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Argentina has always had a love-hate relationship with its economy ministers. There is this undying hope that a sensational economist will come one day to save the nation from its financial doom.
Argentina’s political landscape has shifted dramatically, as expected. Alberto Fernández, the Peronist operative known for his work as Cabinet Chief under President Néstor Kirchner in 2003-2007, is the new president. He took office on Tuesday in a smooth transition that was crowned by his embrace with outgoing President Mauricio Macri, leader of a centre-right coalition that won in 2015.
The outgoing and incoming leaders produced some very civil conciliatory gestures when they attended Mass together on Sunday. But Cristina Fernández de Kirchner, the new vicepresident, openly expressed her disgust at having to share the inauguration ceremony with Macri in Congress on Tuesday.
The departing president, meanwhile, has made a point of keeping his private propaganda machine spinning at the speed of a cyclist racing the Tour de France, in a bid to secure a political future and a presidential comeback at some point in the future. But the race is over – many other opposition politicians have ambitions.
The new immediate political scenario is dominated by the Peronist unity brokered by Fernández de Kirchner earlier this year, when she anointed Alberto Fernández as presidential candidate. Yet one thing has not changed: Argentina is still staring down the barrel of another massive sovereign debt default, as it did under Macri. The debt burden includes the giant US$57-billion loan from the International Monetary Fund (IMF) that Macri asked for to rescue his administration from bankruptcy.
President Fernández is now flirting with default in what is probably a strategy aimed at sitting the creditors down at a negotiating table to accept the Republic’s conditions, which according to speculation would include a grace period to honour the debt and not necessarily a haircut.
Argentina has always had a love-hate relationship with its economy ministers. There is this undying hope that a sensational economist will come one day to save the nation from its financial doom. The new minister is Martín Guzmán, a 37-yearold academic trained at Columbia and Brown who has Nobel Prize winner Joseph Stiglitz – a critic of “free market fundamentalism” – as his mentor.
Will Guzmán, who during a press conference on Wednesday was fiercely critical of Macri’s neoliberal policies, manage to save the day? Possibly. But he is not a bird, he is not a plane and he is certainly not Superman. He is Guzmán. Ministers are humans, not men or women of steel, and must show what they are made of under pressure.
The last economy minister to turn into a sensation is Axel Kicillof, the economics professor who headed the portfolio under Fernández de Kirchner. He took office as the governor of Buenos Aires Province on Wednesday. The new man in charge, a member of the Kirchnerite wing of the new ruling Peronist coalition, immediately announced that he is scrapping a 25-percent utility rate hike announced by María Eugenia Vidal, the outgoing Macri-allied governor. Kicillof, the most left-leaning politician to govern Argentina’s biggest province since 1983, has summoned private utility companies to discuss the rates.
This is definitely the shape of things to come: welcome back state regulation. President Fernández addressed Congress on Tuesday and announced plans to submit a parliamentary bill to declare an economic emergency. Effectively, such an emergency will grant the Executive sweeping powers to dictate economic policies. The priority, the new president has said, is those in need. New policies, Guzmán said at his own press conference, will be detailed in writing.
There’s more sweeping of brooms on the way, judging by President Fernández’s inaugural speech. A drastic reform of the federal courts system is in the works, along with the “intervention” of the Federal Intelligence Agency (AFI). Federal judges wield huge clout and often use the intelligence agency to carry out shady investigations. This, according to the new president, is the dark side of democracy.
An overhaul of the intelligence sector is expected to be carried out by Gustavo Béliz, the new strategic affairs secretary. Béliz worked for the early stages of the Kirchner presidency (under the wing of Alberto Fernández) but was kicked out when he clashed with the state intelligence agency, then known as SIDE.
Now Béliz is back. President Fernández has vowed to abolish the huge “reserved funds” used by the state intelligence service, which has amassed so much power under so many administrations that it has the whiff of a secret police designed to snoop on citizens rather than to fight crime. That secret police is part of what President Fernández has called the “dungeons of democracy” which – in a jab to the press that will prompt controversy – opens the way to “media lynchings.”
This reform, which is bound to ruffle some powerful feathers in the courts and the intelligence services, is launched at a time Fernández de Kirchner, the new veep, is facing corruption allegations in court. President Fernández claims that the vicepresident is the victim of the seedy court system, which has worked to frame her with the help of the state intelligence services.
The question is whether this declaration of all-out war against the purportedly corrupt federal judges and spies will bring about political instability agitated by those who are about to feel the wrath of Béliz’s return as a powerful state secretary. Yet the headlines are unlikely to be about the judicial reform. The volatility will be stoked if the economy is not put right. Guzmán must make the economy grow, curb inflation and fight poverty. The regional outlook is complicated. Already there are signs of diplomatic tensions with the United States after a Donald Trump administration official complained about Cuban and Venezuelan officials attending Tuesday’s inauguration. News about the recently-ousted leftist Bolivian President Evo Morales seeking asylum in Argentina on Thursday could further irk Washington.
The pressure is tremendous. The economy is in a sorry state of depression. President Fernández already looked like he had aged a decade in Congress on Tuesday, with his eyes magnified behind the big round reading glasses he put on to deliver his first speech as head of state.
The new president had started the day driving his own Japanese sedan to Congress like a rally driver cruising on a victory lap. But the race has just started. Rally cars can fly off dirt roads spectacularly, and in no time at all. The scenes were chaotic when President Fernández was driven to Government House, with his bodyguards on foot wading through the crowd for the motorcade to slowly nose down the avenue. Who organised that mess? It made the new president look makeshift, vulnerable and in the middle of an institutional vacuum. Still, there was muscle in the huge crowd that turned out in Plaza de Mayo to voice support. It quickly filled the void.
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