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OPINION AND ANALYSIS | 01-10-2022 07:00

Sergio Massa: from buying time to running out of time

No-one should doubt Massa’s courage in taking on the Economy Ministry at a time of extreme crisis, nor his ambition, despite claiming he’s taking his final steps in the political realm. He’s eyeing 2023 and 2027. Both Fernándezes know this, and they don’t like it.

In one of the many ideological contradictions that characterise the Argentina’s ruling Frente de Todos coalition, Martín Guzmán was expelled from the Economy Ministry for trying to cut the deficit, only to be replaced by Sergio Massa, who is tightening the nation’s belt at a substantially faster pace. It seemed that the ex-Tigre mayor – part of the triumvirate formed together with Vice-President Cristina Fernández de Kirchner (the real leader) and President Alberto Fernández (who “holds the pen” that signs the bills and decrees passed by this government) — had the political weight that Guzmán, and the ephemeral Silvina Batakis, lacked. There was no better illustration of this than the vice-president’s silence, until this week, when she took to Twitter to criticise the rise of extreme poverty and ask Massa to “intervene” in commercial markets to fight against the private sector’s extraordinary “profit margins” caused by supply-side inflation. Could this mark the beginning of the end of the “pax peronista”?

Massa has managed to take full advantage of the first 60 days of his “honeymoon period” with the markets, which read Fernández de Kirchner’s silence as a tacit approval of Massa’s initial plan. Taking the reins of the Economy Ministry, the Frente Renovador chief has managed to gain control over the peso-dollar exchange rate, push out the Kirchnerites that had blocked Guzmán out of key energy agencies, and put in place a partial devaluation through the “soy dollar” rate that allowed agricultural producers to cash-in at a differential exchange rate, allowing the Central Bank to add much-needed hard currency reserves to its dwindling coffers. He cozied up with the private sector, to the point where he has been critical of union behaviour in the conflict with tyre-production firms, and made his way to the United States, where he secured fresh financing from multilateral institutions, even grabbing a picture with Treasury Secretary Janet Yellen in the process. He even met with the recently fired Maurice Claver-Carone while he was still at the Inter-American Development Bank, a man seen as an enemy by president and vice-president.

If Massa was crossing every line, it was probably because he could. The assassination attempt against Cristina played its part as well, pushing economic issues into the background while unifying a divided Peronist field behind the vice-president. While a few weeks ago the conversation had to do with corruption allegations against Fernández de Kirchner and her associates — CFK did everything she could to make it about “lawfare” — the failed attack perpetrated by Fernando Andrés Sabag Montiel put everyone on the edge of their seat, forcing a reckoning for the political class that has been playing with fire for years. As the adrenaline rush subsided, the socio-political debate  began to returned to its natural, polarised state. Not only does a major portion of society believe the assassination attempt against CFK was set up by her political space, they also think that any calls for unity across the aisle will inevitably fail.

In that context, Massa presented the 2023 Budget bill in Congress, sitting next to his lead economist Gabriel Rubinstein — a known critic of Cristina and the Kirchnerites on social media — as the INDEC national statistics bureau agency released poverty figures. Fernández de Kirchner broke her silence on economic issues, lauding Massa’s portfolio for “working hard” but not hard enough in controlling monopolies in the food production sector, which she accuses of generating supply-side inflation to fill its pockets. Sources close to Massa quickly came out to tell reporters that he had been in close contact with Cristina throughout the previous days and after presenting the budget, noting that they too were concerned with food monopolies and essentially agree on absolutely everything. Such overacting generates scepticism.

Guzmán was initially the golden boy of the Fernández-Fernández administration. He came with a double seal of approval, he was the protégé of Joseph Stiglitz — Mrs. Fernández de Kirchner’s favourite economist — and had an Ivy League education (Brown and Columbia), satisfying that Argentine hunger for everything that comes from the United States. His calm tone and technical terminology made him a different kind of creature in a pan-Peronist coalition, but it felt right. Guzmán’s handling of the private debt restructuring process with international investors earned him a seat next to The Dame herself as they announced the first major political victory of the Fernández-Fernández administration. But things quickly went south for poor old Guzmán, who suffered a public onslaught against him, including being the target of several of CFK’s infamous letters. In September, 2021, in the aftermath of a resounding electoral defeat in the PASO primaries, Cristina bluntly told him to increase spending in order to avoid losing elections, telling him deficit reduction harmed economic activity. The then-minister stoically resisted repeated attacks against him from within the ruling coalition – until he went out with a bang this July.

No-one should doubt Massa’s courage in taking on the Economy Ministry at a time of extreme crisis, nor his ambition, despite claiming he’s taking his final steps in the political realm. He’s eyeing 2023 and 2027. Both Fernándezes know this, and they don’t like it. They didn’t have much of a choice, though. CFK’s plan was to retreat to the Buenos Aires Province, where she would take a Senate seat and try to retain control of the governorship. Alberto seemed doomed politically, and Massa was an impossible candidate. 

The Tigre leader’s initial policies are far from the integral plan that’s needed to tackle inflation and put Argentina on a sustainable path, though Rubinstein laid out the dream scenario before Congress this week as they presented the budget: a single exchange rate, a primary surplus of three percent of GDP, an external surplus of two percent of GDP, no price controls, a Lebac/Leliq interest rate of six percent, five percent annual inflation and US$40 billion in foreign reserves. Eliminating currency controls is the cornerstone of this strategy, something Rubinstein claims would occur maybe in three years, only after securing a strong primary surplus. In order to achieve this, some are speculating with a shock treatment through a stability programme similar to the Plan Austral, the Convertibility and even the Plan Real, all of which allowed the incumbent to win the upcoming elections. Could this be in the cards for early 2023?

Regardless, Fernández de Kirchner has politely shown her teeth. Apparently President Alberto has also been trying to put some proverbial sticks in Massa’s wheel. All that matters, to all of them, is the election.

Agustino Fontevecchia

Agustino Fontevecchia


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