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Argentina under Macri: Will Political Stability Prevail?

 6 min read / 

Despite public criticism and increasing political pressure on the Argentine President, Mauricio Macri, his ruling coalition ‘the Cambiemos’ or the ‘Let’s Change’ movement, won a vital sweeping victory in Argentina’s mid-term congressional elections on Sunday 23rd October.

With half of the seats in the lower house up for grabs, Macri’s party successfully increased its seats from 86 to 107. Even though it fell short of a majority needing 130 seats, he secured one of the biggest victories in midterm elections since democracy returned to Argentina in 1983.

The business-friendly Macri has now asserted himself as Argentina’s leading power while the Peronist opposition remains politically outcasted. Yet, the question arises of whether this new period of political stability that is crucial for Argentina’s development shall endure?

The Need for Results

While these midterm elections were widely seen as a referendum on Macri’s pro-market reforms, the positive electoral victory for the president shows that he has substantial public support, decisive for Macri to fulfil the rest of his presidential term by passing more reforms. Coincidentally, it will ease pressure from the private sector who want Macri to enact further labour and tax reforms needed for stimulating investment and to lower business costs important for economic progression.

Reforms are clearly important for Macri and his master plans, having mentioned them during his mid-term electoral victory, stating “There are so many reforms we have to do [that] I’m not thinking about 2019 [elections]. Including vowing to reform the country’s retirement system, an amnesty plan for companies and reforms to Argentina’s justice system aimed to combat corruption that has burdened the country for decades.

However, doubts remain over whether the government will be able to deepen its reform agenda because of it facing challenges from an increasing current account deficit and a high fiscal deficit that has forced the government to rely on international credit. Alongside a lack of investment, supposed to have arrived since the implementation of reforms when Macri took office in December 2015, has not yet fully arrived in Argentina.

Despite these doubts, the election results suggest that Macri’s policies are beginning to benefit the Argentine people, especially lower-income households who have opposed his austerity measures so far. Evident by a decrease in the unemployment rate to 8.7% from 9.2% in Q2, alongside the poverty rate falling to 28.6% from 30.3% for 2017 indicating that Macri’s policies have begun to benefit lower-income families. Therefore, it is politically crucial for Macri to continue producing positive growth results to counter any criticism of his reforms that are a key part of his administration.

The Threat from the Past  

An issue for Macri and the politics of Argentina was during the run-up towards the midterm elections with the return of the former left-wing Peronist President, Cristina Fernández de Kirchner, who gained a Senate seat once again after achieving 37.27% of the votes. However, Fernández lost first place to Macri’s right-hand man, Esteban Bullrich, who gained 41.34% of the votes. Her re-election to the Senate means she is entitled to temporary immunity from her prosecution over corruption charges that are currently being investigated.

Fernández used the electoral occasion to declare herself as someone who could lead the opposition against Macri’s government and become a potential candidate in the 2019 presidential elections. Expressing the same anti-Macri rhetoric routine criticising his reform-minded administration, importantly aligning with her most loyal voters of lower/middle-income dissatisfied households who are still feeling the effects of the president’s austerity measures.

“We believe in the need to unite all the different political forces that believe this political and social model of austerity will cause pain to most of the population,” as claimed by Fernández.

While Fernández may applaud herself now, her finishing second for the Senate seat and Macri’s strong electoral victory diminishes her chances of a presidential comeback for 2019. Fundamentally, the former president is becoming politically isolated and more importantly, the Peronist political party has become divided with no clear leader increasing the chances for Macri to be re-elected as president in two years time.

Even some Peronist governors are questioning whether to join Macri’s reform agenda or abandon their political careers enabling Macri to negotiate with a new generation of Peronist politicians and reach political goals together. Exhibiting how Argentina is political evolving and taking a new political path wanted by its people who are taking a chance on business-friendly politics, entrusting Macri’s Cambiemo coalition to do this.

However, the Peronist movement must not be written off given its history and its ability to change with times. Yet, it appears the political faction is fragmented until 2019 alongside it not being able to lean on its predecessor of Fernández for political success. For the former president, the next two years towards the 2019 presidential elections will test how loyal her remaining voters are. Not only burdened by her chaotic and hazy political past for cutting Argentina off from international capital markets and economically isolating the country with vigorous protectionist policies but also for the fact that she is still being investigated for corruption charges. Of which, Fernández’s former chief prosecutor Alejandra Gils Carbo and former Vice President and Economic minister Amado Boudou, were both recently arrested that marks a step towards fighting corruption and erasing its political past.

“People are more confident in the future, the economy, in making investments. They are tired of corruption and populism,” as stated by Cecilia de Francesca, a writer celebrating Macri’s mid-term victory at the Cambiemos campaign headquarters.

Looking Ahead

While Fernández’s re-election for president seems unlikely due to her political career being in decline, her return to politics could be an opportunity to sabotage Macri’s efforts, burdening Macri with unnecessary political headaches.

Alongside this, the decline of the Peronist movement should not be overlooked. So, it is crucial for Macri to utilize the next two years and push forward with more reforms to embody his people with increasing confidence in his pro-market reforms and leadership abilities to solidify his chances of re-election for president in 2019, thus preventing any chance of a backward Peronist return to political leadership.

Most importantly, these historical mid-term elections show there is growing political stability for Argentina. Not only was it a victory for Macri, but also a victory for Argentina is a political turning point by moving away from its Peronist past. Hence, the Argentine people need to see these elections as an important sign by ignoring its tainted political past and move forward together into an era of greater economic and political stability with Macri as their best chance to lead the way.

 

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