Bolstered by Argentina’s economic stability and widespread sympathy for her widowhood, President Cristina Kirchner’s easy re-election has confirmed that she can, indeed, govern a complex, contentious, and at times self-destructive society without her husband, Néstor. His presidency paved the way for hers, but she is a leader in her own right. The question now is what kind of leader she will want to be in today’s more difficult domestic and international context.
The Kirchners lifted Argentina out of the deep crisis of 2001, presiding over GDP growth rates similar to those of China. They partly restored Argentina’s social and political fabric, which had been weakened by the brutal adjustments made during that crisis, which triggered a president’s fall from power, default on the country’s debts, and a dramatic decline in living standards that left more than half of the population below the poverty line. Their management of the economy, which included a deluge of subsidies, reduced unemployment and poverty.
The opposition underestimates the Kirchners’ achievements, arguing that the international context, particularly high commodity prices – and thus strong export revenues – bailed them out. While that is true, high export prices alone were no guarantee for success.
But that tailwind may have been squandered, because the Kirchners have yet to make the structural changes – in industry, in the country’s energy policy, in education, and elsewhere – needed to free Argentina from extreme dependence on commodity prices.
As a result, if the price of soy continues to fall, subsidies – a source of corruption and patronage – will be an increasingly heavy burden for public spending. According to unofficial figures, subsidies already represent 5% of GDP, and only painful adjustments can reduce them. But what was an emergency remedy has become a long-term policy, because there is no economic activity to take its place.
Few in Argentina, which is enjoying a consumer boom, are worried about inflation. But prices are already rising at a 20% annual pace, which, if unchecked, will lead to conflict with the powerful Peronist unions. Moreover, given the country’s history of high inflation ravaging the economy, the problem needs to be addressed soon, before it gets out of hand.
Relations with Brazil expose other difficulties. Brazilian President Dilma Rousseff’s government, which began its term this year with an understanding that economic growth will slow sharply, devalued the real in order to shore up the country’s competitiveness. That was bad news for Argentina, because Brazil, its main trading partner, will now buy less and sell more, undermining Argentina’s external position.
In this difficult international context, Cristina Kirchner will need to rebuild relations with the United States and Europe, which have been impaired since the default in 2001. Subsequent actions by her husband’s administration and her own have blocked improvement.
Néstor ridiculed President George W. Bush in front of the world: host to a summit of heads of state, he organized a parallel anti-summit with supporters of Fidel Castro and Venezuelan President Hugo Chávez. More recently, Cristina’s foreign minister presided over the requisitioning of a US military plane on Argentinean soil. These spectacles were intended for national consumption, but the Americans deeply resented them.
As for Europe, the Kirchner’s have not yet paid off Argentina’s debt – pending since the default – to the Paris Club of sovereign creditors. All of this hinders foreign investment and access to international credit. In the meantime, the US is opposed to concessionary loans for Argentina from the World Bank and the Inter-American Development Bank.
In this context, Argentina’s rich and powerful vote with their wallets and send their dollars overseas. This year, the outflow is nearly $20 billion – almost a record.
Argentina is a country that lives in an almost continual state of emergency. Its history has seen many coups, tens of thousands of people missing, a war with Great Britain, bouts of hyperinflation, a brutal economic crisis, default on foreign debt, and its most vulnerable citizens going hungry. But there is also a theatrical intensity about the Argentine character: we are dramatic like the tango and somber like the novels of Ernesto Sábato.
That exceptional spirit benefited her husband, but the country’s institutions paid a high price. Néstor convinced Parliament to allow him to modify the budget. Later, he took the liberty of manipulating official statistics in order to hide inflation. And, while building a system that would do whatever the government wanted, he began a struggle against critical journalism that continues under his wife.
With hard times approaching, will Cristina try to be a twenty-first-century Evita and create an epic by exploiting Argentines’ flamboyant tendencies, armed with an exceptional power or will she adopt Rouseff’s sensible attitude and combat inefficiency and corruption while strengthening governmental institutions?
If she chooses Rouseff’s approach, she will first have to resist the temptation of perpetual re-election. She and her husband had hit upon a novel scheme: alternating power between them every four years. Now a widow, she is exposed to the lame-duck syndrome, since she can’t be re-elected again. The same Peronist caudillos that have obeyed her until now could start a war of succession if she does not find a way to continue in office.
If she wants to retain power four years from now, she might do just that. After all, she now holds absolute control over a docile parliament. In Argentina, as in many Latin American countries, presidents have so much power that other governmental institutions’ authority fades, eradicating the boundaries between the executive and the state. If the only limits on Cristina are her own, Argentina will not weather the coming storm well.
By Roberto Guareschi, for 13 years the managing editor for the newspaper Clarín in Buenos Aires and currently a writer and university lecturer.