Versión Español
Spanish – The result of the primaries on 11th August has not surprised Argentina, and above all its government. The dollar and the country risk are still adjusting. The economic minister has resigned. We don’t know if anyone is thinking of an orderly transition or if Macrismo is stubborn about overcoming the 15 percentage point difference.
But behind a foretold result some aspects are worth rescuing today since they are not only related to the current circumstances but can leave lessons for the future (although they had already been learned, evidently not enough, in the past)
1) The error of gradualism
It has previously been mentioned countless times. However, we still hear defendants of Kirchnerism say that it was the “neoliberal” model that failed Macri. Thus, it becomes evident that we must insist on this point consistently.
When he took office in 2015, the current president decided to avoid any fundamental reform and began a timid and gradual process of correction. It is important to note that ordinary Argentines exclusively paid for the “adjustment.” When it came to correcting subsidies on energy tariffs, the government was clear and robust. However, when it came to fixing the severe public sector imbalances, the modifications were not even cosmetic. The state and the bureaucracy maintained all the privileges. Moreover, to pay for them, the government continued, and sometimes also increased, the tax pressure of Kirchnerism.
Macri bought into the recipe of “gradualism:” that by financing the immediate expenditure with debt, one could expect considerable growth based on foreign investment. But the truth is that this expected growth never arrived. High taxes and impossible labor legislation are deterrents to the idea of channeling money in the country. As has happened on other occasions, the president’s optimistic and pro-market words were not enough for investors to decide to bet on Argentina.
Macri’s discourse and the diagnosis of the problem were correct. However, we need to look at the numbers and the implementation of policies to understand the failure and to be fair to what happened. As Jose Luis Espert said, “kirchnerism of good manners. Or not even that, given what we saw in the last few hours.
2) The insistence on the error in 2017
After two lean years, the Argentines, in fact, with little precedent, voted “against the pocket.” Analysts were then wondering (and are asking again now) whether the electorate could support a Government that was failing to achieve its economic goals.
Two years ago, during the mid-term legislative elections, Macri asked for the support of the people and had a resounding success at the polls. Esteban Bullrich, Macri’s successor in the province of Buenos Aires, had the luxury of defeating former President Cristina Fernandez de Kirchner in her strongest territory. However, after those elections, the government ideally had to correct the course of the economy immediately. It did not do so and stuck to the plan of gradualism, which, as we could have expected, two years later remained unsuccessful. On this occasion, inflation prevailed, and the ruling party was defeated.
3) The partnership with Cristina Fernandez de Kirchner
When the former president left office four years ago, her reputation had plummeted. The severe corruption acts seemed to indicate that Kirchner would limit himself to representing a minority, with no chance of returning to power. Faced with this reality, Macrismo saw an opportunity in the figure of Cristina: it empowered her as the leader of the opposition.
Convinced that she would never win a majority and seize their power, the ruling party bet strongly on the polarization and radicalization of “the crack.” Macrismo was successful in that the opposition could not articulate another competitive formula, but lost to a good move by the former ruling party: the call for Alberto Fernandez lead the coalition in the elections.
The story would have been different today if Macrism had not decided on this strategy of allowing Peronism to rearm. The government would have lost the same way to the opposition in these primaries, but Cristina would not be the protagonist under any point of view. Macri, his chief of staff, Marcos Peña, and Ecuadorian strategist Jaime Duran Barba, positioned Kirchner, who gladly accepted the role given to her by Macrismo. As the former legislator of the city of Buenos Aires, Carlos Maslatón, says, “in politics, the invention destroys the inventor.”
4) The electoral advances of the year
While Fernandez’s victory was no surprise, the enormous difference of votes was astonishing. But if we look at the electoral map and the elections held in the provinces, last Sunday seems to be the chronicle of a death foretold. Between Rios, Santa Fe, Chubut, Rio Negro, Cordoba y Neuquen everything was a defeat for Macrismo. At best, the ruling party scratched second place. However, sometimes, it was even relegated to fourth place.
Although there was speculation that things could be different at the national level, especially with Kirchner in the opposition, it was unthinkable that the ruling party, which was defeated in all the advances, could obtain a victory. Ultimately, the national election reflected the trend of the interior of the country during the last few months.
5) The choking blows of the previous week
Faced with the fateful 47-32 last week, the government could take up the initiative to hope for the miracle with a substantial change of course in the economy, or give up and bet on an orderly transition. It didn’t do one either and seemed somewhat overwhelmed. Journalist Jorge Lanata, a significant contributor to Macri’s initial victory, was horrified by the latest initiatives and rebuked the president. He said that the measures presented in the public square are “pathetic” and that it seems that Macri is seeking to “buy” the votes to reverse the election.
In Dujovne’s last week as a minister, the ruling party used the supply law to “freeze” the price of fuel after companies refused to do so because of exchange rate volatility. He also reduced VAT on food even though he had repeated all through his term that it would be “impossible.”
Instead of showing signs of recovery, the desperate measures ended with the resignation of the finance minister. This is another indication that, from December onwards, Argentina will have a government of a different political persuasion.
It is mysterious what a Fernandez presidency entails, and it is impossible to speculate just yet. Some people insist that it will be the presidency of the reformist (and even almost “liberal”) Alberto, while others worry that it will be the dictator and Chavista Cristina. The first few months of the next year ill solve this mystery. However, it is evident that when we toss a coin in the air, the responsibility for that risky bet will be the fault and responsibility of the current administration.
