The alarm bells have been ringing for quite some time. In recent weeks, we've seen an acceleration of the socio-economic breakdown of the populous Conurbano region, (the ring of municipalities that encircles Buenos Aires City) where some of the worst poverty in the country is concentrated.
Front and centre is the forced seizure of land throughout several of the poorest localities in Buenos Aires Province, almost all of them with some level of criminal premeditation and organisation, but also more as consequence of a violent growth in urban migration toward the Buenos Aires metropolitan region (AMBA), leading to the growth of massive shantytowns ("villas miserias") in inhumane conditions. Exacerbated, of course, by the global coronavirus pandemic and its subsequent economic implosion. This arrives on top of a steady increase in violent crime throughout the AMBA region, which began about a month and a half into the extended quarantine, caused by decreased economic opportunities (both legal and illegal) and the de facto breaking of lockdown rules. Equally troubling, alarms have been sounding over the breakdown in political conversations between the government and the opposition.
The early days of the Covid-19 outbreak generated unparalleled collaboration between the ruling Frente de Todos coalition and the main opposition force, Juntos por el Cambio. A triumvirate of sorts emerged with President Alberto Fernández at its centre, with City Mayor Horacio Rodríguez Larreta to his left and Province Governor Axel Kicillof to his right. The three became the country's best-ranking politicians in opinion polls, with Alberto reaching levels only ever achieved previously by Raúl Alfonsín, Carlos Menem and Néstor Kirchner. (Note that Vice-President Cristina Fernández de Kirchner was never close to those heights). Rodríguez Larreta represented the doves among the opposition, working toward greater cooperation with the government and putting "politics" ahead of "ideology." Kicillof, traditionally a hardliner close to Mrs. Fernández de Kirchner, also played ball.
In last week’s column ("Don't hate the player, hate the game") we used a montage of Alberto Fernández as rapper Notorious B.I.G. and Rodríguez Larreta as 2pac Shakur, intended to represent the fatally dangerous game of love and hate between the leaders of spaces that were diametrically opposed, yet need each other to survive. Indeed, both the ruling coalition and the opposition appear to have been dragged by their fringe sectors toward the extremes: Kirchnerismo in one group, Patricia Bullrich's version of Macrismo on the other. Polarisation, dubbed "la grieta" in Argentina, has been the most successful political ideology of late, in that it has allowed the extremes to control the whole, with former presidents (Macri and Fernández de Kirchner) dominating the political stage. That polarisation is also seen as one of the main culprits behind consistent economic mediocrity, as the lack of political consensus over pretty much everything has led to elevated levels of uncertainty, particularly when it comes to the economy and its key indicators.
And so, a question emerges: Are we past the point of no return? It's definitely possible, but let's take a second to define our terms first. President Alberto campaigned on unity, painting himself as a consensus builder that managed to join up Fernández de Kirchner and her followers, Frente Renovador leader Sergio Massa and his, and the league of Peronist governors under one banner, in order to oust Macri from the Pink House. Rodríguez Larreta, aligned with former Buenos Aires Province Governor María Eugenia Vidal and a few other major power players within the opposition front, has built his political reputation on pragmatism and his capacity to engage in political negotiation. During Macri's presidency they were opposed to the "anti-politicals," with former Cabinet Chief Marcos Peña at the helm, but truly responding to Macri's own vision of the world. For them, negotiations with the opposition and the whole theatricalisation that is the key to political discourse in Argentina was ancient and obsolete. Modern marketing methods, social media, and simple language based on emotion was the key to winning the electorate's heart and soul.
The point of no return would be defined, then, by a moment at which the forces of attraction grouping the centrists (Alberto-Horacio) together was weakened by the magnetic pull of the extremes (Cristina-Mauricio), to the point where every single decision being taken by the government and the opposition is read under the "Us & Them" category, resulting in the complete breakdown of any negotiations. This was the case during the heydays of Kirchnerismo, only that Cristina controlled Congress. It was also the reason Macri became president, as a large portion of the country voted to oust CFK. It also occurred after Macri's coalition defeated Cristina and the rest of the fragmented Peronist front in the 2017 midterm elections and, instead of seeking consensus, decided to push forward with certain major reform bills without the support of the opposition, which had allowed it to govern for nearly two years (with Massa's support).
It's not about politics, really, but about the economic consequences of such breakdown. Most political actors agree that Economy Minister Martín Guzmán’s sovereign debt restructuring, which lifted Argentina out of its ninth default yesterday, was a necessary but not sufficient condition to put the nation on a path of economic sustainability. Now, Guzmán has indicated he would cut the fiscal deficit by half next year, meaning some level of austerity in an electoral year. And all with restructuring negotiations with the International Monetary Fund ongoing at the same time. At the heart of his vision, and any economic plan for that matter, is a reactivation of the productive apparatus and the "animal spirits" of demand that results in positive GDP growth. And this requires a certain level of optimism about the future which translates into investment. Even if such investments seek to capitalise on certain "competitive advantages" such as an extremely cheap labour force. If there is no trust, there is no investment.
It is unclear whether we've reached the point where Alberto's early speeches have been rendered obsolete, a bit of the old and empty promises politicians have all of us used to, here and across the world. We're close, though. If we haven't gone off the edge already.