Argentina had national and state (provincial) elections on Sunday that returned a Peronist (left) government to power after four years of a conservative government headed by an oligarch, Mauricio Macri. The new President is Alberto Fernández, with former President Cristina Fernández de Kirchner as Vice President. Their ticket is called the "Frente de Todos."
Macri's government implemented an economic policy that was a model of what "respectable" economic opinion - that of what Paul Krugman calls the Very Serious People (VSPs) - that immediately produced four years of what can generously be described as awful economic results: lower wages, cutbacks in public services, privatization of public property, a lower living standard for the majority, and a tremendous amount of public debt, much of which was a pure gift to financial speculators. The former Peronist Finance Minister and newly elected Governor of Buenos Aires province Axel Kiciloff described the results as an economic "wasteland." For most people, that is. Macri and his very wealthy allies did fine.
Victoria Ginzberg writes (
Se va Macri Página/12 28.10.2019):
Macri is going away. The one who said he came to fight corruption and turned out to be involved in the Panama Papers. The one who, as though it were nothing, made an agreement for the state to forgive his family a debt of at least five billion pesos [around $84 million or at the 10/28/2019 exchange rate]. The one who, among other things, also benefited his family's companies with highway contracts, with a maneuver whereby he paid for an unjustified million-dollar reparation that served at the same time to renew the contracts. The one who placed officials in parts of the government who took care of and represented the interests of companies in their area of responsibility. [my translation from Spanish; emphasis in original]
But, as Krugman also says, for the VSPs it's always better to be conventionally wrong than unconventionally right. So Macri got decent coverage in the American and European business press. And it's entirely predictable that the new Fernández-Kirchner government will get correspondingly negative press from the same sources. Unless they reverse themselves and basically adopt Macri's economic program, which is highly unlikely with the leaders involved and would be politically suicidal for the new government. It has happened in the past, though, notably with the Peronist President Carlos Menem (1989-99). And that was an epic disaster, too.
Bad foreign press isn't their biggest worry. The financial markets are likely to go to war against them, for a while at least. The Peronist government will have to impose new capital controls. And if Macri is at all responsible during the interim before Fernández becomes President, he will do the same to prevent ruinous speculative attacks. His record so far doesn't offer reasons for optimism on that score.
One of their biggest policy tasks will be to renegotiate or default on part of the debt that Macri's government piled on. This is absolute heresy to the VSPs, of course. Macri has also done business with Trump. Just after Trump's election, he and Ivanka got on the phone to Macri and in a week or so, by pure coincidence I'm sure, a big Trump project in Buenos Aires that had been held up suddenly got approved to proceed. So we can expect some official hostility to the new government on Trump's part. Although Trump is so erratic, who knows?
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