Argentina, now to be run by its proprietors

The Argentine electoral system exhibited its virtues by showing that an incumbent can be defeated, and a centre-right president has been elected. Will he repeat the right-wing’s major errors of the past? Español.

Guillermo A. Makin
24 November 2015

Mauricio Macri celebrates the results and his victory as new President of Argentina, on his bunker at the national elections day. Javier Gallardo. Demotix. All rights reserved

Mauricio Macri, of the centre right party operating with the acronym PRO, for Republican Promise, is now the president elect of Argentina, after winning the runoff election as candidate for the Cambiemos (Let’s Change) political alliance, a coalition integrating the PRO, the Coalición Cívica ARI and the Unión Cívica Radical . He will be sworn in on 10th December.

In his acceptance speech, Macri said that he had learnt much whilst campaigning. He already signalled his swift learning curve when he unveiled the first statute of Perón in Buenos Aires city, the rich province Macri governed for 8 years, making a virtue of favouring the well off. He puzzled most anti-Peronists stating below Perón’s statue that “I owe a lot to Perón” and that none of the recent social reforms will be rolled back. If this is the case, the defunct and wily old general will have chalked up an unexpected victory, now that even anti-Peronists seem to favour the Peronist policies.

It will be a new form of hegemony. Anti-Peronists, if we go by Macri’s latest statements, appear to have been converted. Whatever is the case, by signalling this volte-face Macri has delivered a hostage to fortune, allowing the 48% that did not vote for him to think he has broken his promises if he backtracks.

On the positive side, the Argentine electoral system, long known to be fraud proof, exhibited its virtues by showing that an incumbent can be defeated and that the results are known speedily. By midnight, 60% of the polling centres had sent in results verified by representatives of all parties. The most momentous news item is that, for the first time since electoral reform introduced universal male suffrage in 1912, the right wing has shown its is able to win an election.

Torcuato Di Tella, in a famous article in Desarrollo Económico, one of the best social sciences journals published in Argentina, argued in 1965, whilst Peronism was banned, that coups resulted from the inability of the establishment to win elections. Likewise, in 1977 Alain Rouquié, a French political scientist,  writing about the military, since the 1980’s no longer a relevant political actor, said that coups were “the revenge of the defeated by universal suffrage.”  With PRO’s electoral success, narrow though it may be by some 3%, the Argentine political game sheds one of its features: the establishment is no longer unable to win elections. As from the 10 December Argentina is under new management: the country will be run by its proprietors

Governability and the economy

Now PRO and its allies will have to show that they know how to govern. If again they run up the national debt, currently at 45% of GDP, of which only 7% is in foreign currency, Argentines will remember the 2001-2003 debacle. At the time the default and depression resulted from the debt ran up by politicians and economists praised by Washington and financial circles in the nineties. The debt, then 141% of GDP, caused the default.  It could be neither serviced nor paid.

Joseph Stiglitz persuasively argues that, if debt is acquired to improve infrastructure and make exports competitive, it is not a bad thing. The trouble is that Argentina, since the 1820’s, has a nasty penchant for relying on the debt to cover ordinary state expenditure, with only occasional attention to infrastructure.  It is now for Cambiemos to show it does not follow the same road to failure, pursued by previous right-wing governments.

The Argentine portfolio held abroad amounts to a humongous U$S 440 billion, 81% of GDP.  It is high time Argentina came up with financial instruments designed to provide a higher return than the dollar. Brazil has long been doing this. Argentina used this approach after 2003, but later dropped them and only partly reinstated them in the run up to the election. After all, the dollar also fluctuates. Who can tell what will its standing be with eternal deficits, coupled with never ending wars against Islamic enemies, a strategy that, along with US pro-Israeli policy, acts as a recruiting sergeant of outraged Islamic extremists?

Cristina Kirchner’s errors

As to the causes of Macri’s victory, in a country where Peronists are used to winning elections –the only exception was in 1983, when the Radical party under Raúl Alfonsín–, the best summary is that the Kirchner three 4-year periods in office were, on the whole, praiseworthy in terms of economic growth, low unemployment, paying off the debt and lowering of the level of poverty. However, the list of errors makes sorry reading:

On the first place, the most promising political reform, forcing all parties to hold primaries was spoilt by Mrs Kirchner wading in, imposing the election of Daniel Scioli, the lacklustre governor of Buenos Aires, despite too many Peronists doubting his credentials. Secondly, Mrs Kirchner’s constant speechifying tired the middle class. And finally, an array of economic policy mistakes that include exchange controls unworkable with 21 Century IT technology; scandalously high subsidies on electricity and gas for the well off; dropping the policy of twin surpluses in state expenditure (4% of GDP between 2003 and 2007) and trade, some U$S 10 to 15 billion pa. (currently the deficit is 7% of GDP, and exports have plunged due to exchange rate controls);  and finally ignoring that the un-integrated nature of Argentine industry (requiring hefty imports) something that was known since the 1970’s. This feature meant that, when domestic economic activity expanded, it resulted in foreign exchange scarcities.

These mistakes caused the electorate to cease to support the kirchenist project. It has made it crystal clear that praiseworthy policies, if not backed by economic hard-headedness, become all too fragile.


The Cristinista version of kirchenism has served those on low incomes patchily. Néstor Kirchner (2002-2007) always made sure resources were not undermined. His economics ensured that GDP growth averaged 8% pa. Mrs Kirchner has also served the independent trading and foreign policy of her husband badly. Nestor Kirchner’s version of kirchenismo was financially viable. Even taking into account counter-cyclical policies to combat the post 2008 international slump, Nestor Kirchner’s policies were steadily and inexplicably dropped.  This trend became more marked as from 2007.  By 2011, having won a second term with 54% of the vote, 17% points ahead of the runner up, Cristina Kirchner thought she could walk on water and harboured no criticism.

Financial errors

Dealing with the sabotage engineered by the vulture funds that, for a few dimes, bought 7% of the total of the bonds held by foreigners became more complicated by the parochialism of the kirchenist advisors. They fell into the trap and went along with the jurisdiction of US courts, a toxic policy introduced during the 1976-1983 military dictatorship. European courts would have been acceptable, but the Kirchners failed to push for this. 

In 2014 the vulture funds got Judge Griesa, a New York circuit judge, to grant them more favourable treatment than the terms secured by the 93% that accepted the two-tranche renegotiation in 2005 and 2010, embargoing Argentine payments to the creditors that had accepted the renegotiation. One of the financial centres offering better terms is the City of London and yet, as long as the South Atlantic dispute remains unresolved, Argentina has sought, except during the vilified nineties, to avoid financial dealings with the UK.

Macri’s likely foreign policy priorities

David Cameron, in the UK Defence review, and contrary to long standing expectation, decided to purchase aircrafts to arm the two new aircraft carriers under construction. Therefore, the window of opportunity to negotiate with the UK will soon be slammed shut again. Argentina wallows in a legalistic and declarative policy on the South Atlantic, ill-designed to profit from the crucial point made by Lord Shackleton that the Falkland Islands were neither economically nor demographically feasible, unless they integrated with Argentina.  

Other foreign policy actions of president Macri are likely to include the absolute priority of relations with Brazil. Also Mercosur, which was developed strongly under President Carlos S. Menem (1989-1999) a well known right-wing Peronist. Also distancing Argentina from a misguided and increasingly erratic Venezuela is not a danger is an urgent requirement.  And then the development of closer financial and political relations with China and Russia will be halted, with the emphasis on trade allowed to predominate, even though little can be expected from the USA and Europe other a regeneration of debatable conditionality and fresh attempts to submit Argentina to their priorities.

The formidable constellation of problematic issues is further complicated. It appears that the most recalcitrant right-wingers will seek to halt the 700 trials for human rights abuses during the 1976-1983 dictatorship. It is only partly promising that, in his first press conference on 23rd November, Macri gave his word that the courts would be allowed to proceed. However, the human rights movement concludes that a Macri administration will cease to encourage the trials. Macri holds that human rights are a money-making wheeze, dismissing it as “un curro” (too much work).


Lastly, judicial reform initiated by the Kirchners has been halted by the courts protecting their privileges, showing an unconstitutional tendency to actively make the law, muscling in to annul laws passed by Congress and the president.

As Christmas is upon us, the shopping list that Argentines might pen would include an overdue democratization of the governance and trade unions, and the manner in which strikes are called.

Here endeth the lesson on Argie politics.


The author will give a talk on the Argentine elections at the University of Cambridge Centre of Latin American Studies on 30 November



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