A blog of the Argentina Project
Is Cristina's Brand Crisis?
In the run-up to the October , Argentina鈥檚 economy is on the precipice. Its country risk is the second highest in the world, after , and annual inflation is the worst since 1991.
Argentina is to economic challenges, but at least some of the country鈥檚 economic strife these days is caused by the gnawing uncertainty ahead of the election 鈥 one of the most competitive in recent history.
Polls show President Mauricio Macri neck-and-neck with his predecessor, Cristina Fern谩ndez de Kirchner, who is running for vice president on a ticket with her former chief of staff, Alberto Fern谩ndez.
Both candidates forecast doom if their opponent wins. Ms. Fern谩ndez de Kirchner paints Mr. Macri as a coldhearted businessman whose austerity policies impoverished Argentina, even as he indebted the country over the past three years.
For his part, Mr. Macri portrays the Fern谩ndez-Fern谩ndez team as spendthrift and corrupt, and warns it would reverse recent painful efforts to balance the budget. On social media, the Cambiemos campaign slogan is 鈥淒efensores del Cambio.鈥
Mr. Macri鈥檚 branding of his rivals pleases his base and helps attract disillusioned moderates who fear a return to the 12 years of populism that Mr. Macri ended with his surprise election in late 2015. (His choice of moderate Peronist Miguel 脕ngel Pichetto as his running mate was designed to appeal to those same voters.)
However, though Mr. Macri鈥檚 description of his opponents is hardly flattering, it could actually come in handy for the former president and her running mate. Should they decide to play spoilers to Mr. Macri鈥檚 fragile economic program, his financial fearmongering could backfire.
A single ill-timed statement by the Fern谩ndez-Fern谩ndez team could instigate a run on the currency and increase country risk ahead of the election, locking local companies out of global capital markets. That would worsen inflation, lowering real wages and provoking unions and social movements to ramp up their conflict with the government.
Should they avoid blame for sparking a new crisis, the chaos could increase the kirchneristas鈥 chances of victory. Axel Kicillof, the kirchnerista candidate for Buenos Aires governor, has preemptively mocked Mr. Macri for trying to blame his potential successors for any economic turbulence. 鈥淪e pas贸 un a帽o y medio ech谩ndole la culpa al gobierno anterior,鈥 he said at a Wilson Center event last month, 鈥測 ahora se la echa al gobierno que est谩 por venir.鈥
This all might sound unfair to the former president. After all, when Ms. Fern谩ndez de Kirchner announced she would settle for the vice presidency, she stressed the need for national unity and future economic stability.
But Peronists playing spoiler is hardly a new strategy.
No non-Peronist government has finished its term since 1928; all were either deposed in a military coup (1930, 1962 and 1966) or collapsed amid social unrest worsened by Peronist-dominated unions (1989 and 2001).
The first non-Peronist president since the 鈥淒irty War,鈥 the Radical Ra煤l Alfons铆n, resigned amid hyperinflation that had led to a large increase in poverty and . Throughout his term, as the economy teetered, Peronist-led unions organized 13 general strikes, further destabilizing his administration.
Radical President Fernando de la R煤a, elected in 1999, grappled with Argentina鈥檚 worst recession in modern history and rising popular rage, including widespread looting and violence.聽 Like Mr. Alfons铆n, Mr. de la R煤a鈥檚 hold on power further weakened due to strenuous opposition from Peronist-led unions. In all, he endured ten general strikes, including two in December 2001, immediately prior to his resignation.
Looking back, Mr. de la R煤a, who fled the Casa Rosada in a helicopter, describes his as a 鈥渃oup carried out by Peronists.鈥
Mr. Macri has feared a similar fate since the beginning of his term. In January 2018, when Argentina鈥檚 economy was still relatively strong, a powerful union boss, Luis Barrionuevo, Mr. Macri, 鈥渢he unions were attacked by the military, by Alfons铆n and by de la R煤a, and it ended badly.鈥 The next month, another Peronist union leader, Hugo Moyano, Mr. Macri鈥檚 early exit from the presidency. 鈥淭hey have little time left,鈥 he said.
Although the role of Peronists in chasing their opponents out of office is debatable, it is clear non-Peronists rarely feel secure in power.
For now, the Fern谩ndez-Fern谩ndez campaign does not appear to be intentionally spooking markets to create a political crisis. Rather, it has signaled its commitment to repay debt and to maintain relations with the International Monetary Fund, which approved a to Argentina last year. In an with Bloomberg late last month, Mr. Fern谩ndez said, 鈥淲hat we can guarantee is that we aren鈥檛 going to fall into a new default.鈥 He added, 鈥淚 received an Argentina in default. I don鈥檛 want Argentina to fall back into that.鈥
Helpfully, Ms. Fern谩ndez de Kirchner and Mr. Fern谩ndez have been vague about their economic policies, recognizing that markets would react negatively to any hints of a populist sequel.
Indeed, Ms. Fern谩ndez de Kirchner鈥檚 choice of Mr. Fern谩ndez was seen as an attempt to calm market jitters about her return for a third term in national office. Though he briefly served as his running mate鈥檚 chief of staff, he is more associated with N茅stor Kirchner, whose administration was relatively stable and economically successful. Under Mr. Kirchner, Mr. Fern谩ndez maintained ties to moderate Peronists, unions, the media conglomerate Clar铆n, private sector leaders and key economic sectors. Those relationships withered under Ms. Fern谩ndez de Kirchner, but could presumably be rebuilt by Mr. Fern谩ndez.
Moreover, provoking a crisis would be a risky political maneuver. And if it worked, it would saddle a Fern谩ndez-Fern谩ndez administration with an even heavier burden.
That said, should polls sour on Ms. Fern谩ndez de Kirchner and Mr. Fern谩ndez, she might recalculate her strategy. As a student of Peronism, the former president is well aware of her party鈥檚 historic ability to take advantage of the country鈥檚 economic vulnerabilities.
