Argentina lurches rightwards but progressive policy gains will endure

The most enduring legacy of Kirchnerism is that it has left President Macri partially tied to its ideological straightjacket. Social pressure will prevent him from neoliberal temptations. Español. 

Daniel Ozarow
29 December 2015

Thousands of Argentinians celebrate the nationalisation of YPF oil corporation. May 2013. Niels Wensted/Demotix. All rights reserved.

The ascendency of the pro-business conservative Mauricio Macri to Argentina’s Presidency on 10th December 2015 spells the end of 12 years of centre-Left Peronist governments.

Among the key milestones of Cristina Fernandez de Kirchner’s administration (2008-2015) and that of her husband Nestor (2003-07) were coordinating an impressive economic recovery since the 2001 debt default, drawing millions of citizens out of poverty and significantly reducing inequality. Pivotal to their economic success until 2012 was the achievement of twin fiscal and trade surpluses, brought about through a combination of redistributive policies and public investment that stimulated domestic demand, taxing multinational corporations’ exports to fund the expansion of social programmes for the poorest and benefiting from favourable global conditions which boosted its exports including high world commodity prices and strong Chinese demand for its soya.

Although a victory for Macri appeared unlikely just several months ago, his narrow defeated of the incumbent President’s preferred candidate, Daniel Scioli by just 51% to 49% was made possible through Macri heading a carefully constructed coalition of opposition parties to form Cambiemos (Let’s Change). This included his own Propuesta Republicana (PRO) together with the remnants of the near defunct Civic Radical Union. Incorporating this ailing but historically second major force in Argentine politics allowed him to access national organising structures and led the upper class to gain control of its own party that was capable of winning elections without the need for alliances with other social sectors for the first time since 1916. This marks a real setback for the Left, especially in terms of how Cambiemos has captured votes from significant sectors of the working class.

Together with a supportive Clarin media group that was fiercely critical of the Kirchner government, Mr Macri was also able to exploit genuine concerns about growing inflation, crime and government corruption to gain support from many in the middle class, whilst promising “change” and remaining deliberately vague in terms of the policy detail of his so-called “happiness revolution” during the election campaign.

Yet the result is also indicative of a deeply polarised society in which historic social faultlines have been revived and two very distinct visions for the national project divide the country in two. Macri, the millionaire businessman and former City of Buenos Aires Governor has declared himself in favour of returning a market-orientated economy, establishing closer relations with the United States and Europe, tighter monetary and fiscal policy, removing public subsidies on utility bills, fully capitulating to the demands of the American vulture funds that have been holding Argentina’s economy to ransom and opposing the existing ‘wage commissions’ that agree periodic salary increases for the unions.

The beginning of the end for Latin America’s Pink Tide?

But with Latin America much lauded as a global beacon for progressive politics during the last decade, the simultaneous resounding defeat of President Maduro’s United Socialist Party in Venezuela’s parliamentary elections last month, leaves one asking whether we are witnessing the start of a rolling back of the spectacular social changes witnessed more broadly across the region? For now it would seem to be too early to make such bold assertions, at least in Argentina’s case. The reasons are threefold.

First, the plethora of progressive policies, the millions of indigent or socially-excluded who now receive welfare coverage and the powerful human-rights discourse introduced under the Kirchners (by which the military leaders from the 1976-83 Junta have finally been put on trial) have all become institutionalised and naturalised minds of Argentinean citizens; minds, making them virtually impossible to reverse. Indeed Macri has himself been forced to pledge to maintain the Kirchners’ Universal Child Benefit (AUH) and even a watered-down version its Fair Prices programme by which the government ensures that supermarkets offer affordable prices for basic foods. Despite his family-business’ links to the Dictatorship, he would also commit political suicide were he to ever pardon the military leaders. These have been the Kirchners’ legacy.

Secondly, Mr Macri’s electoral coalition possesses a minority in both Parliamentary Houses. This will make passing policy very difficult without compromising with the Peronist opposition and will act as a straightjacket that may prevent him from carrying out more polemical aspects of his programme. Argentinean Heads of State are renowned for resorting to hyper-presidential powers, but it always makes them deeply unpopular with the electorate, aside from being constitutionally dubious.

Thirdly, his neo-liberal instinct will be tempered by the fact that the electorate are highly suspicious of free market zealots. Unable to forget the profound social and economic damage that Menemismo (then the poster-child of the IMF’s 1990s structural reforms) did to the country, society has not handed the new President a blank cheque but in its highly politicised state, will come out onto the streets to voice its opposition if Macri goes too far. Further, for as long as Peronism enjoys hegemonic control over the labour movement and until recently Argentinean politics more generally, it retains a significant disruptive capacity through the organisation of strikes, lootings and street demonstrations which the new President may struggle to contain. No non-Peronist President has seen out their term of office since the restoration of democracy in 1983 and many suggest that Macri will be deposed prematurely. Yet if this were to occur it will more likely be because the President is forced to resign if found guilty of any of the separate 214 counts on which he is currently indicted, ranging from ‘fraud and illicit association’ to abuse of public office.

More neo-extractivist than neo-liberal, the environment and indigenous communities as the main losers

Whilst the new government will thus not be as neoliberal as feared, one of the areas of continuity with the Kirchners and where he may face less ideological and parliamentary opposition is by intensifying Argentina’s neo-extractivist model. This entails encouraging transnational companies and big businesses to exploit natural resources such as soya or open-cast mining so as to generate inward investment. Indeed, scrutiny of the new Presidents’ appointments in the opening weeks of his mandate provide a powerful statement of intent regarding in whose interests he intends to govern.

A large number of cabinet posts have been allocated to the CEO’s or former Directors of multinational corporations like HSBC, JP Morgan and the principle benefactors of fracking and other elements of neo-extractivism like Shell and Monsanto. Whilst environmentally disastrous, rural and indigenous communities have proven themselves adept at physically resisting dispossession from their land and homes. However, they may be crushed by the repressive state apparatus that former President Cristina Kirchner was more reluctant to unleash.

 Anglo-Argentine relations may enjoy a revival

Finally, we can also expect an improvement in diplomatic and trading relations with the UK which have been complicated in recent years due to heightened tensions surrounding the Falklands/Malvinas. David Cameron was among the first to congratulate Macri following his victory, and one of the new President’s initial moves was to scrap the Office of the Ambassador of the Malvinas.

This act of détente has placated the British government and alongside other policies will help attract western investment. Unlike under Cristina’s mandate, we are likely to see the ‘ticklish subject’ of the Falklands/Malvinas temporarily swept under the carpet, as it suits neither leader to embarrass the other by tub-thumping over the issue in domestic or international fora.

 New seeds of resistance to Macri already being sown

In his first few weeks, Macri has predictably confined his free-market policies to those that answer demands from his key electoral constituents whilst avoiding open confrontation with existing social movements. Yet each move has also sown the seeds of discontent among potentially new sources of opposition.

For instance import restrictions have been lifted on 95% of goods and currency controls which had limited dollar purchases have been removed. This has pleased the upper-middle class but domestic Small and Medium-Sized Business owners have expressed concerned about the potential increase in competition from multinationals which are now free to compete. Meanwhile, ending the currency controls has led to an effective 30% devaluation of the Argentine Peso and will aggravate already run-away inflation, affecting consumers and the poor.

Elsewhere, abolishing export taxes on meat, wheat and corn and reducing them on soya has delighted the transnational corporations and landowning elites, but may yet spark resistance in the urban centres when stocks of foodstuffs rundown after they are exported for greater profit overseas rather than being retained to feed the hungry populace in the urban centres.

Further, credit deals with China and financial elites have bolstered currency reserves but will add to the growing public debt - a ticking time-bomb which if it remains unresolved may one day provoke yet another debt default on the scale of 2001 that could ignite a united and multisectoral opposition that seeks to depose Mauricio Macri as they did so memorably with President De La Rua fourteen years ago.

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