With Macri’s Election, the ‘Sky is the Limit’ for US-Argentine Ties

The Atlantic Council’s Peter Schechter discusses the implications of Argentina’s presidential election

Mauricio Macri, the conservative Mayor of Buenos Aires, ended more than a decade of Peronist party rule in Argentina when he defeated Daniel Scioli in a hard-fought runoff election on Nov. 23.

Macri has promised to roll back President Cristina Fernández de Kirchner’s economic policies that have shut Argentina out of international credit markets and undermined its economic security.

His victory also presents an opportunity to mend ties between Buenos Aires and Washington that have grown frosty on Fernández de Kirchner’s watch.

Peter Schechter, Director of the Atlantic Council’s Adrienne Arsht Latin America Center, 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: Mauricio Macri’s victory ends more than a decade of Peronist party rule in Argentina. What does this mean for Argentina?

Schechter: We have had twelve years of Kirchner rule. The Peronist party is the largest party in Argentina and it has a number of currents and factions. These factions are very different. I will simplify these into two: one group falls into the pragmatic category and the other into the far more anti-American, more socially oriented and centralized economy.

The reason I make these distinctions is because Macri won the presidency and the Kirchner faction lost its political power. Without a majority in Congress, the ability to govern in Argentina depends on Mauricio Macri’s skill to reach out and make some pragmatic agreements with moderate Peronists.

You will see some important things happening in Argentina over the next couple of weeks. On the main stage will be all of the economic reforms that are necessary for the President to take to begin stabilizing the Argentine economy. Those include freeing of the currency, some type of a deal with the vulture funds, and monetary policies to curb inflation.

On the side stage you will have an equally fascinating, and perhaps just a tad less important, bloodletting of the Peronist party. Who wins that bloodletting is going to be critical to the future of Argentina. If Sergio Massa, who came in third in the first round of the elections, takes over the Peronist party you are going to see an epoch of pragmatic cooperation with the new government. There are going to be issues upon which they disagree, but there are going to be issues on which they agree.

If, on the other hand, the Kirchner faction holds on to power in the Peronist party then this government is going to have a lot of problems getting its program through Congress.  

Q: What are Macri’s plans for the economy?

Schechter: Nobody knows exactly what that means because neither of the two candidates during their political campaigns were very specific about what they would do. There was a reason for that because what they need to do contains some pain.

In the press conference Macri had [on Nov. 23], somebody asked him what he is going to do and he said he didn’t know exactly.  He explained that this was because, given the lack of credible financial statistics in the country, he didn’t know what the state of the economy is, what the inflation rate is, what the debt levels are, or even whether Argentina is in a recession or a slow advance.

Since statistics have been degraded to such an extent, Macri was very believable in saying that he needs to first understand what the situation is before he is able to say what the depth and breadth of what his economic policies will be. 

Nonetheless, removing currency controls — whether one does those fast and totally or slow and over phases — and anti-inflationary policies will be an inevitable priority.

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

Schechter: This could be an inflection point in Latin America. Latin America has been divided into two basic camps. In one corner you have the Pacific alliance countries believing in open economies. In the other corner you have countries believing in much more state- and centrally driven economies, and much larger state intervention. Neither of those sides, for the last fifteen years, has had a defection. We have just had the first defection. Argentina has defected to the other side.

The first thing it means is that Argentina will try to mend fences and strengthen its ties with its main Mercosur partner — Brazil. Both countries are in difficult position, both countries are one of each other’s major trading partners. So it is imperative that both countries work together to improve their economies and their ability to trade. To a large extent, you’re going to have Macri dedicating himself to the Brazil-Argentina relationship.

The second thing that is going to happen is that Macri has stated publicly that he intends to create a bridge between Mercosur and the Pacific alliance. That is fascinating because, while it sounds great that Latin America is one happy continent, these two groupings have had fundamentally different economies and different ways to characterize the relationship between citizen and state. The notion that Macri is now going to have some type of formal conversations about how Argentina can be more a part of the Pacific Alliance is a fascinating turn of events.

And third, Macri has said publicly and repeated [on Nov. 23] that he believes Venezuela’s lack of democracy means that it has not qualified for the minimum democratic standards required by Mercosur partners. Does that mean Venezuela is going to be thrown out of Mercosur? No, I doubt it. Countries like Brazil will probably not want that. But it is a major symbolic breakthrough that in Latin America — a continent on which countries have been very reluctant to criticize other countries — there is now a President who has no problem saying that he does not believe that Venezuela has met the minimum standards of democratic requirements of Mercosur.

Q: Does Macri’s victory provide an opportunity for an improvement in Argentina’s strained relationship with the United States? And what should the United States be doing to capitalize on this opportunity?

Schechter: There is no doubt in my mind that this election signifies a significant opportunity to improve ties with the United States, if only because US-Argentine relations during twelve years of Kirchner were in a very bad place.

There are a whole plethora of avenues of cooperation that goes from technology to innovation and education that I think can be opened up.

Under Macri, there is also the possibility to begin to talk about how to improve the trade relationship between the two countries. The United States, Brazil, and Argentina are three of the major agricultural competitors in the world and the ability to find predictable trade rules and standards presents an interesting opportunity. The sky is the limit for what could happen now.

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

Related Experts: Ashish Kumar Sen and Peter Schechter

Image: Mauricio Macri, presidential candidate of the Cambiemos (Let’s Change) coalition, with his daughter Antonia on his shoulders, and his wife Juliana Awada wave to supporters after the presidential election in Buenos Aires, Argentina, on Nov. 22. Macri won Argentina’s presidential election promising business-friendly reforms to spur investment in the struggling economy. (Reuters/Ivan Alvarado)