Requiem for President Macri’s reformist government?

Who is Alberto Fernandez, the Peronist who might very soon become the next Argentine President?

 

By Alberto Navarro

 

Primary, open, simultaneous and mandatory elections (known as “PASO”, for its Spanish acronym) held on August 11, 2019 were a bucket of frozen water to Mauricio Macri’s government, and more than 32% of Argentine voters, and placed Peronism (with more than 47%) on the verge of resuming power next December 10. Although only primary ballots within political parties (and thus the first round and eventual ballotage shall take place by the end of October and November, respectively), these showed that candidate Alberto Fernández is already trying on the presidential band and baton.

Although Macri government’s supporters, residual anti-Kirchnerist Peronists, Uruguayan and Chilean neighbors, right-wing populists, Wall Street, the IMF (that funded Macri’s government as never before), markets (of whatever nature), Spanish businessmen, a disoriented Mercosur, the European Union and many others, still expect a miracle, the election’s result seems difficult to overturn and a Kirchnerist Peronist victory might more likely be expected; even in the first round. If I refer to Kirchnerist Peronist, in that order, it is simply because there is no doubt that former left wing populist president Cristina Fernández de Kirchner (CFK) is today the top head of General Peron’s traditional party and who by herself appointed Mr. Alberto Fernández (AF).

So in the first place, with these overwhelming results, if confirmed, it is worth wondering whether it can be said that President Macri failed his intent to dissociate Argentina from its populist past and, no way, this question seems to be answered in the affirmative.

Secondly, the question arises as to whether it is possible that with AF, those who did not want to even hand over the presidential band to President Macri in 2015 -when he lawfully won the national elections- may govern the country again; I say this because the entire world sadly remembers that CFK and her followers made then public that they might leave government, but never the power. So many assume –like a déjà vu- that many characters, without résumés, but facing criminal proceedings for corruption, may now return as right-wing and imperialism martyrs, and fill niches in the Argentine public life. Although I may want to think that it is still early to surrender to that tragedy, this will ultimately depend on AF’s will, real and effective handling power.

In this sense, the Peronist candidate is a smart person, a law professor, highly prepared and with recognized political skills, who accompanied several peronist presidents -from reformist Carlos Menem to Nestor Kirchner (i.e. from right to left), and was the head of campaign and chief of staff for the latter and then for CFK during a short period of time until they violently broke up in 2011. Then suddenly reconciled 6 months ago, and there we are. His critics see in him a particular ability to go toujours devant de celui qui arrive.

In any case, no one can deny that if the “Peronist Fernández – Kirchnerist Fernández” formula ended up prevailing, it would not be precisely because this time the crazy peronist mobs stole the ballot boxes, but simply because a growing number of Argentines seems to wish that right wing reformist Macri leaves the government. In this sense, several explanations might arise: that such a victory is due to the lack of republican education and values of the people –the people here are peronists, my dear; or because we only voted with our pockets and the government proved to fail on the economic front; or a mix of everything. But no one can neither deny that CFK played masterfully her few cards while choosing AF, who blessed her, not only with all the votes she lacked (brought 15+ peronist governors with him and voters who hated her), but also the possible relief she & family needed to avoid a lifetime in jail for their obscene enrichment while in power. Personal insights on Power & Influence over the Judiciary in peronist times may be left for another occasion.

A third question that could be posed is whether those who now changed their vote, really expected from Mauricio Macri’s government an economic and social improvement in only little more than three and a half years, something that not even Harry Houdini or David Copperfield could have achieved in two decades, and thus, impiously punished the government with their votes. Or, on the contrary, are there any other deeper or worrying reasons?

It is true that the Macri Administration promised an economic and social improvement that could never be realistically materialized in such a short period of time. It is also true that the government naively expected that Argentina’s long-standing inflation, extreme poverty, excessive public deficit and expenditure, and economic stagnation could be fought with little more than the change of political winds, excellent outer image and a transitory global economic boom like the then experienced. But when outside conditions changed and interest rates soared, the government had to shoot out from its controversial gradualist policies and resort to the IMF, leading to an irreversible financial crisis by the end of April 2018.

No one denies that the President –as other rational and realistic state men- focused on putting the house in order and take some –not even all- unpopular measures despite conservative criticism that he stayed halfway in most all badly needed hard structural reforms. But almost everyone concurs that in case President Macri had sought to solve all problems at once (problems coming from more than 70 years ago), kirchnerists and unions would have made it all impossible for him.

In any case, it is fair –and far not exaggerate- to also affirm that no government ever showed more social sensibility, support, material help and rescue towards the inherited 30%+ population below the poverty line, but it is also sad to say that a large majority of those beneficiaries –by adhering to the slogan that “With Cristina we were much better”– would never vote in favor of President Macri.

So, could we say that he was probably condemned ab initio to be always under fire? Perhaps, for the same reason only Sully was able to safely land at the icy Hudson river on early 2009. Also because, as General Peron taught, mortal sins will always be forgiven to friends, but to the enemies, not even the venials. So paraphrasing Bill Clinton’s 1992 saying during the US political campaign, it could be said that, more than the failed economy, it’s old fashioned peronism, stupid! Alternatively, it’s again left-wing-low-level populism …

It is also worth describing what is now happening with our delicate economy after the PASO elections as –in clearly relation with the outcome- these are already leaving all sorts of wounded in economic, financial and social spheres, being yet difficult to quantify damages, something which invites to also reflect about the harms of voting so in advance to an eventual government change in still immature or weak democracies.

In this respect, a mega devaluation of the local currency (more than 30%) came immediately early on Monday, August 12, with the resulting inflationary outbreak (50%+ expected for the year). In turn, the country risk rate climbed from 900 to 2500 points and local currency interest rates touched 100% yearly, with all this entails as regards our stagnant GDP. It is clear that, at least for me, that had the government won the PASO, all of this would not have happened, a proof that markets also vote.

To make things worse, in what appeared as a desperate move, the macrist government immediately decreed some reductions in taxes on goods forming the consumer basic basket, which makes pose the question on why didn’t the government take those measures before so as to avoid being now accused of improvising and act as pseudo populist. Also, no matter how transitory are to be, some recent Government and Federal Reserve exchange controls aimed at keeping at safe the monetary reserves were taken, which in practical terms means bans on access to foreign currency and capital outflows; precisely the opposite to one of the most predicated President Macri campaign flags in 2015.

Hence, and leaving aside an unexpected reverse in electoral results, hopes mostly rely now on smart Alberto Fernández and on whether Argentina can continue through the right track under him (Argentina does have a strong presidential system) or, on the contrary, as a CFK puppet he will return to old and failed political, institutional and economic recipes which made the country miss the window so many times.

It is worth recalling that Nestor Kirchner, in his inaugural speech on May 25, 2003, held that Argentina should become a “normal country”, and had to hold “mature relations with the United States” while claiming “prison for evaders”. All the opposite then happened. So the question is on whether AF is to be able to make true the statements initially expressed by his boss and friend? Would he want to? Would he be left to?

I want to believe that AF is smart enough to choose at a certain point to isolate the crazy hordes and follow the path of modernity and normality, reuniting modern peronism behind him. Should this happened, for sure that President Macri’s party -once opposition, markets and most of the world, would be his first allies. In the meantime, uncertainty is to prevail so AF would have to do much more and wait much longer for investors to regain confidence in Argentina.

If I had the chance of asking something to AF it would be that, in case he wins, he immediately proves to become, for the sake of country’s reputation, a rule of law observer and keeper. I would also advice him that immediately after oath, he takes a plane to calm down main trading partner, Jair Bolsonaro, as well as President Macri’s real estate former partner, Donald Trump. In any case, the sooner he gets back home, the better.

 

______________________

 

For more information do not hesitate to email info@navarrolaw.com.ar