Argentina: A Call for National Unity in the Face of High Political and Economic Uncertainty

Alberto Fernández was inaugurated as the president of Argentina on December 10. The ceremony was historic in a number of respects: it marked the first time that a democratically-elected, non-Peronist president (Mauricio Macri) has finished the full four-year presidential term since Peronism emerged in Argentina in 1945. It is also the first time that a former president, Cristina Kirchner (2007-2015), has returned to the national stage as vice president, although she is expected to play a very significant role as a focus of power, including in her position as head of the Justicialist (Peronist) Party.   
 
In a ceremony replete with political theater and strong indications of an extremely divided electorate, Macri handed over the presidential sash and baton to Alberto Fernández as Cristina Kirchner looked on.  The two presidents embraced in a rare sign of respect before Macri left the new president to address the gathered audience in the lower house of the Argentine National Congress. The enthusiastic crowd repeatedly sang the Peronist March until the new president, with some difficulty, was able to calm the enthusiasm and begin his inaugural address to the nation.
 
In an hour-long public address, Fernández struck a strongly conciliatory tone in making an impassioned call for the “unity” of all Argentines in the face of a “serious social and economic emergency.” Openly blaming the Macri administration for policy mismanagement, Fernández recounted the very difficult state in which the country finds itself: the highest inflation rate since 1991, highest unemployment since 2006, highest levels of poverty since 2008, and lowest levels of industrial production since 2006. At the same time, Fernández recognized that Argentina’s faults are shared by all. However, he underlined that blame for the immediate crisis, including a severe debt crisis, lies mostly with the decisions of his predecessor, in part in the hope of being able to count on the patience of the Argentine public for what is certainly going to be a very difficult period ahead. The country faces a serious period of economic restructuring with the real possibility of either another default on privately held debt (like in December 2001) or, at a minimum, a restructuring of the country’s debt in a negotiation with private debt holders and the IMF. 
 
Fernández detailed a long list of structural weaknesses the country faces and laid out a very ambitious agenda for government policy programs. He provided very little detail of where the resources would come from to finance these programs, but he emphasized the urgent need to put Argentina “back on its feet.” The new economy minister, Martín Guzmán, is expected to announce a comprehensive set of economic measures in the coming days. Fernández’s most important announcements included:
 
  • Policies and measures to address the serious social and economic emergency the country faces, with an emphasis on addressing poverty, which affects 15 million Argentines, including one out of every 2 children;
  • Efforts to provide new employment, especially for young people who are suffering an unemployment rate of over 30 percent, with more than 1.5 million youth neither studying nor working;
  • A national plan for development that will take advantage of Argentina's traditional agriculture and energy, as well as new information technologies, to encourage economic growth through both exports and higher consumption;
  • Renegotiation of the country’s debt, both public and private, to allow a longer period for repayment. Fernández stated, “The country has the willingness to pay its debt, but it does not have the capacity.” In short, repayment of debt cannot begin until the country’s economy grows;
  • A new “federalism” based on greater balance between Buenos Aires and the provinces, with an emphasis on infrastructure and employment (though few details were provided);
  • The creation of a new economic and social development council, similar to those established by previous Peronist governments, but with a greater emphasis on the council being endorsed by Congress and with a focus on medium- and long-term development issues;
  • An end to the use of public funds to purchase media publicity and “propaganda” to support the government’s policies and image;
  • Suspension of the activities of the National Intelligence Agency and an end to the use of secret “reserved” funds to support the agency, which has long operated outside of the reach of law and has been used for political purposes more than for intelligence gathering;
  • An independent justice system that is not captive to the ruling political power—and one that is not used as a weapon of revenge and persecution of one’s political enemies;
  • An end to impunity of senior government officials who accept bribes and of business leaders who pay bribes, with no protection provided to anyone accused of corruption irrespective of who they are or how high they might be in the government;  
  • A new emphasis on quality education, with first priority given to those students from the poorest families who have suffered most from inequality of opportunity;
  • A call for all Argentines to look beyond politics to be able to overcome the “walls” of “hate, hunger, and wasting of resources;”
  • A foreign policy founded on independence and sovereignty, with the country committed to being a part of globalization;
  • Condemnation of “coups” against legitimate government (seemingly with Bolivia in mind); 
  • Strengthening of Mercosur and of relations with Brazil after weeks of barbs traded between him and President Bolsonaro of Brazil. Brazil’s vice president, Hamilton Mourao, attended the inauguration after a last-minute conciliatory shift by Bolsonaro toward Fernández.

Internal Power Struggles

As noble as most of the stated policy objectives of the Fernández address were, the biggest unknown facing the country is will he fully be calling the shots. The question remains to what degree former president Kirchner, now vice president, will compete for power with the more moderate and conciliatory president. In fact, Kirchner’s strong influence has already been felt and was best reflected in the list of cabinet ministers announced publicly by the president-elect last Friday, December 6. The appointment of many key ministers, including defense, interior, security, the tax authorities, and the social security administration, among others, reflected the strong influence of Kirchner. In the ministries where President Fernández clearly was able to place his own loyalists, the second positions of power in many cases have been designated by Kirchner or the more ideological Campora grouping. In the most sensitive position, that of the minister of economy, it is rumored that Kirchner vetoed several of President Fernández’s top choices. The president finally settled on Guzmán, an Argentine economist and Columbia University researcher, a specialist on sovereign debt crises, and a protégé of Nobel-laureate Joseph Stiglitz but with scarce experience in public policy making. As the new administration settles in during the next months, one of the most critical issues will be the balance of power between Fernández and Kirchner.
 

Anti-corruption and Justice Reform

Fernández’s first public address as president was a remarkably complete assessment of the extremely serious set of challenges that face Argentina and his new government in the coming months. For anyone without a deep understanding of Argentina’s history, his address could have been taken as little more than a point-by-point criticism of the Macri administration that ended its term at midnight on December 9. In fact, much of what Fernández had to say could have been taken as directed against past Peronist governments as much as against President Macri. When Fernández strongly stated that no one would be immune from prosecution for crimes committed in the past, to his left sat Cristina Kirchner who is herself the subject of more than a dozen judicial investigations linked to corruption during her eight years as president. While he condemned “political persecution,” which could have been taken as a defense of Kirchner, Fernández’s call for a truly independent judicial power not subject to pressures from political forces was a surprisingly clear indictment of the justice system as it has existed in Argentina for many decades. Some notable progress was made during the last four years, though significant reforms are still needed before the Argentine justice system can truly be considered independent. This will be one of the most serious challenges the new administration will face, with resistance to real progress to be expected from strong elements inside the Peronist Party itself. The issue will be whether these standards will again be undermined by the reality of Argentine politics, with the government in power itself not subject to the same rules as previous ones.    
 

Fiscal and Debt Challenges

Another critical issue will be how the new president will pay for what would be a major increase in government spending to finance his ambitious policy agenda. At a time when the country faces declining tax revenues and no access to private international credit markets, this fiscal challenge will be one of the most serious issues facing the president. Having already made it clear that he will not be seeking further lending from the IMF, this resource question will dominate the next weeks and months as the new administration puts together its economic program. Fernández stated clearly that those Argentines with greater resources will be asked to provide more of what will be needed to support these plans, a clear hint that higher income taxes, efforts to force the return to Argentina of funds held abroad, and the return of higher taxes on agricultural exports are in the works. What is certain is that a Peronist president, with an almost guaranteed coalition majority in both houses of Congress that has been negotiated in recent weeks, will have an easier time of gaining at least temporarily the patience of the Argentine public during difficult times like these than the Macri administration would have had it won another four-year term. The only certainty is that the next months will be marked both by a serious internal power struggle within the new Peronist administration and by an urgent need to sort out a very complex fiscal and debt situation.
 

Relations with the United States

With the new president’s attention almost exclusively on the country’s domestic economic challenges, very little focus was placed on the new direction that Argentina’s foreign policy is expected to take on his first day in office. Relations with the United States have been kept mostly off the president-elect’s agenda since his electoral victory on October 27. President Trump has carefully avoided any public airing of differences with President Fernández despite indications that Fernández will be much less critical of Nicolás Maduro’s regime in Venezuela and that he will take a more uncompromising position condemning the November “coup” against Bolivian president Evo Morales. The announcement last week by President Trump of the possible re-imposition of U.S. tariffs on Argentine and Brazilian steel and aluminum has been mostly overlooked in Argentina as it exports very little of these products to the United States. To continue smoothing the bilateral relationship, President Trump sent an official delegation to the inauguration led by Secretary of Health and Human Services Alex Azar, along with National Security Council Senior Director for Western Hemisphere Affairs Mauricio Claver-Carone, White House Principal Deputy Chief of Staff Emma Doyle, and the State Department’s acting assistant secretary for Western Hemisphere affairs, Michael Kozak. The Argentine press reported late on December 10 that Claver-Carone departed Buenos Aires without attending the inauguration or meeting with Argentine counterparts after he learned that Venezuela’s communications minister, Jorge Rodriguez, one of the senior Venezuelan officials on the UN list of sanctioned individuals, had been welcomed to Argentina to attend the inauguration just hours after President Macri’s term ended. Fallout from this situation is likely, but it is too early to say how this situation will sort out in the first weeks of the Fernández administration.
 
Michael A. Matera is a senior fellow and director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
 
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Michael A. Matera