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A New Stage for Argentina?

Walter Russell Mead

Capping off a surprisingly strong performance in first-round voting, center-right opposition candidate Mauricio Macri won Argentina’s presidential election last night. Macri’s victory is good news—but his problems are just beginning and the country isn’t out of the woods. Bloomberg reports on the election:

The candidate of the ruling party, Daniel Scioli, conceded defeat and called Macri to congratulate him. With more than 98 percent of the ballots counted, Macri had 51.5 percent, while Scioli followed with 48.5 percent, according to the National Electoral Council.

At Macri’s headquarters late on Sunday, cumbia music boomed, balloons were released and supporters danced and cheered for “Macri Presidente.” Ernesto Sanz, a lawmaker and ally, said, “Argentina won’t be the same starting tonight.”

“A wonderful new stage begins for Argentina,” Macri told his supporters in his victory speech.

The 56-year-old mayor of Buenos Aires is a wealthy businessman and former head of one of the country’s most popular soccer teams. He has promised to lift currency controls and negotiate with hedge fund creditors to boost investor confidence amid the lowest reserves in nine years. He will also focus on cutting inflation, fixing the largest fiscal deficit in 30 years and luring back international investment dollars.

For much of the past seventy years, Argentina has been cursed by its seventy-year fixation with a deeply corrupt, anti-liberal Peronist movement. Since 2001, the country has been ruled by the Peronist Kirchner dynasty—first husband and then wife. Macri’s win, which represents a shift away from the ineffective populism that afflicts many Latin American states, is a promising development.

But there will be a lot of resistance to any reforms that Macri hopes to pursue. The deep state and the inner structure of many of the country’s most powerful institutions — labor unions (both public and private sector), state-owned enterprises, the bureaucracies, political parties, and so on — remain staunchly Peronist. These organizations depend on the corrupt, clientalist politics and influence peddling that constitute the backbone of Peronist politics, and they will surely fight a war of attrition against Macri. Peronist ideas—reflexive anti-capitalism and anti-Americanism, for example—are deeply embedded in Argentine psychology and culture. That’s going to make it hard for Macri to succeed; he will be fighting his own state much of the time. That the majority of both houses in the country’s Congress remain Peronist only makes Macri’s agenda even more difficult to pursue (at least until the next elections in 2017).

And as if that balance of power challenge isn’t enough, the economic mess that propelled Macri’s victory will also—eventually—become his responsibility. Low commodity prices mean Argentina’s oil and agricultural exports can’t bring in enough money to drive a recovery on their own. Macri will surely try to resolve disputes with creditors and introduce more transparent rules that encourage foreign investment, but, as in Greece, much of the country will fight the measures that creditors impose. The trick will be to develop a reform agenda that works, but that isn’t so threatening to vested interests that it drives the Peronist Congressional majority into a united opposition. Macri will have to build bridges to moderates and reformers (and there are some) in Peronist ranks.

However great the challenge, success would be enormously consequential. If he can make reforms work and if ordinary Argentines see their living standards rise under his leadership, Macri has a chance to open a new chapter in Argentine history. At long last, the country could begin to put the disasters and the horrors of a lost century behind it. But it won’t be easy. His electoral majority, though real, was slender. The world economy is looking a little shaky. His enemies will continue the fight against him.

The United States government should care about his success. A turn for the better in Argentina would send a powerful signal across Latin America, where one Leftist regime after another is sinking into the mire of failed populism. Helping Macri succeed is a way to help the western hemisphere become a wealthier and happier place. That’s important in a world as shaky and dangerous as the one we live in today.

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