Argentina’s Re-elected President and the Road Ahead
The Latin American nation of Argentina held
its National Presidential and Legislative elections on October 23, 2011. The
results of these elections were along expected lines, given the wave of
populist sentiment the current Government managed to whip up in the run up to
the elections. The incumbent President Christina Fernandez de Kirchner has
managed to secure a second consecutive term in office after the Front for
Victory (FpV) marginally captured over half the seats in the National Congress.
Headed by the President, the Front for Victory (FpV) is a coalition party which
includes allies like the New Encounter. It is based on the factions of the
centre-left Justicialist Party (PJ) that presently owe allegiance to the ruling
Government. Fernandez has charted a chequered path, paving the way to her
re-election. In 2008, she had suffered a noteworthy decline in support as a
consequence of the prolonged imbroglio between the Government and the
under-fire agricultural sector. The recessionary situation and the global
economic meltdown only amplified her problems. In fact, the reigning Front for
Victory (FpV) Government suffered the ignominy of losing its absolute majority in
both the houses of Congress during the June 2009 mid term elections. However,
Fernandez has managed to stage a gallant albeit gradual recovery in the period
following her Government’s mid term debacle that has eventually culminated in
her winning her second consecutive term in office.
There are numerous plausible factors that
have collectively connived and manifested themselves at the right time to
contribute to Fernandez’s re-election. A year ago, on October 27, 2011; with
her Government under relentless pressure; Fernandez’s husband, Nestor Kirchner
died of a sudden heart attack. Kirchner was Argentina’s President before his
enterprising and politically savvy wife succeeded him in office. Many believed
that Fernandez had lost her grip on power and her appetite for another tenure
in public office following the death of her husband and most trusted political
aide. However, Fernandez displayed remarkable poise and drive as she put aside
her personal grief to focus on her Government’s performance and Presidential
campaign with renewed vigour. One would be naïve to dismiss the fact that the
death of her husband – a much respected and influential Statesman – certainly
won her a veritable degree of sympathy from myriad quarters. Suffice to say,
the extraneous element of luck has undoubtedly played a role in her
re-election. However, the Kirchners at large have been remarkably fortunate
during their respective Presidential tenures.
It was in the tumultuous year of 2001 that
the then moderately developing state of Argentina slipped off the precipice
to land itself in a severe debt crisis. Poverty and unemployment soared as the
nation and economy per se failed to find a modicum of stability. Five
Presidents were elected within a brief period of three years as the country
continued to lurch further into the abyss of pressing economic crises. It was
one of these temporary Presidents, Eduardo Duhalde that actually succeeded in
stemming the rot to a certain extent. Through a sound mix of fiscal and
monetary policies coupled with the devaluation of the Peso that was fixed on
par with the US Dollar until 2001 and a renewed emphasis on exports, Duhalde
managed to put the Argentinean economy on a relatively stable path of
progression. However, his year long tenure soon came to an end as he was then
succeeded by the late Nestor Kirchner (then the Governor of the Province of Santa Cruz) in 2003. The long term
economic and political benefits of Duhalde’s sound developmental strategies
were eventually reaped by first Kirchner and then his wife, Christina
Fernandez. On account of “inheriting” an economy in improving shape, their task
was probably made easier. Fernandez was also aided by the fact that there
suddenly was an enhanced demand for farm exports that commanded higher prices
in the market and a rapidly burgeoning “next door economy” in the form of Brazil. The
mutually beneficial “cross-regional growth effect” stimulated the Argentinean
economy as its exports sector boomed. 
To placate an impoverished population
fuelled by angst that had displayed a well documented proclivity to rise in
protest against the Government and its perceived apathy, Fernandez focused her
attention on expansionary policies. Robust socio-economic progression and Job
creation became her cornerstones of ensuing political success. Although
inflation continued to escalate at an alarming rate (and still continues to
rise. It is presently in the vicinity of about 20%), the Argentinean economy
has bounded to register a GDP growth rate of 9.2% in 2010. Many believe that
the Government has often resorted to doctoring the figures to suit their needs.
However, the veracity of those claims or alleged rumours remains questionable
in the absence of substantial evidence. Thus, her carefully calibrated populist
measures have certainly gone some way in winning her approval and favour,
especially from the lower income strata of society. She has also attempted to
ease inflationary pressures on her populace through welfare schemes, state
sponsored subsidies and marginal wage rises. Christina Fernandez may have made
her way back to the Presidential office riding on a wave of luck, positive
sentiment fuelled by populist people-centric measures and sympathy garnered due
to her bereavement. However, undeniable is the fact that she does possess the
requisite political skill, diplomatic wherewithal and personal leverage to make
her second tenure count. However, recent figures are clearly indicative of the
fact that economic development is stuttering and industrial performance is
slowing down, especially in the wake of the global economic slowdown at large.
A new tenure demands a fresh approach to
policy formulation, especially in the current global economic scenario. The
present rapid growth and expansionary policies are beginning to catch up with
the economy, what with Argentina
struggling to meet its fiscal deficit targets. There also needs to be a
detailed review with regards to the numerous subsidies the Government presently
offers, that amount to almost 5% of the GDP. There is a fine line between
treading the populist path and hampering long term economic progression by
placing undue stress on the economic infrastructure. A renewed focus on
attracting greater FDI, encouraging proactive private sector partnerships in
critical sectors and gradually reducing widespread Government intervention
should also be looked at from a more discerning lens. The road ahead appears
daunting…fraught with obstacles. However, it remains to be seen whether
Christina Fernandez learns from her previous follies and embraces a more
balanced approach towards holistic inclusive growth. Populist measures can be
relegated to the back burner for now. The need of the hour is structural
economic reforms and privatization drives to stimulate greater demand and
counter rising inflation.
Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.
