Tuesday, December 1, 2020

OPINION AND ANALYSIS | 20-10-2018 07:53

Argentine déjà vu

Recession is beginning to generate political instability as different actors are now standing up to Macri, from union leaders to the Catholic Church.

“We all have some experience of a feeling, that comes over us occasionally, of what we are saying and doing having been said and done before, in a remote time—of our having been surrounded dim ages ago, by the same faces, objects and circumstances—of our knowing perfectly what will be said next, as if we suddenly remembered it!”

David Copperfield by Charles Dickens (1849)


More often than not, things appear to repeat themselves. Or at least that’s how human perception inter - prets our complex reality, assigning causality on the basis of deductive logic to occurrences that appear to follow a pattern repeatedly.

Having weathered the latest storm, the Mauricio Macri administration appears to have regained control of the ship, and things seem to gone back to “normal.” The value of the dollar, which is Argentina’s first indicator of instability, has remained rangebound and even on a slight downward trajectory, meaning it no longer is the main conversation point of the middle class. The media has taken to focusing on the inner rumblings of the political class — which only matters to a very small segment of society — and sports, with the Youth Olympics and the goings on of football teams River Plate and Boca Juniors once again monopolising attention, along with crime. The omnipresence of Cristina Fernández de Kirchner gives the ruling Cambiemos (Let’s Change) coalition a feeling of security – polarisation with their favourite antagonist has proven a foolproof electoral strategy.

Yet, alas, the situation remains dire , which in turn requires upmost vigilance. From an economic standpoint Argentines have seen a potent erosion of their purchasing power as the peso has devalued more than 100 percent since December, in turn dripping fuel on the fire that is inflation that continues to hit higher highs.

A painful recession is underway and it is hard to envision a quick recovery. This, in turn, is beginning to generate political instability as different actors are now standing up to Macri — not just the Kirchneristas — from union leaders to the Catholic Church, meaning the president’s political capital has also been aggressively depreciated.

Doldrums. The relative peace that we are experiencing is primarily derived from the stability of the peso. We just went through this, throughout July as Luis “Toto” Caputo took over the presidency of the Central Bank from Federico Sturzenegger, having secured funding from the International Monetary Fund as the dollar-peso exchange rate hovered above 27, days after the Argentine national football team lost to France in the quarter-finals of the World Cup in Russia. Economists praised Caputo’s monetary tourniquet, which aimed at reducing the stock of short-term paper known as Lebacs but allowed for a continued expansion of the money supply. It lasted about a month before the next bout of aggressive devaluation, the steepest, rocked the nation and Caputo’s stamina.

This time around, with Caputo out of the Central Bank and an IMF-approved austerity plan that includes monetary contraction and the inception of an even deeper market-imposed correction, it once again feels like we’ve hit bottom. In the government, Macri’s political advisors are telling the president he’s not doing that bad. Yet, since January the numbers indicate people’s negative perception of Macri’s administration has outstripped the positive figures, reaching a peak of 54.2 percent in October according to Synopsis (his positive figures have fallen to 26.2 percent, the lowest in the series). Cambiemos is comfortable because the polls still have him beating Cristina in a hypothetical 2019 run-off, with Macri at 46.6 percent and CFK earning 44.1 percent, while 9.3 percent of the electorate remains undecided.

Even more reassuring, the president is told in the Casa Rosada, political wunderkind and Buenos Aires Province Governor María Eugenia Vidal would take the run-off by a wider margin, 51.6 percent to Cristina’s 44.6 percent, with just 3.8 percent of undecided voters. A different set of polls corroborates another relieving fact for Macri and Cabinet Chief Marcos Peña, the man behind the electoral strategy: the “presidenciables” among the Peronists rank well below Macri, Vidal, and even Buenos Aires City Mayor Horacio Rodríguez Larreta, while their disapproval ratings remain sky-high. According to San Andres University’s latest figures, Salta Governor Juan Manuel Urtubey is the best ranked with a 38 percent approval rating, 38 percent disapproval and a recall rate of 89 percent. He’s followed by Renewal Front leader Sergio Massa (32 percent approval, 54 percent disapproval), Felipe Solá (25 percent, 46 percent), Agustín Rossi (19 percent, 42 percent), and Miguel Ángel Pichetto (12 percent, 29 percent).

In public appearances Macri appears confident. Surrounded by his former peers at the IDEA colloquium of businessmen in Mar del Plata this week, Macri asked everyone for resilience, confirming the intended trajectory, repeating Vidal’s message a few days earlier of “putting a shoulder to it.” From a political standpoint, Cambiemos is said to have negotiated the 2019 budget with the opposition, counting with the implicit support of Pichetto in the Senate and the tacit support of Massa’s allies in the Chamber of Deputies, despite public criticism.

We’ve seen this film before, it’s high time for Macri and the opposition to be proactive, demonstrating their collective capacity to overcome gridlock in the shadow of Cristina Fernández de Kirchner. At the same time, we need Macri and his team to lay out their productive plan in order to jumpstart the economy. Promises of a flourishing energy sector with Vaca Muerta firing on all cylinders in five years just won’t cut it, particularly in the face of a recession that will only get deeper. Argentina also needs a judiciary that is truly fair, that will prosecute the Kirchneristas and the businessmen who paid bribes.

All of those things that Macri speaks about in abstract terms need to be brought down to reality right now, explained, and followed up on. Unless this is just another bad dream.

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Agustino Fontevecchia

Agustino Fontevecchia


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