Political shift in Argentina

The victory of Mauricio Macri, the Mayor of Buenos Aires, in Argentina’s presidential election over the ruling Peronist party’s Daniel Scioli, marks an end to the so-called Kirchner era, at least for now. Over the past 12 years, the outgoing President, Cristina Fernandez, and her late husband Nestor Kirchner dominated the country’s polity, reshaping the character of the Argentine state into a welfare institution from being a free-market facilitator. Mr. Scioli had promised to follow the policies of Ms. Fernandez. But Mr. Macri’s offer to build “21st century development” as opposed to “21st century socialism” resonated better with a majority of the voters at a time when the Argentine economy was going through a tough phase. The late President Kirchner inherited a much worse economy in May 2003 when he assumed office. It is widely accepted that Argentina’s market-driven policies of the 1990s, a period of blind deregulation of the economy, triggered the financial meltdown of 2001-2002. The power couple offered a new social contract; they raised public spending heavily on programmes for the poor; increased tariffs to protect local economies; nationalised private corporations and passed several progressive laws, including the legalisation of gay marriage in 2010. But Ms. Fernandez faced a serious economic challenge in 2011 when commodity prices fell globally. This derailed her government’s expenditure-driven development model. The economy slipped into stagnation, while inflation jumped, setting the stage for the comeback of the opposition party. Ms. Fernandez’s combative style of governance was also criticised both inside and outside the country for its “authoritarian tendencies”. Mr. Macri built his campaign on these concerns of the general public, and reaped benefit.

However, it does not mean that Mr. Macri has got a free hand to take the welfare Argentine state back to the hands of the free market. To begin with, his margin over Mr. Scioli is less than three percentage points. The Peronists are strong both inside and outside Parliament. They have the backing of Argentina’s strong trade unions. Memories of the instability of the 1990s and the financial crisis of 2000-02 are still fresh. Besides, Mr. Macri would like to remember that outside the dictatorship era no President has ever completed a full term of office without the support of the Peronist political force. If he cuts down public expenditure and ends programmes for the poor — steps that business-friendly leaders usually take to fine-tune finances — a backlash could follow in Congress and on the streets. But the election also provides Mr. Macri an opportunity to offer better-quality governance that would continue the progressive policies of the Kirchner era while taking steps to rejuvenate the sagging economy and strengthen the democratic institutions of the South American country. The choice he would make will shape not just his legacy, but also his country’s future.

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