Can a Centrist Save Argentina?
After 12 years under the leftist Kirchners, Argentina just elected a center-right president—but can he fix the country’s disastrous economy?
After 12 years of rule by Nestor de Kirchner and his wife, Cristina Fernandez, Argentina welcomed a new era on Sunday with the former mayor of Buenos Aires, Mauricio Macri, winning the presidential election.
Macri is the first president, since the return of democracy in 1983, to not belong to one of the two main parties in Argentina, the Radicalists or the Peronists. This could end up being a major challenge for his government. He also inherits deep economic difficulties from outgoing president Cristina Fernandez de Kirchner’s time in office.
Unlike the left-leaning Fernandez de Kirchner, Macri is a center-right politician and former businessman who has promised to lift foreign exchange market regulations, devaluate the peso, and reduce taxes on exports. He also has said he plans to implement several harsh or unpopular measures, such as cuts in public spending and higher prices for public services.
The biggest problem that Argentina’s economy faces right now is the appalling lack of U.S. dollars in the economy and the Central Bank reserves, along with a sky-high inflation rate, which is expected to rise over 30 percent next year.
To solve the first issue, Macri is expected to bring a dramatic shift in the country’s relations to the international financial community. At the top of his to-do list is definitively closing the 2002 default complaints and regaining access to international capital markets. He also will look to revive relationships with the International Monetary Fund (IMF) and other multinational financial entities.
Also on the agenda: cleaning up the state’s statistics institute, which now provides official but unreliable data on prices, employment and social indicators such as poverty and economic growth. Getting accurate data will be crucial in rebuilding foreign confidence in Argentina’s credit-worthiness, especially as Argentina has issued bonds that adjust by inflation or GDP.
The new political and economic era that Macri promises to inaugrate in Argentina is also of major importance to the rest of Latin America. In the past decade, both Kirchner administrations had chosen the anti-U.S. governments of Venezuela and Ecuador and Boliiva as main allies. This will surely change, as Macri has already announce that he plans to overhaul Argetina’s foreign policy. And indeed, after his victory, he repeated statements he had made during the campaign about requesting Venezuela’s suspension from the Mercosur for “breaking” the regional bloc’s democratic clause.
And while Merci said he expects to “build good relations with our brothers,” he also warned that Venezuela must respond to the bloc’s democratic clause and cautioned the Nicolás Maduro administration about its “persuction” of opposition leaders there. He also vowed to improve ties among Mercosur members, especially Brazil, and with the European Union.
“We have to recover the dynamics in the Mercosur and with the European Union to converge towards the Pacific Alliance,” said Macri, who will assume office on Dec. 10. “Integration will have to do with the dynamics of the Mercosur that has been frozen over the past years.”