Wednesday, June 12, 2024

OP-ED | 01-04-2023 06:07

Paint it black – beyond the White House

The White House meeting and Macri’s bombshell announcement dominated last week’s headlines but neither in truth do very much to modify the basic picture.

If Andy Warhol said (or is said to have said) that everyone will be famous for 15 minutes, President Alberto Fernández may congratulate himself on his midweek Oval Office encounter with his White House colleague Joe Biden extending to 20. Former president Mauricio Macri is already famous so he did not need 15 minutes to explain his exit from this year’s presidential race, confining himself to six last weekend.

While opposition leaders unanimously applauded Macri for his statesmanship, critics were divided as to his presumed ulterior motives – did he feel condemned to electoral defeat, given majority disapproval ratings, or did he conclude that an election which was his to lose with the country’s current free fall would lead to a second term as frustrating as the “second halves” during his 2015-2019 presidency, precisely because of that free fall? Within this context it would seem that in the best of cases the next presidency will be transitional, a mirror image of the 2002-2003 Eduardo Duhalde caretaker administration paving the way for Kirchnerism. In the worst of cases it could be a further twist in the downward spiral of the last 20 years – ever since Néstor Kirchner struck lucky with the global commodity price boom, each four-year presidential term has been perceived as worse than the one before (even when under the same person, Cristina Fernández de Kirchner, between 2007 and 2015).

Aside from the papal health scares, the White House meeting and Macri’s bombshell announcement dominated last week’s headlines but neither in truth do very much to modify the basic picture. The ravages of the drought have yet to be fully quantified in terms of the final harvest, export earnings and the fiscal deficit among other figures but it stands to be truly disastrous – nor will the fallout be only economic since Economy Minister Sergio Massa had previously been touted by many as almost the only viable government candidate for the presidency. While various opposition voices have been raised over the compulsory sale of dollar bonds in state hands as rifling pension funds yet again, the issue merits even more attention as potentially much weightier than either international meetings or presidential encounters – even if it is not quite so simple as trading greenbacks for worthless peso bonds and even if the pension system was hopelessly insolvent long before this stunt (or the recent moratorium). Finally, the recent news of the Leliq quasi-fiscal deficit snowball increasing twelvefold to 12 trillion pesos under the Frente de Todos administration and 147 percent in the past year (way ahead of inflation) – a cancer which is far more menacing than the primary deficit obsessing most orthodox economists.

If libertarian Javier Milei responded to Macri’s exit by saying that many more members of the “political caste” should follow his example, this might seem sage advice for reasons other than those given by Milei against this backdrop – as the late Queen said to her penultimate prime minister Boris Johnson: “I don’t know why anyone would want this job.” Yet is all gloom and doom with Argentina confirming that old joke about being “the land of the future, always has been and always will be?” That jibe overlooks that the future is never so rigid as it paints Argentina’s destiny – the future is not what it was at the start of this year and is unlikely to be the same at its end. To give only one example, midyear completion of the Néstor Kirchner gas pipeline tapping Vaca Muerta shale (reportedly on schedule with no import restrictions applied there) could drastically improve the long-term outlook in just a couple of months. Yet nor is Argentina “condemned to success” in Duhalde’s words – that other boom industry of lithium confronts environmental litigation while software potential is continually stunted by a protectionist nationalism which is the precise opposite of playing to the country’s strengths.

In contrast to that, the presidential presence in the White House should not be underestimated even if it is easy enough to mock a sterile meeting with a Biden seemingly living up to his nickname of “Sleepy Joe” or downplay the importance of the United States with the rise of China. If the US budget deficit recently proposed by Biden is alone six times the size of the entire Argentine economy and if Spanish exports are sevenfold those of Argentina with a similar population, this country is never going to enter into that scale until it enters the world and all moves in that direction should be applauded.


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