2. MACRI-ECONOMICS (The Economist)







31 October 2015

The first round of voting shakes up the presidential race

HOURS before the official results began to circulate on October 25th, campaign workers for Daniel Scioli, the front-runner in Argentina’s presidential election, handed out orange T-shirts, baseball caps and pens emblazoned in capital letters with the legend “president”. Pollsters were not sure whether Mr Scioli, who is running as the heir of the Peronist president, Cristina Fernández de Kirchner, would win outright in the first round or move on to a run-off against Mauricio Macri, the mayor of Buenos Aires. No one doubted that he would be well ahead.

The results are therefore a shock. With 97% of the votes counted, Mr Scioli, the candidate of the Peronist Front for Victory (FPV), has 36.9% of the vote, which puts him barely in front of Mr Macri, who has 34.3%. There will be a run-off on November 22nd. Mr Macri, who is campaigning under the banner of Cambiemos (Let’s Change), an alliance of non-Peronist parties that promises to break with the divisive populism of Ms Fernández, now seems to have a good chance of winning.

If he does, he will set a different tone for the country. Unlike Ms Fernández and her late husband, Néstor Kirchner, who preceded her as president, Mr Macri favours markets instead of state controls, is friendly to the outside world and an advocate of strong institutions rather than obedient ones. Mr Macri would undo much of the Kirchners’ legacy, though he has promised to keep parts of it (see “Argentina’s elections (2): Macri-economics”). He would be the first president since Argentina returned to democracy in 1983 who is neither a Peronist nor a member of the movement’s less successful rival, the Radical Party. The financial markets cheered that prospect. The stockmarket rose by 4.4% on news of the first-round results and the peso strengthened in the unofficial “blue-dollar” market.

Although Mr Scioli is nominally ahead, the vote looks like a repudiation of his thesis that voters just want judicious modifications to Ms Fernández’s policies. Her expansion of welfare and defiance of foreign creditors were popular, but she also pushed up inflation even as the economy started to stall. The middle class is tiring of restrictions on buying dollars. A survey conducted before the election by Management and Fit, a consultancy, found that a quarter of Argentines want the next president to continue Ms Fernández’s interventionism, a third want limited changes to her approach and 40% want a radical overhaul. Voters may be eager for more change than Mr Scioli is proposing.

The setback to his candidacy is even bigger than it looks. Part of his pitch to voters had been that as a Peronist he represents Argentina’s dominant political force and would therefore guarantee stable government. “The governors are with me, the presidents of the regions are with me, the mayors are with me and the legislators are with me,” he told The Economist before the election.

That is less true than he thought. The parties that make up Cambiemos gained 29 seats in the lower house of Congress, while the FPV lost 26 (see chart). If united, the parties arrayed against the FPV and its allies can now outvote them in the lower house, though the FPV retains its ample majority in the Senate.

Cambiemos won the governorship of the Province of Buenos Aires, home to nearly 40% of the population, which had been in Peronist hands for 28 years and in Mr Scioli’s for the past eight. That may have less to do with him than with his party’s candidate, Aníbal Fernández, who was backed by the president (but is not related to her). His candidacy revived rumours (which he denies) that he had been involved in a drug-trafficking ring. Two-thirds of voters surveyed said they would never back him. Even so, the loss of the governorship, the second-most powerful elected office in the country, is a blow to Mr Scioli. Now, “whoever wins the presidency could have a governability problem,” says Joaquín Morales Solá, a columnist at La Nación, a newspaper.

Much now depends on who can win over the supporters of the third-placed candidate, Sergio Massa, a Peronist congressman who won 21.3% of the vote. Mr Massa had been Ms Fernández’s cabinet chief but struck out on his own before the legislative elections in 2013 and began criticising his old boss. He has been the law-and-order candidate, calling for a crackdown on drug trafficking and harsher penalties for corrupt public officials. On economic policy he advocates a middle way between the “gradualism” proposed by Mr Scioli and the more comprehensive changes espoused by Mr Macri.

Indications are that Mr Massa will support Mr Macri, even if he does not make a formal endorsement. The first-round results show that people “don’t want continuity”, he said in a television interview.

Mr Scioli must now distance himself from Ms Fernández without alienating Argentines who benefit from her government’s lavish spending and cheer her pugnacious attitude toward foreign creditors. If he gets the balance wrong, he may find himself stuck with a lot of useless orange merchandise.

2. MACRI-ECONOMICS (The Economist)
Oct 31, 2015

A profile of a possible president

MAURICIO MACRI’S path to politics was an unusual one. On a winter’s night in 1991, as he was walking through his posh neighbourhood in Buenos Aires, he was attacked by three men. The assailants—corrupt police officers, perhaps—punched him in the face, bound his hands with wire and shoved him into a coffin in the back of a Volkswagen van. Mr Macri was held for two weeks before his father, a prominent Argentine businessman, paid a $6m ransom.

Mr Macri says that this trauma led him to a career in public service. He gained fame by running Boca Juniors, a football team, for a dozen years until 2007, was elected to Congress and is now mayor of Buenos Aires, Argentina’s richest and most populous city. He stands a good chance of winning Argentina’s presidential election in November.

His success does not come from personal magnetism. He rarely smiles when cameras are not present. In meetings he comes across as aloof, even apathetic. His speeches lack zest and originality. Perhaps realising he will never inspire a cult of personality, he opted to be a consensus-forger and team-builder. The party he founded and leads, Republican Proposal (PRO), started out on the right but has become more inclusive. It is non-Peronist—the political current to which his presidential rival, Daniel Scioli, belongs—but is not anti-Peronist; many ex-Peronists work alongside the party’s conservative founders.

As mayor, Mr Macri improved infrastructure, especially transport, and developed poor neighbourhoods that his predecessors had ignored. Colleagues say he encouraged them to innovate. Banco Ciudad, the municipal bank, began hiring on merit rather than connections, says Federico Sturzenegger, a PRO congressman who ran the bank.

To secure the presidency, Mr Macri will need to change the perception that he is a cold-hearted capitalist, born to privilege. “He seems to favour businesses over people, whereas I want a more inclusive government,” says Mariel García, who works at a corner shop in Palermo, a leafy neighbourhood in Buenos Aires.

While promising change, Mr Macri assures voters that it will not be too abrupt. He would end exchange controls and allow the peso to float, but has promised not to undo the nationalisation of pension funds or of YPF, an oil giant. He would leave generous welfare programmes untouched. Voters want a president who will fix the economy without leaving anyone behind. Mr Macri may be the one to convince them.

By Katia Porzecanski
October 29, 2015

* Citigroup says 2033 bonds may jump 5% on Macri victory
* Macri is now favored to win presidency in election next month

A victory by Mauricio Macri in Argentina’s presidential election next month is poised to hand a big windfall to hedge funds.

After finishing in a surprising near-tie with frontrunner Daniel Scioli in first-round voting on Sunday, Macri is now the favorite to emerge victorious on Nov. 22. Citigroup Inc. has put his odds of winning the runoff at 55 percent.

For hedge funds run by the likes of George Soros and Daniel Loeb, Macri’s promises to settle Argentina’s decade-long debt dispute with creditors and jettison polices that have held back the economy may dramatically boost the value of their bond investments. For example, defaulted bonds due in 2033 may jump at least 5 percent from their current price of about 110.5 cents on the dollar if Macri prevails, according to Donato Guarino, a strategist at Citigroup.

“We’re now in a scenario where you have to have exposure to Argentina and it’s going to pay off,” said Luciano Cohan, the chief economist at Buenos Aires-based research and consulting firm Elypsis. His was the only company to correctly predict the outcome of Sunday’s elections.

A price of 116.25 cents assumes past-due interest that currently totals about 15 cents. It’s also based on an expectation that, in a Macri presidency, Argentina will trade in line with sovereign borrowers that have ratings in the B tier, Donato said in an Oct. 27 report.

Argentina’s foreign debt is currently rated Caa2 by Moody’s Investors Service, which is eight levels below investment grade. Standard & Poor’s has a SD, or selective default, grade on overseas debt.

Even though Argentina defaulted last year after President Cristina Fernandez de Kirchner refused to comply with a U.S. court order to pay holdout creditors led by billionaire Paul Singer, the country should be rated as high as BB- regardless of who becomes president, Guarino said.

He cited Argentina’s per-capita income and potential economic growth among his reasons.
Guarino said the 2033 notes may fall as low as 103.75 cents if Scioli wins. Scioli, the ruling party candidate, has pledged to make only limited changes to the polices of his predecessor.

“While Scioli is likely to attempt a rapid agreement with holdouts, we believe this would be driven by his more gradualist approach, which will require higher USD financing needs,” Guarino wrote. Argentina is likely to issue more debt under a Scioli government, “which should negatively impact prices.”

The prospect of a Macri win has already sent the nation’s bonds up an average 4.2 percent since Sunday’s election.

Robert Tancsa, a strategist at Morgan Stanley, estimates yields on the notes may fall to as low as 7.1 percent by the end of 2016 if the next president quickly adopts policies that help revive economic growth and slow inflation. The notes currently yield about 9 percent when adjusting for the past-due interest, according to Bloomberg estimates.

If Argentina continues with Fernandez’s policies, yields could go to about 12.6 percent, according to Tancsa.

“A front-loading of policy adjustments and reforms, including the settlement with the holdouts, would be welcomed by investors,” Tancsa said in an e-mail.

By Pablo Rosendo Gonzalez
October 29, 2015

* Production will be 9.5 million tons in 2015-2016, bourse says
* Farmers switch to barley to avoid government regulations

Argentina’s next wheat harvest may be the smallest in three years, according to the Buenos Aires Grain Exchange, a decline that may spur Brazilian flour mills need to import the grain from other countries.

Argentine farmers will produce 9.5 million metric tons of wheat in the 2015-2016 season, down 16 percent from a year earlier, the exchange said Thursday in its first wheat forecast.

since 2001
since 2001

Farmers are switching to unregulated crops such as barley because the government charges wheat export taxes of 23 percent and restricts shipments to other countries. Wheat exports are permitted after 6 million tons are produced for domestic consumption. There are no export taxes on barley.

“We have had more barley than expected this winter,” Diego Ubici, an agriculture engineer from Agropulso, a seed and fertilizer reseller in America City, in Buenos Aires province. “Farmers were not selling waiting for a new government.”

By Hugh Bronstein
October 29, 2015

Oct 29 Argentina’s outgoing leader Cristina Fernandez gave an emotional campaign speech on Thursday in her first public address since a surprisingly weak performance by her party’s candidate in the first-round presidential election on Sunday.

Without mentioning allied candidate Daniel Scioli by name, the leftist president implicitly backed him by calling for her progressive social policies to go on after she hands the presidency over to her successor in six weeks.

“Who is the candidate who can guarantee our policies continue?” Fernandez asked in a clear reference to Scioli.

“What’s important is that our policies are carried on. Names are not important,” she said at a televised rally before thousands of applauding and chanting supporters.

Scioli, who did not attend the event, is running against opposition leader Mauricio Macri in the Nov. 22 run-off vote.

Macri defied opinion polls on Sunday by getting enough votes to easily force a second round.

At stake is the future of Latin America’s No. 3 economy at a time of dwindling foreign reserves and high inflation left by eight years of free-spending populism under Fernandez.

“I am not a candidate for anything,” said Fernandez, who is barred by law from seeking a third consecutive term this year.

“But when I leave, please God, I don’t want to see ruined what it took us years to build!” she said, her voice breaking with emotion while some listeners at the rally wept.

Loved by many of the country’s poor for strengthening Argentina’s social safety net, Fernandez could return as a presidential candidate in 2019.

Macri promises a sharp turn toward free-market policies while Scioli vows to continue the programs that are working for the poor while gradually changing macro-economic policies where a more orthodox approach is needed.

Fernandez took a few shots that appeared to be aimed at Macri, although she did not name him, alluding to him changing his position earlier this month regarding Fernandez’s nationalization of Argentina’s main energy company YPF and airline, Aerolineas Argentinas.

“We, with all our errors and defects, are who we are. We are not one thing one day and something else another,” she said.

When first elected in 2007, Fernandez was helped by high prices for soy and corn, the country’s main cash crops, which helped her fund subsidies and generous welfare programs.

But the grains boom has ended, leaving her government short on cash and without access to the international debt market due to an ongoing sovereign bond default.

By Robie Mitchell, Research Associate at the Council on Hemispheric Affairs
October 29, 2015

Argentina’s run-off elections on November 22 will not only be a test for outgoing President Cristina Fernandez de Kirchner and her mission to see if she can successfully coronate Daniel Scioli of the Partido Justicialista (PJ) as her heir, but the elections also represent a test for the Peronist movement. Since the fall of the military junta, Peronism has dominated the political arena. Political newcomers such as the center-right Propuesta Republicana (PRO) party have begun to challenge Peronists’ historic dominance. Notably, there is a fundamental split between left-wing Peronism of the PJ and the right-wing Peronism of the Frente Renovador (FR). Regional and class divisions have long existed within the Peronist movement, but President Kirchner’s attempt to raise export tariffs in 2008 on agricultural products set the powder keg alight and made leaving the PJ a compelling move for rural Argentinians.1 The Dissident Peronist party FR was created in the still-relevant aftermath of this aborted tax hike. Preventing the Argentinian Peso from further decreasing in value, keeping foreign reserves from falling, dealing with high inflation, and making debt payments on time will keep whoever wins the presidential election well-occupied, be it Daniel Scioli of the PJ or Mauricio Macri of the PRO2 Past leaders of an ideology as inconsistent and all-encompassing as Peronism, including Juan Peron himself, have had enough trouble governing Argentina without having to worry about these heightened internal and external political threats.

Accordingly, Argentina’s need for a strong leader with a clear vision and a stable party would not have boded well for any Peronist winner, whether it had been Scioli or the farther right Sergio Massa of the FR, as the broad ideological struggles over the depth and type of proper government intervention in the market undermines their movement and serves as a distraction to actual governance. The difference of opinion between fellow Peronists is far less than that of any given Peronist and non-Peronist politicians like Macri; compromise between the PJ and FR should come naturally. However, history complicates this seemingly simple picture of an ideology that is fracturing itself.

Scioli narrowly won last Sunday on October 25. Due to a split within Peronism that divided votes between Scioli and Massa the margin of victory could have been substantially higher and sufficient to avoid a run-off election. Notwithstanding the recent victory, and Scioli’s attractive odds for winning again on November 22, staying relevant in the 21st century will require Peronists to move back towards the center of the political spectrum and start consolidating their ideology. The tightness of the race reveals the challenges faced by Peronism. In spite of Cristina Fernandez de Kirchner’s endorsement, Scioli failed to garner 45 percent of the popular vote and win the election outright.3 In a remarkably close election with 84 percent of the polling stations reporting, Scioli won 35.7 percent of the vote and Macri took 35.3 percent.4

Defining Peronism

Current Peronist leaders, who share a common political mythos, define Peronism in a variety of ways. Broadly speaking, it is the populist ideology that fought back against foreign imperialism in the mid twentieth century before its founder Juan Peron was overthrown by the military. Agreeing on its details can prove to be a contentious process. Yet, across the board some commonalities remain, including the social classes and regions that they can count on for their support. Carlos Menem’s conservative platform in 1995 and Kirchner’s liberal platform in 2011 drew heavily from the same base.5 Both Menem and Kirchner won landslide victories around the industrial belts of Rosario, Córdoba, and Buenos Aires. Poorer, conservative, and rural interior provinces have also gone for Peronists consistently for the past thirty years.6 Edward L. Gibson has described the Peronists as a “two-headed party with a progressive urban and a more conservative rural base.”7 The redistribution that has characterized Kirchner’s two terms in office, which was a carryover from her husband’s 2003 presidential term, has required high levels of public spending.8 While these policies have increased Kirchner’s popular political support, especially when they are coupled with Kirchner’s devaluation of the peso they have also brought the threat of uncontrollable inflation. Kirchner’s distinctly leftist twist on Peronism is the main source of the ongoing split between mainstream Peronism and Dissident Peronism.

If mainstream Kirchnerist Peronism and Dissident Peronism cannot reconcile their differences soon, by the next election cycle their public split could open the path for non-Peronist parties to dominate Argentinian politics. The presumption that Scioli, who Kirchner endorsed as her successor and the nominee of the PJ, will win and will preserve Peronism in the short-term is a safe one, given the lead that he enjoyed in the polls throughout the summer and his performance on Sunday.9 On the other hand, Macri (a non-Peronist) and Massa (the leader of the Dissident Peronists) have been consistently polling in second and third place, respectively, which is exactly how they performed in the election. Essentially, between polling data collected over the past year and the candidates’ actual performance in the recent election, the electoral math still favors the PJ for November 22. A broader look at Argentinian politics, however, shows that growing support for Macri and his Propuesta Republicana is correlated with intensified divisions among Peronists. Further, Scioli’s performance on Sunday does not come close to the outright victory that Kirchner had in 2011, with 54 percent of the vote.10 It is plausible that the run-off could have been avoided had Scioli and Massa not competed for support from a similar base. Any Scioli victory will almost certainly lack the popular mandate that Kirchner had in both of her elections, signifying the growing problems that both Peronist parties will have as newer parties emerge to exploit their conflicts. Governing will also prove to be more challenging without the bully pulpit that a clear victory provides. A return to the pre-2005 political order, where Peronists were united in a single party, might be too much to expect. Without some political consolidation, prospects for continued Peronist domination of Argentina are murky, but are still a possibility.

Peronism’s Historical Track Record

During a time that Peronists are experiencing historically unprecedented infighting, why should Argentinians, as well as international observers, desire continued Peronist influence? For one, there is a reason why Peronists have won nine out of eleven open Argentinian elections (which military leaders have not barred them from participating in) since 1946. Rapid changes in Argentina’s economic and social order in the aftermath of the Great Depression necessitated new political thinking. In the midst of World War II, industrial growth intensified and over a million Argentinians moved from rural areas greater Buenos Aires.11 Debates over the role of the state in the economy were a natural consequence of a mobilized labor force that drove growth in the industrial and commercial sectors.12 Peron rejected laissez-faire liberalism in the 1940s and criticized it as an outdated ideology that would leave many Argentinians out of the economic boom that was starting during World War II.13 In his first term, President Peron fought the landed elites to finance industrialization and to promote social reforms14. An essential component of Peron’s industrialization was that it was nationalist. After the coup against Peron, foreign capital came to dominate Argentina.15 The course that the military charted condemned Argentina to industrial dependency. When Peron returned from exile to serve a third term, mass mobilizations were used to carry out reforms.16 Peron led a political program supported by a diverse coalition that championed the workers, earned profits for Argentinian businesses, and combated foreign imperialism.17 Peronism faces the challenge of keeping foreign monopolistic capital from dominating the Argentinian economy as well as keeping the country’s working classes interested in a symbiotic relationship with domestic Argentinian businesses.18

Critics cast the economic state intervention that is championed by Peronists as a stepping stone towards authoritarianism, arguing that one cannot have political freedom without economic freedom.19 But whose freedom is being restrained by Peronist policies of market intervention? Corporations, more often than individuals, have been the targets for Peronists measures that limit economic freedom. Peronist ambivalence towards unrestricted capitalism is not unfounded within the context of Argentinian history. Even though Argentina opportunistically served as the breadbasket for the Allies during World War II, prosperity failed to trickle down to working class Argentinians. In Juan Peron’s first term Peronist agencies distributed millions of consumer goods, from sewing machines to toys.20 Between 1946 and 1952 the number of hospital beds in Argentina doubled and more than 100,000 units of public housing were constructed.21 Funding these welfare programs did require higher taxes on corporations. Juan Peron enacted stricter controls over freedom of expression in order to mold a consensus that these taxes were justified.22

Peron should have been able to sell his expansion of the Argentinian system of social welfare on its merits alone, without using coercive measures. If modern Peronists like Kirchner and Scioli seek to draw parallels with the benefits of their namesake leader Juan Peron, then it is only fair that they get stuck with the drawbacks of that association. It goes too far to imply that Peronism leads to authoritarian rule, but for some leaders it is a very short leap to go from reigning in corporate excess to reigning in democratic opposition. Peronist leaders have another incentive to become authoritarian in that they are sometimes tempted to control their wily coalitions with state power; Juan Peron himself was guilty of giving in to this temptation in his later years. Future Peronist leaders like Scioli, hopefully, can make that crucial distinction between appropriate constraints on corporate power and inappropriate limits on the necessary annoyances of democracy, like a tabloid media, while favoring the power of persuasion over that of decree.

Tension between different factions of Peronists is not a new phenomenon, but it is new in its scope. Despite economic progress under Peron’s first and second terms, tension between the left and right within the Peronist movement had been barely contained. It came to a boil during Peron’s third term as president when a gunfight erupted in 1973 between fellow Peronists. At least 16 people were killed by right-wing Peronists in the Ezeiza Massacre upon Juan Peron’s return from his long exile back to Argentina. The official death toll continues to be highly contentious, but there is no question that the horrific act of violence was perpetrated upon left-wing Peronists in an attempt to remove then-President Hector Campora.23 This intra-Peronist tension was arguably the inevitable result of managing what was in fact a foreign capitalist dependent economy.24 Without Peron’s magnetism, the ideological contradictions inherent in getting diverse Argentinian groups to cooperate revealed themselves. Reconciliation was possible during previous splits among Peronists and is likely possible again. Unfortunately, it was the military coup and a subsequent absence from Argentinian politics that eventually allowed Peronists to present a unified front against the Church, military, and the traditional parties that had ousted their leader from power.25 The Ezeiza Massacre shows how fragile their unified front was.

While Peronists were biding their time on the sidelines, the military mismanaged the economy. By 1970, Argentina was more fragmented socially than ever before, suffering high inflation, heavy taxation, frequent bankruptcies in the private sector, while witnessing the deterioration of health and education programs.26 A combination of Scioli’s leadership and cooperation within the Peronist movement can lead to differences being sorted out before far-right forces can take over both the legislature and the presidency. Ascension to the upper echelons of government by a far-right party would undoubtedly cause Argentina’s government to bow to foreign capital. If that happens, similar problems to those of the 1970s could arise before Peronists can remind the public of the upsides of appropriate state intervention in the economy and a developed welfare system funded by a strong export sector, key aspects of Juan Peron’s legacy.

Peron’s past management of an internal Argentinian class struggle can inform current Peronist leaders who seek party unification, or at least ideological coalescence between the PJ and the FR, what that process might look like. Indeed, Peron went beyond merely accepting the class struggle inherent in his movement, and went on to exploit it to better both his political odds and the well-being of Argentinians. When Peron was in exile, he built his new coalition from below, with recruits motivated by desperation that the military leaders that had ousted Peron had foisted on them27. Peronism ditched its former top-down recruitment strategy, which was made possible by the prosperity displayed in 1950s Argentina, and took on the tone of a liberation movement.28 The nationalist and imperialist cleavages that Juan Peron exploited to win his first two terms were replaced, in part through a changed coalition building strategy, by proletariat and bourgeois ones29. Scholars such as Alberto Ciria think that a direct focus on class might make national liberation without socialist revolution impossible, but that assertion remains to be proved. Instead of ignoring the class fight inherent in Peronism, Peronists need to embrace it. Instead of fearing that this class fight will inevitably lead to unfettered socialism, they need to keep championing a third way.

Kirchnerism, serving as a third way of sorts, still ignored fiscal realities and lacked the unifying force of Peronism in the 1950s in three ways. Firstly, the agricultural tariff debacle of 2008, where Kirchner attacked agricultural exporters and her rural constituents, exemplifies her shortcomings compared to Peron. Whereas Peron went after the rich landed aristocratic class with his agricultural reforms, Kirchner attempted tax hike would have hurt the poor. Her second economic shortcoming compared with Peron is that she turned the Argentinian economy towards extraction and away from sustainability. Europe’s devastation presented a unique opportunity to Peron to export Argentina’s wares and industrialize in his first two terms. Similarly, growing demand from Asian economies presented an opportunity for Kirchner during her two terms in office to sustainably grow Argentina’s economy. Yet, she did not take this as an opportunity to diversify the Argentinian economy. Third of Kirchner’s economic failures is her divisive programs of redistribution that are driven by inflationary monetary policies. They are not in line with the coalition building approach taken by Peron himself that took the interests of domestic producers into account. The increasingly hard line that she has used to deal with legislators and the media is also troublesome, given the history that Argentina has had with military strongmen. There is a fine line between being a strong leader and being an authoritarian that she gets dangerously close to. Kirchner did not deviate from Peron’s legacy in this regard; both leaders are equally guilty of a tendency to lean too heavily on authoritarian and unilateral action.

Applying theoretical lessons from Peron’s experience in reforming Argentine institutions to contemporary politics is paramount to the success of future Peronist leaders. After all, it was his initial reforms that allowed him to return to Argentina and secure a third term. Peron was a steward of economic growth and brought out common interests between domestic industrialists and laborers. Kirchner, while a Peronist in name, is not always a Peronist in either her governing style or her policies. Polls suggest that Scioli will win the run-off election and that he will have a majority in the legislature to help him pass his moderate agenda, which harkens back to the early days of Juan Peron, with gradual changes. In the face of problems such as social unrest and rising inflation that are similar to those of the early 1970s that unseated the military and restored Peronism, Scioli will need to lead with a large coalition and speak for competing interests, just like Juan Peron. Learning from Kirchner’s mistakes will be essential in guiding Argentina out of the choppy waters that surround it.

Scioli: Puppet or Prophet?

Barring an endorsement of Macri from Massa, a victory for Scioli seems likely. So long as a Macri-Massa alliance does not emerge in the coming weeks, Scioli is almost assured an ascent to the presidency. As president it will be up to him to be a unifying force in these divisive days within his country and his party. Eliminating the divide within the Peronist movement so that Peronist solutions can be used to tackle Argentina’s economic crises in the long-term will require political independence for Scioli, something that he might be lacking. Frequently, Argentinian voters see Scioli as Kirchner’s puppet.30 Kirchner’s backing helped Scioli secure his left flank and gain popularity among the working classes, but it could serve as a double-edged sword. Both Massa and Macri, Scioli’s main rivals for the presidency, have accused Scioli of owing a massive political debt to Kirchner that will impinge on his freedom to make his own decisions31.

Consequently, this would-be reformer of Peronism could run out of political capital quite early on in his term. And if Scioli bucks Kirchner’s control and attempts to bring Peronism back to the center by liberalizing the Argentinian economy, reduce subsidies, and reign in the heavy spending that has led to inflation, then there is a possibility that she will run for president in the next election cycle. She could legally choose to do this because Argentinian election laws only forbid holding the presidency for more than two consecutive terms, allowing her a separate third term. It is with this threat hanging over him that Scioli must make his reforms that will bring his party closer to Peron’s original political platform and away from the Kirchnerist interpretation of Peronism that has sown divisions among the PJ. The run-off could be the last electoral chance for Peronists to show the Argentinian people that they can present a unified ideological front. Without unification it will be difficult for the party to maintain the trust and confidence of the Argentinian people for elections. On top of this, the fracturing of the party will only weaken the political capital of Peronists and thus reduce their ability to effectively govern if elected. And without Peronists in power, the influence of foreign vulture funds and other forms of foreign investment capital over Argentina will continue to increase, making a resolution for Argentina’s economic malaise ever less likely.

By Belén Marty
October 29, 2015

Mauricio Macri Is No Liberal, but He’s as Close as We’re Going to Get

If last Sunday’s Argentinean presidential election was a pie, no ingredient was missing from the recipe. It had everything: uncertainty, hope, participation, disbelief, faith, and, the key to it all, surprise.

It carried the strong aroma of potential change, one that’s only made sweeter after 12 years of die-hard Kirchnerism.

With over 97 percent of the votes counted, the candidate backed by President Cristina Kirchner, Daniel Scioli, emerged in first place with 36.86 percent of the vote. A Pyrrhic victory, considering the 34.33 percent secured by his conservative rival, Mauricio Macri, of the opposition Let’s Change coalition. Macri even led in the polls for a good part of the night.

It was a huge surprise. No pollster could have imagined that Macri would only lose by two points. Only days ago, most polls showed Macri trailing by six points behind Scioli. Now the two candidates will square off in a runoff set for November 22, and Marci is in a strong position to pull ahead.

That’s the reason why, during the first few minutes of Monday, October 26, when election authorities first released preliminary results that showed Marci in the lead, euphoria overwhelmed the people of Buenos Aires.

Macri, the current mayor of the Argentinean capital, won a clear victory in the town he has governed for eight years with 50.55 percent, doubling Scioli’s 24.09 percent.
The first indications of Macri’s strong performance exhilarated the residents of various neighborhoods throughout the city, where people began making loud noises, honking their car horns, and shouting “Vamos Argentina!” (Let’s go Argentina) and “Viva la patria!” (Long live Argentina).

But why did porteños react so viscerally, as if they were experiencing great relief? Why did Macri garner such intense support?

Let’s be clear: Macri is not a liberal; never has been, and never will be. He’s a statist, just like every other Argentinean politician. As mayor of Buenos Aires, he raised taxes, created a Ministry for Modernization in order to “modernize” bureaucracy, and increased the budget for “official advertising,” which could easily be confused for political propaganda.

Beyond that, he promised to keep the state-run Aerolíneas Argentinas under government control, and pledged to not only not reduce subsidies for the airline, but expand them.

However, unlike the Kirchneristas, he is at least open to debate. He promised, if elected president, to offer press conferences and not just national broadcasts like Kirchner, and has talked about promoting entrepreneurship.

He has said that he will combat inflation, unlike the current government that denies the problem even exists and doctors the official numbers. He has vowed to bring in investment by establishing clear rules and legal security.

Without much philosophical rhetoric or ethical arguments, like the pragmatist that he is, he believes socialism doesn’t work.

By Frida Ghitis
Thursday, Oct. 29, 2015

Latin America is reaching a quiet but remarkable turning point, one that, though occurring without much fanfare, has significant historical resonance. This past weekend, voters in several Latin American countries participated in national and local elections, and the process unfolded for the most part peacefully. That in itself is an achievement. But what is most noteworthy is that the outcomes of the elections were decided by the actual votes cast, and by extension the voters, rather than by fraud or violence. That, of course, is how democracy is supposed to work, but it is not always the case.

When viewed from regions where democratic traditions have grown deep, strong roots, this hardly merits mentioning. But in Latin America, where the soil has proved unhappily fertile for dictatorships, coups and personality-driven populism, where Marxist revolutionary conflicts have outlasted the Cold War, and where opposition leaders are still imprisoned on trumped-up charges, the largely peaceful festival of democracy that just took place is a rather notable feat.

And it’s more than that. It is a warning to the many remaining demagogues in the region that the public is growing tired of the manipulations of the democratic process that entrenched political leaders and their parties have come to rely on to stay in power.

The voters spoke in Argentina, Colombia and Guatemala.

Each of the three countries is unique, facing distinct challenges and choices. But if there was a common thread running through the results, it is that voters tended to stay away from the most radical partisans on either side of the spectrum. In doing so, they at times defied the wishes of the most powerful political players and the predictions of the pollsters.

In Argentina, the main event was the first-round vote for a new president to replace Cristina Fernandez de Kirchner, who is ineligible to run for a third consecutive term. Fernandez succeeded her late husband, Nestor Kirchner, meaning that the family has governed the country for a dozen years, using a controversial and eclectic formula of leftist populism that has inflamed social divisions, among other harmful side-effects.

Fernandez anointed Daniel Scioli, a former speedboat racer and governor of Buenos Aires province, as her successor. Pollsters had predicted he would win by a landslide, saying the only question was whether he would capture victory without the need for a run-off. But voters had a different idea and shocked the experts. Scioli came out in first place, but just barely, taking a disappointing 36.9 percent, just ahead of his main rival, Buenos Aires Mayor Mauricio Macri, at 34.3 percent. It was an energizing result for Macri, who emerges with strong momentum, and a demoralizing one for Scioli, Fernandez and their supporters. Many voters said they were tired of the divisiveness of the Kirchner dynasty. Others said they worried that a Scioli victory would leave Fernandez in control behind the scenes, with the outgoing president preparing for a future return to power.

Ahead of the Nov. 22 run-off, Macri has the psychological advantage, though both candidates are vowing to move to the center where the political advantage now seems to lie.

In Colombia, voters also voted against the extremes and for the normalcy of the center. Utopian promises hold no allure in a country that has endured half a century of Cold War-style revolutionary conflicts and unceasing violence.

The local elections there came with a reminder that the fighting is not over, even if peace talks with the FARC guerrillas seem close to completion. An attack by a smaller leftist guerrilla army, the National Liberation Army (ELN), killed 12 security forces transporting ballots back to Bogota, the capital. Still, it was the most peaceful election Colombia has seen in living memory.

The most important of the more than 1,500 races for governors, mayors and city councils that took place was the contest for the new mayor of Bogota, widely seen as the second most powerful post in the country. Voters could not have spoken more clearly. They ended 12 years of ideologically infused leftist control of the city and elected Enrique Penalosa, an independent candidate who is neither an ideologue nor a populist, but a technocrat.

Penalosa’s campaign slogan was “Let’s take back Bogota,” and it was backed not just with the experience of his previous successful term at the city’s helm, but by a list of specific projects, including more public transportation to solve the city’s nightmarish traffic and transportation problems, as well as more green spaces and bicycle paths to improve the quality of life in the city. The contrast with outgoing Mayor Gustavo Petro, a former guerrilla leader whose tenure has been marked by bitter political acrimony and devastating administrative incompetence, could not be sharper.

But while voters dealt a blow to the left in Bogota, the right suffered a painful defeat of its own in the country’s second city, Medellin. There, the pollsters had predicted victory for Juan Carlos Velez, the mayoral candidate backed by former President Alvaro Uribe, who has become a vociferous opponent of the peace process and of the current government. As in Bogota, the voters ignored the polls, the pundits and the ideologues, handing a narrow victory to the centrist candidate, Federico Gutierrez.

With hundreds of seats up for election, every party had something to celebrate, and every party declared victory. But the main trend in key races was a move away from the extremes.

Elections also took place in Guatemala, where the notoriously corrupt country is in the midst of a political earthquake. Last month, former President Otto Perez Molina resigned due to corruption charges and was promptly arrested days before the first-round voting for a new president took place. This weekend’s run-off ballot pitted a former first lady, Sandra Torres, against a comedian with no political experience. The comedian, Jimmy Morales, won in a landslide. It was yet another sign of popular disgust with the political class, although the fight for a clean democracy in Guatemala is far from over, especially as plenty of questions remain about who is funding Morales.

It’s worth noting that perennially troubled Haiti, not a Latin American country but a Caribbean neighbor, also held a presidential election that was astonishingly peaceful, with 54 candidates running for president. It’s the first time in Haiti’s history that three successive elections have been held without major fraud or violence. That’s just about the best news the country has had in a long time.

And it’s one more reason to celebrate a weekend of elections that, while far from perfect, constitute a step forward for the Sisyphean labor of developing a self-sustaining democratic tradition throughout the region.

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