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OPINION AND ANALYSIS | 22-06-2019 10:14

When everything changes so that nothing changes

That Cristina still has a chance to make a comeback is as much a consequence of Macri’s disastrous economic policy as it is a conscious decision by his electoral team, led by Cabinet Chief Marcos Peña and Ecuadorian political analyst Jaime Durán Barba.

Interestingly, President Mauricio Macri’s surprise choice for his vice presidential candidate, Miguel Ángel Pichetto, appears to be working wonders for a man who just a few weeks ago seemed to be on his way out of the Casa Rosada. Not only have the aspirations of the ruling Cambiemos (Let’s Change) coalition been injected with renewed optimism on the back of relative financial stability and rising poll figures, but the President himself has told those around him that he feels invigorated and ready to fight tooth and nail for his reelection. And as the momentum appears to turn from Cristina Fernández de Kirchner’s side to Macri’s, it’s important put it all into context: the real campaign begins tomorrow, with candidates and lists formally registered and the first true test comes on August 11 when the PASO primaries are slated to occur.

Macri’s presidency has been utterly disastrous. Coming into power with a mandate for change, on which he campaigned, the President spent the first couple of years blaming the previous administration for the “heavy” inheritance, meaning that absolute dislocation of macro-economic variables, while engaging in what had been dubbed “Kirchnerism with manners.” Macri increased spending and failed to tackle the deficit head on, putting the country on an inevitable path toward implosion, which finally occurred throughout 2018 as the global economy forced a painful devaluation-cum-recession down Argentina’s throat. Macri’s heavy courting of the world’s most powerful leaders is arguably the highlight of his presidency, which also allowed him to receive the largest emergency loan in history from the International Monetary Fund (IMF). Thanks, Donald.

That Cristina still has a chance to make a comeback is as much a consequence of Macri’s disastrous economic policy as it is a conscious decision by his electoral team, led by Cabinet Chief Marcos Peña and Ecuadorian political analyst Jaime Durán Barba. After twelve years of Kirchnerism and the beginning of a series of very explicit investigations into rampant public-private corruption during the decada ganada, the vast majority of society had expressed their distaste for CFK by punishing her with three straight electoral defeats (2013, 2015, 2017) that should’ve put her out of commission. Yet, electoral reliance on the grieta or deep polarisation means Mrs. Fernández de Kirchner has a very real possibility of returning to the Casa Rosada, this time as Vice-President.

Indeed, as reported in page 5, the latest polling figures indicate Macri’s approval ratings have gained considerably, eroding Cristina’s lead from an apocalyptic nine percentage points back in April to a digestible two points. What happened? The first part of the story has to do with what could be the first green shoots. Inflation has decelerated for two months straight now, and could continue its downward trajectory given currency stability, price controls, and limited measures to increase consumption including micro-loans from the ANSES social security agency. Exogenous factors have helped as well, as the Federal Reserve has indicated it is in no hurry to accelerate interest rate hikes, giving emerging market economies much needed breathing-room. Add continuous currency intervention by the Central Bank run by Guido Sandleris (which does translate into capital flight in US dollars), a steady flow of dollars from an acceptably successful harvest, and a positive trade balance after imports were decimated by a strong dollarweak peso, and it translates into a fairly successful couple of months for Macri on the economic front. This is what the government was going for. And Christine Lagarde’s IMF.

The second leg is socio-political. The initial neutral impact of the Fernández-Fernández ticket has given way to cloak and dagger negotiations that reveal Peronism’s true nature, alienating many who don’t belong to what political strategists call the “strong nucleus” of supporters. Alberto was one of Cristina’s fiercest critics, but in a second he became the standard-bearer of the Kirchnerist cause. Renewal Front leader Sergio Massa once again flip-flopped his way into a political alliance that he spent the past half-decade condemning. While Cristina’s decision to let Alberto lead the ticket was a signal to the political establishment that their sector was moving to the centre, it is still more of the same faces. At the same time, Cristina is being forced to increase her public exposure, which she knows chips away at her poll figures by further alienating those who have grown tired of Peronism, Kirchnerism, and leftist populism.

On the flip side, Macri’s side is still reaping the benefit of positive momentum from the Pichetto announcement. While it was clear the Peronist Senator representing Río Negro province didn’t bring any votes, he brought a market rally that is a first indication to the círculo rojo group of decision-makers that Macri is willing to do whatever it takes to win reelection. This also means that Pichetto’s particular skill set—loyalty to whoever is in power without regards to underlying ideology beyond supposed republicanism, and the capacity to weave pragmatic congressional alliances to pass legislation—is valued by market participants in a hypothetical second term for Macri.

Initial speculation indicated the “new politics” of Durán Barba and Peña had lost out to the “political wing” represented by the likes of Interior Minister Rogelio Frigerio and the Speaker of the Chamber of Deputies Emilio Monzó. As Gustavo González´s column in this issue of the Times makes clear (page 6), this decision is Durán Barba in its purest form. The Ecuadorian boasts that he hasn’t lost a single election for Macri’s Pro party, following his strategy of antagonising with CFK. The docile Pichetto represents another cog in the wheel of that vision.

Yet, a smart observer should note that things haven’t actually changed all that much. The economy is still destroyed, with this week’s unemployment figures showing an increase to 10.1 percent, the highest in the Macri presidency. Cristina Kirchner continues to face a judicial onslaught as several corruption cases are being elevated to oral tribunals. And the so-called third way is now represented by former Economy Minister Roberto Lavagna and Peronist Salta Governor Juan Manuel Urtubey, which could scrape some votes away from Macri, meaning as of today the next government will have Mrs. Fernández de Kirchner in the Casa Rosada. We still have a long way to go.

Agustino Fontevecchia

Agustino Fontevecchia

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