on by their adversary in an attempt to lock up their extended family members. There’s even been talk of the need for some sort of amnesty, which sounds pretty pathetic.

Thus, we find ourselves in the final stretch of a weird electoral campaign where we’ve barely seen any campaigning since the primaries. There have been no campaign platforms or proposals, only the arguments “blame Macri” and “blame Kirchnerism” thrown around by candidates on both sides. The electorate, sick and tired, has refused to vote or moved toward the extremes, with liberals like José Luis Espert and Javier Milei gaining ground, along with the left-wing Frente de Izquierda grouping. With the election as a backdrop, bickering and petty politickery will only persist. What will happen the day after, though, when Massa “announces” the call for a grand socio-political-economic pact with the opposition?

Agustino Fontevecchia

Agustino Fontevecchia

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