The recent revelations of President Trump’s unfortunate phone call outreach on July 25th to Ukraine President Volodymyr Zelensky has excited a media frenzy. But it has masked a more upbeat presidential diplomatic story regarding Argentina's embattled president, Mauricio Macri, who faces a crucial election test in three weeks and whom Trump tried to help late last year.
- When Macri was elected president in 2015, Argentina's economy had been ravaged by years of mismanagement under Macri's predecessors, first President Nestor Kirchner, and then, for eight years, Kirchner’s wife, Christina Fernandez de Kirchner ("CFK"). Their populist emphasis on broad trade restrictions, currency controls, and nationalization of key business sectors not only stifled growth but led ultimately to political defeat.
o Unfortunately for Macri, his efforts to restore economic health using traditional, market-centered macroeconomic tools worsened an already perilous situation: inflation, poverty levels, and internal as well as external debt have all skyrocketed.
o The political result was predictable: in a primary two months ago, Macri and his party were soundly defeated by an opposition “Peronist-style” team, with CFK as the VP candidate. This primary result forecasts Macri’s eventual defeat later this month when voters go to the polls on the 27th to elect a new president.
- But as pressures were mounting on Macri last year, President Trump reached out to help secure a $50 billion IMF line of credit for Argentina; it was well-timed, and it is widely viewed as helping to arrest a precipitous slide in the value of the Argentine peso in the immediate aftermath of Macri’s primary defeat in August.
So, where does the political and economic turmoil in Argentina lead? Stepping back and viewing the larger political picture in South America, particularly if CFK is returned to office, one is tempted to conclude that the “Pink Tide” of leftist governments, so dominant 15 years ago, might be resurgent. With Macri’s election in 2015, together with Sebastian Pinera’s victory in Chile in 2017, and of course, Bolsonaro’s win in 2018 in Brazil, conservatives presently control all of Latin America’s major economies; a win by Macri’s chief opponents, presidential candidate Alberto Fernandez (no relation to Christina) and running-mate CFK would change that.
- Yet the team likely to win in three weeks represents no far-left, Venezuela-style or Bolivia-style movement. Fernandez, in fact, enjoys a relatively pragmatic reputation in international business circles, with recent comments criticizing currency controls and offering reassurance to bondholders that ”haircuts” will be avoided. CFK, of course, will be calling the shots behind the scenes; and her anti-capitalist messages, combined with swirling, continuing corruption allegations, will guarantee passionate voter turnouts. She and Fernandez enjoy major leads in pre-election polling.
Should the Argentina electorate usher in yet another populist, Peronist-style leader team, it will recall the haunting words from the musical "Evita." The actress playing Eva Peron – who, though deceased since 1952, is still in the minds of many Argentinians "La Santa Peronista" – laments on the stage, "All through my wild days, my mad existence, I kept my promise."
- If that’s the case, Argentina is likely to be roiled yet again by another mad cycle of economic instability. For a vital economy in South America and a potentially vibrant U.S. export market as the U.S. and China continue to disengage economically, the October 27th Argentine national election is enormously consequential; it bears careful watching.
