Opinions - 20.10.2015 - 00:00 

Argentina: Continuity or change?

On October 25th, Argentinians go to the polls. In a country deeply mistrustful of its own system, the next president would do well in solving the country’s economic issues and depolarizing the social climate. Comment by Nicolas Matthieu and Angélica Rotondaro, HSG Hub São Paulo.
the coast


20 October 2015. When Argentina’s presidential candidates met on October 4th in their country’s first-ever televised debate, the absence of Daniel Scioli, the government’s candidate, captured most of the audience’s attention. Mr. Scioli was previously the country’s vice-president. He had decided not to participate as he considered such events to be an unnecessary series of accusations between presidential candidates.

Political polarization and economic paralysis

The fact, though, that the current frontrunner in opinion polls decided to sit this one out shows the deep trap of political polarization and economic paralysis that Argentina finds itself in today. As Jorge Lanata, a popular talk show master and a vocal critic of the current government put it: “Two don’t fit in one chair.”

Since it became clear that the country’s current president Cristina Fernández de Kirchner and wife of the late Néstor Kirchner would not run for a third term despite her allies’ failed attempt to amend the constitution, the presidential race has been clearly shaping into a vote on continuity or change.

The most popular candidates
The electorate’s most popular candidate according to the latest opinion polls is the government’s candidate Daniel Scioli (Frente para la Victoria – Front for Victory). Mr. Scioli has been a close member of the Kirchners’ inner circle and thus represents continuity. He was previously the country's vice-president in the government of Néstor Kirchner, and is currently the Governor of the Province of Buenos Aires.

The current runner-up is the opposition’s presidential hopeful, the central-right wing Mauricio Macri (Cambiemos – Let’s Change), offspring of a politically influential family and the current Mayor of the City of Buenos Aires. In an uprising third position is the middle class’ long-time favorite Sergio Massa (Frente Renovador – Renewal Front).

In order to be elected in the first round, candidates must have 45% of the votes. As it looks like today, the presidential elections will have to go into a second round scheduled for November 22nd.

Argentina under the Kirchners

As Argentinians flock to the polls, they are repeatedly reminded of their country’s rocky past decade. At almost every corner of Avenida Florida, Buenos Aires’ main shopping street, one might bump into one of the Arbolitos, technically illegal but booming currency trading stands, who offer the Argentinian peso at the black market rate known as the Dólar Blue. When the Big Mac started being less prominently advertised or was sold at a lower price than the other simpler burgers in the country’s many McDonald’s restaurants a few years ago, it became apparent that this had hardly anything to do with Argentinians’ distaste for American fast food culture. Rumor had it that the government had attempted to trick The Economist’s world-famous index to measure purchasing-power parity across countries.

These are only a few of the many reminders of the era Kirchner’s economic policy which has been a posterchild of Viveza criolla, an Argentinian term describing the belief that one could play by its own rules, rather than by those of the rest of the world. Massive state intervention, currency controls and a clampdown on imports have been hallmarks of the government’s program to stabilize the economy and to curb inflation. In 2011 it became public that the German car manufacturer Porsche was forced to export Malbec, an Argentinian red wine, in exchange for importing its high-class cars.

While many parts of Argentina’s society benefited from the government’s lavish subsidies and increase in social welfare programs over the past decade, the fiscal deficit widened to about 5% of GDP. The occasional outbursts with the IMF over the alleged falsification of inflation statistics and a deadlock with “hold-out” bondholders known as vulture funds did not help. 

A country in a difficult situation

Admittedly, the late Néstor Kirchner inherited a country in a difficult situation in 2003. Two years before former President Fernando de la Rúa had to flee in a helicopter because the President’s palace was blocked by angry pot-banging protesters. One year ago, though, Cristina Fernández de Kirchner seemed close to board a chopper too. Argentina had defaulted again on its foreign debt. While foreign-exchange reserves plummeted to their lowest level in eight years and inflation at a record high of 40%, the peso was worth roughly half as much at the Arbolitos of Avenida Florida as at the government’s official exchange rate.

Since then reserves recovered and inflation slowed. Thanks to a currency swap with China and the emission of USD denominated bonds the government cashed in about $7 billion earlier this year. These and other measures seemed to calm down things.

But as the uncertainties over the outcome of the elections are growing and the opposition’s chances of winning the elections are waning, the peso on Avenida Florida weakened this month to its lowest value this year. The economy is expected to contract by about 0.3% in 2015.

In a country with people deeply mistrustful of its own system, institutions and its currency, the next president would do well in both solving the country’s most-pressing economic issues and depolarizing the social climate. Televised debates serve after all as a platform and chance for the voters to compare and choose among the candidates who best unleash a country’s potential. After 12 years of the Kirchners in power, Argentinians should have deserved this opportunity.

Picture: Photocase / 50Centimos

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