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July 23, 2017

As I see it

Friday, January 6, 2017

Crunch time approaches for Team Macri

By James Neilson
For the Herald

Many members of Argentina’s political class are experts when it comes to making the most of failure

Argentina may not be the only country in which what makes good economic sense tends to be politically suicidal, and vice-versa, but few others can compete with her in this particular terrain. Sooner or later, all her presidents feel themselves obliged to choose between attempting to ensure their own survival by loosening the purse strings and that of what is still left of the economy by tightening them.

Until a couple of months ago, Mauricio Macri thought that, thanks to foreign investment, he could have it both ways. That proved to be an illusion. Some may be in the pipeline, but it has yet to make much difference and, to make matters worse, under the stewardship of Donald Trump, the United States could soon start repatriating the trillions of dollars that for a decade have made life easier for economy ministers and businessmen in “emerging” countries. So, just over a year after taking office, Macri has come to the conclusion that he would be well advised to rein in public spending before the dreaded market steps in and — after depriving him of his job — throws yet another big chunk of the population onto the scrapheap.

That, presumably, was why he told Alfonso Prat-Gay, a man who, like his predecessor Axel Kiciloff, is regarded as a “Keynesian,” whatever that may mean these days, that his presence was no longer welcome. Insiders’ gossip would have it that Prat-Gay earned his boss’ displeasure by looking down his nose at him. In any event, his replacement, the mild-mannered Nicolás Dujovne, is already under attack for his alleged desire to subject Argentina to a spot of belt-tightening.

To justify such an inhuman approach, Dujovne can tell his critics that, given the circumstances, there is no alternative, as Margaret Thatcher used to remind her many adversaries, but Argentine politicians know better. Their earnings put them in the top bracket and they take it for granted that, like their equally well-off counterparts in Europe and the US, they are entitled to demand that the government spend more money on welfare programmes.

As they made clear a month or so ago when they upped their own emoluments, they live in a country in which only a dyed-in-the-wool reactionary could imagine austerity was called for. This being the case, it would be unpatriotic for them to take into account the unfortunate fact that, according to the available statistics, Argentina is far poorer than the developed countries. That is one reason they are preparing to make life harder for Team Macri. Another is awareness that their own personal fate will be at stake in the elections scheduled to take place next October.

Many members of Argentina’s political class are experts when it comes to making the most of failure. In other parts of the world, a movement regarded as responsible for the mass impoverishment of a country that was once a synonym for wealth — “riche comme un argentin,” as the French put it back in the good old days — would long since have disappeared from view, but here the Peronists continue to prosper. For a while, many devotees of the old religion assumed it would be best for them to keep their heads low for a few years and let Macri stay in office until his term ran out, thereby proving that Argentina was a genuine democracy, but others, among them Sergio Massa, are beginning to show signs of impatience.

They fear that, despite the country’s economic woes and the government’s evident inability to make good on its rash electoral promises, Macri and his friends could stay in power for a bit longer than they had originally expected. From their point of view, that would be disastrous because it would give Macri’s supporters the time, and the money, they would need to build a far bigger political machine than the one which, to widespread astonishment, did so well in the final months of 2015. As a result, for the first time in a great many years, Argentina now has a “centre-right” and presumably non-populist movement that is capable of winning general elections.

If anecdotal evidence and recent opinion polls are anything to go by, people by and large think Team Macri have the right approach to the country’s worst problems but many could change their minds if measures taken to improve medium-term prospects hurt them personally. On the whole, they feel the Letñs Change (Cambiemos) coalition is more trustworthy than the competing Peronist factions, all of which have been tainted by their association with the fabulously corrupt Kirchnerite administration.

Though the government insists that it is not behind the judicial offensive against Cristina, it has certainly benefitted from it and must have been pleased by that huge US$630-million asset freeze judge Julian Ercolini slapped on her which was more eloquent than any of the actual accusations, most of them terribly plausible, that have been levelled against her and her cronies. Also favouring the current government is the feeling that the more enthusiastic Kirchnerites want to see it, and the country, go up in smoke because unless something like that happens fairly soon, they and their leader will be liable to end up behind bars. Though nobody thinks that, deep down, all Macri’s foes have Cristina’s wellbeing at heart, some of them clearly do and that in itself is enough to inhibit the rest of them.

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