Latin America Advisor

A Daily Publication of The Dialogue

Is Argentina on the Right Path as Fernández Seeks Re-Election?

Q: Argentine President Cristina Fernández de Kirchner has a massive 40-point lead ahead of her nearest rival leading up to the country's Oct. 23 presidential election, according to a Sept. 14 survey by local polling group Management & Fit. However, Inter-American Dialogue senior fellow Claudio Loser said in a Sept. 29 column in the Advisor that capital flight has continued, and added the country is "taking discriminatory actions against its trading partners" and has "strong evidence of corruption and crony-capitalism close to power." Is the country on the right track or the wrong one? How will the Fernández administration's policies affect the country's economy and businesses in the long-run? Why does Fernández have such strong support headed into the election?

A: Eduardo Amadeo, Judicialist Party member of Argentina's Congress and former ambassador of Argentina to the United States: "Mrs. Kirchner's support is based primarily on the strong economic cycle that has generated an unprecedented level of consumption and job creation. Also, she has expanded social expenditures to a level never before known in Argentina, which assures the support of the poorest of the population. The future steps of the eventual government of Mrs. Kirchner are hard to predict. There is no doubt about the current high level of corruption and crony capitalism of the government; the question is whether she really can stop it. The economic situation has changed for the worse: the pillars of the model twin surpluses have vanished, and therefore her main challenge is to obtain the needed financing to keep the economy moving without crises. It is also uncertain what Mrs. Kirchner is going to do with the high level of inflation, which to date has been denied by her government. In a more complex economic world, Mrs. Kirchner must give clear indications on whether she is going to reduce the level of conflict with the outside world, assure respect for basic institutions and have a predictable economic path if she wants to sustain the level of investment and financing the country badly needs."

A: Juan Cruz Díaz, managing director of Cefeidas Group in Buenos Aires: "To explain CFK's strong popular support, we need to look at Argentina's economic performance. The International Monetary Fund recently said Argentina is among the countries with the highest growth and lowest unemployment rates in the region. Such positive results have been shown consistently throughout the past eight years. In analyzing CFK's popularity, the perception and expectations of the economy are just as, if not more, important as the actual economic performance. According UCA-Gallup's economic expectations index, positive expectations for income and employment have grown. For example, when asked about their expectations for the next six months, most respondents replied 'will be better than now,' and the number of people in agreement with that phrase has grown from August 2010. Furthermore, the social policies implemented by the CFK administration, such as the Universal Allocation per Child, among others, also impact a large sector of society, the lower-middle and poor classes, thus gaining their support. We cannot predict the future, but we can try to comprehend and explain political and economic processes. In order to understand and effectively analyze the realities of Argentina, or any given country, independent analysts need to let go of their personal positions, past experiences and individual desires or ideologies. For the past eight years, independent analysts have repeatedly failed to explain Argentina's economic, political and social performance. The economic problems of Argentina, of which there are many, are less critical than those of 1983, 1989 or 2001-2003. Argentina has serious issues to face, such as the distortion of subsidies, fixed utility costs, inflation and credibility of official statistics. Also, the country has a serious political challenge, which is the opposition's lack of imagination and courage to present solid alternatives that contribute to a republican equilibrium. If we analyze the political, economic and social realities in a responsible and less-alarmist manner, we will be better equipped to inform the decision-making processes in both public and private sectors."

A: Bruce M. Bagley, professor and chair of the Department of International Studies at the University of Miami: "Cristina has presided over a buoyant economy with low unemployment and generalized prosperity for years. The Argentines remember the bad old days at the outset of the 2000s and have embraced her policies. She is an attractive and charismatic leader of the majority Peronista party and the widow of the popular former President Néstor Kirchner. She is 40 points ahead in the polls as a result. Corruption and cronyism are deep and widespread in her administration, as they have been in all Argentine governments in memory. Drugs and crime are growing problems. The prosperity wave she is riding may burst in the not-so-distant future. But at this point, there is no candidate or party capable of mounting a serious challenge to her re-election for a second term."

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