For Argentina’s New President, It’s Still the Economy

Reviving the economy will be top priority for Argentina’s new President, says Atlantic Council’s Jason Marczak

Argentina’s President-elect, Mauricio Macri, will inherit an economy that is “in serious need of revival,” said Jason Marczak, Deputy Director of the Atlantic Council’s Adrienne Arsht Latin America Center.

Macri, who defeated his main rival Daniel Scioli in the Nov. 22 runoff election by less than three percentage points, has vowed a 180-degree turn on his predecessor Cristina Fernández de Kirchner’s economic policies.

Jason Marczak discusses the implications of Macri’s election victory in an interview with the New Atlanticist’s Ashish Kumar Sen. Here are excerpts from our interview:

Q: After more than a decade of Peronist party rule in Argentina, what is the state of the country that Mauricio Macri is inheriting?

Marczak: Macri is inheriting a country that has changed significantly over the last twelve years. He is inheriting an economy that is in serious need of revival as well as an injection of credibility. Under Cristina, there has been an increasing lack of credibility of the majority of economic statistics.

Argentina has been effectively shut out of international credit markets for the last year and a half, when the country went into technical default with the New York-based creditors. Cristina has been reluctant to negotiate an end to this crisis. President-elect Macri’s first priority will be to try and resolve this situation so that Argentina can once again get access to international credit markets. In the absence of this access, Argentina has been forced to turn to countries like China. Argentina also has export restrictions and capital controls in place. Those, along with a whole slew of additional economic components, have led Argentina to become a less than favored destination for foreign direct investment.

Macri also inherits a country in which the security situation has significantly diminished as a result of the deteriorating economic situation and a sense of impunity that has grown across the country.

On a more positive note, he will also lead a country that has seen significant investments in social programs over the last twelve years. Argentines are now accustomed to these social programs. Macri has said these programs must continue.

On the foreign policy front, Argentina, over the past twelve years, has been a critical supporter of Venezuela joining Mercosur, and has crafted less-than-transparent deals with the Chinese and the Russians. The outgoing administration has been all about trying to “diversify” Argentina’s foreign policy alliances, but Fernández de Kirchner has moved Argentina toward working closely with those who are not the natural strategic allies of the United States.

President Macri’s first visit will be to Brazil, but after Brazil and other Latin American capitals you can expect him to come to Washington early in his term to reset the icy relations with the United States.

Q: Macri has promised to do a 180-degree turn from Cristina Fernández de Kirchner’s economic policies. What will that mean for Argentina?

Marczak: That means opening up Argentina’s economy more broadly to the world. The Argentine economy has become inward looking and that is partly a result of the capital controls and partly a result of being shut out of international credit markets. This is unsustainable.

Cristina and her late husband, her predecessor, were able to do this because they both governed under a commodity boom. Commodity booms often mask the real economic changes that a country needs to be undergoing. One of the things that Macri will have to work with is how to increase the value-added of Argentine exports. His government has the responsibility and the opportunity to make Argentina a destination for foreign direct investment and help spur local industries to be able to compete in the global economy with exports far beyond just agricultural products.

Macri won the election because a majority of voters were not scared of economic changes that a Macri government would implement. He is not going to start with a wave of privatizations like what happened in Argentina in the 1990s.

Q: What does Macri’s election mean for Argentina’s relationships in Latin America?

Marczak: President-elect Macri is not going to govern from either end of the ideological spectrum. He will have a blended administration such as [President Michelle] Bachelet in Chile or [President] Dilma [Rousseff] in Brazil.

Economically, Macri is going to implement policies that will open up the Argentine economy to the broader global market, which are policies that are more traditionally associated with those on the right. But at the same time he will keep in place many of the social programs that are probably associated more with those on the left.

On foreign policy, he will start to question some of the norms and practices that are occurring in Venezuela right now. Macri will take office in December just days after Venezuela’s scheduled legislative election; how [Venezuelan] President [Nicolás] Maduro deals with a likely opposition victory will be one of the first issues on the foreign policy front that Macri will deal with head on. Macri has said that if Leopoldo Lopez and other political prisoners in Venezuela are not released, he will seek to invoke the democracy clause of the Mercosur agreement, which could result in Venezuela being kicked out of Mercosur.

Q: Does Macri’s victory provide an opportunity for an improvement in Argentina’s strained relationship with the United States?

Marczak: Macri’s victory is an incredible opportunity to reset relations with the United States. He has talked openly about strengthening relations with the United States and with Europe. He has talked about supporting policies both regionally and globally that are more in line with US interests, including not giving the Venezuelans a free pass on their clampdown on political prisoners, and reviewing secretive energy deals Cristina struck with countries such as Russia.  

Q: Does Macri’s victory deprive Maduro of an ally in the region and provide the United States an opportunity for a Cuba-style opening with Venezuela?

Marczak: A Macri victory does deprive Venezuela of a guaranteed ally in the region. Macri is not anti-Maduro, but he is supportive of the importance of democracy in Venezuela and the importance of guaranteeing basic human rights and liberties.

The US strategy with regard to Venezuela is to rely on regional allies to be able to work with the Venezuelans on bringing about change. Anytime the United States tries to intervene in Venezuela it is counterproductive. Venezuelans use that as proof that the United States, in their mind, is trying to meddle in their internal domestic affairs. It also gives a boost to Maduro.

The United States has learned over the course of the last decade to work with regional allies whose vocal support for liberties resonates much better with the Venezuelan people.

Ashish Kumar Sen is a staff writer at the Atlantic Council.

Related Experts: Ashish Kumar Sen and Jason Marczak

Image: Argentina’s President-elect, Mauricio Macri, smiles during a news conference in Buenos Aires, Argentina, on Nov. 23. Argentines’ assets rose broadly after Macri won the presidential election, ending more than a decade of rule under the Peronist movement. (Reuters/Enrique Marcarian)