S ince the PASO primaries, just over a month ago, the country’s two main political figures have been dithering about how to relate to one another. Their tone has changed from cooperation to competition and even outright confrontation, sometimes within hours.
Though to be fair, they are the stars of an unprecedented plot twist in this country’s tangled political history: Mauricio Macri is a lame duck president, but is still a candidate, and Alberto Fernández is a virtual but yet-to-be elected president. What can possibly go wrong?
However, now that the campaign for the October 27 election is officially on, Macri and Fernández appear to have some real incentives to cooperate with one another, rather than fight, or at least to keep the confrontation under control, especially if the financial pax stands. Will they or won’t they? Macri needs to dispose – for good – of his worst fear: not completing his presidential term ending December 10. The president has finally been realistic about the dire condition on the financial front and has introduced capital and exchange control measures, hoping they would get him through the election and beyond, even at the cost of his pro-market international reputation – and his innermost convictions. If he wants to have a future in politics, namely lead the opposition or even dream of a comeback à la Chile’s Sebastián Piñera, Macri needs to deliver an orderly end to his traumatic first administration.
Alberto Fernández, meanwhile, has already got Macri to pay the price of many of the things he thought he needed to have done in order to kick off his likely future government. His economists argue that having the forex at around 60 pesos per US dollar makes the country’s economy competitive enough, and they have applauded the capital and foreign exchange restrictions. Under the current circumstances, Fernández has been able to campaign as if he were already the president-elect, getting in as little trouble as possible, but with less worries about the economy spinning out of control, something that would make his first months in government extremely difficult.
The awareness that things are not as bad as they appear for both leaders led to an unusual policy agreement this week, with the unanimous approval in the lower house of Congress of legislation that pompously declares the country is in a “food emergency.” In concrete terms, it allocates roughly 10 billion pesos toward feeding the nation. This issue moved quickly to the top of the agenda after hardline social organisations – whose political affiliation range from Peronism to Marxism – camped outside the Social Development Ministry on Avenida 9 de Julio over a period of two weeks.
But the news is that Macri’s ruling party decided first to grant quorum in the Chamber of Deputies for the special session, before voting in favour. The other notable move was Fernández urging social movement leaders to rein in their protests. “Don’t go out to the streets,” said the presidential frontrunner in Tucumán this week, arguably anticipating a conflict he will face sooner rather than later if he does become Argentina’s next president.
If it is to continue, the next front for this incipient form of cooperation should be the problems on the country’s complex financial front. The International Monetary Fund (IMF)is still trying to figure out how this Argentine limbo works and, more importantly, what it should do about it. The Fund, however, is in its own transition after the exit of Christine Lagarde, whose replacement as managing director is only scheduled to take over next month. Her absence should be noticeable: Lagarde’s personal relationship with Macri kept the mammoth US$57-billion stand-by agreement going, despite the evident failure of Argentina’s economic programme.
Lagarde, though, is no longer around and Macri can hardly talk about a future that won’t have him in the Casa Rosada, so the IMF bureaucrats are also dithering about what to do with the fifth review of the deal and the rubberstamp needed to clear a new disbursement of US$5.4 billion. With Central Bank reserves dwindling, the country desperately needs every penny it can possibly get, but more importantly, it needs some reassurance that the IMF will continue to have a constructive – and even understanding – relationship with the country.
Macri’s new pragmatic Treasury minister, Hernán Lacunza, has announced that new talks with the Fund, to begin renegotiating the terms the next government will have to meet, will take place later this month. Lacunza is flying to Washington and the IMF officials said this week they are happy to meet over coffee, but they gave no hint about when, how and if the cash will be transferred. Both Macri and Fernández should keep an eye on the minister’s immediate fortunes.