The perennial seesaw of Argentina’s political and economic fortunes has pitched the South American country into more upheaval after an overwhelming primary election loss for the government of President Mauricio Macri. The currency and stock market plummeted Monday, a day after the surprising outcome. Here is a look at the main issues in a nation whose economy was already in crisis:
WHAT SPOOKED THE MARKETS?
Cristina Fernández and the leftist populism that she represents. The former president, whose high spending, trade restrictions and state intervention were widely blamed for years of economic problems, was on an opposition ticket (as a vice presidential running mate) that scored an emphatic win on Sunday. The primary election is seen as a harbinger for general elections in October. Fernández faces numerous investigations into alleged corruption during her 2007-2015 administration — she says she is a political target. As president, Fernández initially presided over economic stability and growth associated with her predecessor and late husband, Nestor Kirchner, but conditions later deteriorated and sapped her early popularity.
THEN WHY DID TEAM FERNANDEZ SCORE BIG AT THE POLLS?
Investors worry about Fernández and her slate. But she has fervent supporters who applauded her moves as president to keep energy cheap through subsidies and redirect revenue to the poor through handouts.
More critically, people are unhappy with Macri, who came into office as a pro-business figure, determined to impose fiscal discipline and jumpstart the wayward economy. But life isn’t improving for many Argentines, who are increasingly weary of low growth, rising poverty and austerity measures. The long-running crisis sharpened in 2018 when the Argentine peso lost about half its value following a run on the currency. Argentina was forced to seek a record financing deal with the International Monetary Fund that totaled upward of $55 billion.
“The refrain from the Macri administration has been: ‘Just give us a little more time and things will turn around.’ And they never really did,” said Michael Shifter, president of the Inter-American Dialogue, a research center based in Washington.
WHAT HAPPENS NOW?
Argentina is heading for a jittery run-up to general elections on Oct. 27. The margin of victory for Fernández and the slate led by presidential candidate Alberto Fernández (the two are not related) was large enough on Sunday to suggest they could be poised for victory over Macri in October. Shifter anticipated a “very strange period” in which the two political camps are in competition even as there is a sense that a “transition” to a Fernández-led administration is underway.
Or, according to one analyst, voters might pull back after recognizing that the symbols of past rule won’t necessarily deliver answers to their problems.
“Maybe they’ll rethink and reconsider what the options are,” said Christopher Sabatini, a lecturer at the School of International and Public Affairs at Columbia University in New York.
While Macri has an uphill battle with voters, Alberto Fernández should offer a detailed economic plan if he wants to calm investors and avoid inheriting a troubled economy, Sabatini said.
HOW BAD IS THE ARGENTINE ECONOMY?
Argentina’s economic woes don’t compare to those of Venezuela, where the humanitarian crisis is so severe that a big chunk of the population has left the country in search of opportunities elsewhere. Indeed, Macri had warned ahead of Sunday’s vote that returning Fernández to government could send Argentina on a more perilous path reminiscent of Venezuela, where the government describes its economic policies as socialist.
But increasing hardship has been evident for some time. Many Argentines struggle to pay utility bills. Families living on the streets outside shopping malls, bus stations and parks have become an increasingly common sight in Buenos Aires. The number of people in extreme poverty in Argentina’s capital – the country’s wealthiest area – has doubled in the past three years to 6.5 percent, or about 198,000 people, according to recent figures from the government.
Monday’s market plunge threatens new turmoil. All banks were hit hard, but so were companies that do construction or provide vital infrastructure services
DOES HISTORY PLAY A ROLE?
The past casts a long shadow in Argentina. Macri’s deal with the International Monetary Fund unnerved many people who blame the IMF for encouraging policies that led to the country’s worst economic crisis in 2001. At that time, one of every five Argentines was unemployed and millions slid into poverty. Cristina Fernández also inherited a powerful — if often fragmented — populist tide in Argentine politics that originated with strongman Juan Domingo Perón in the 1940s. She was sometimes compared to Perón’s celebrated second wife, known as Evita. A polarizing figure, Fernández backed progressive social policies in the face of opposition from powerful business interests.
Argentina has a “bipolar political system and economic model system,” said Sabatini, the Columbia University lecturer. “History repeats itself.”
Follow Christopher Torchia on Twitter at www.twitter.com/torchiachris
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