Monday, November 23, 2015

Macri's election ushers in a new market friendly era for Argentina (Nov. 23, 2015)

Voters in Argentina voted for change after 12 years of Kirchner governments. Mauricio Macri, the conservative mayor of Buenos Aires won by a narrow margin of almost three points over the government-backed candidate Daniel Scioli, reports La Nación.

Macri garnered 51.4 percent of the votes in yesterday's run-off election, adding 17 points to his election results in October, where he came in a close second to Scioli. The relatively close results show a deeply polarized country however. Macri supporters generally emphasized the need for change (in fact, that was the name of his coalition) while his opponents worry about the impact of market friendly policies.

"Today is a historic day," Macri told supporters last night. "We need to build an Argentina with zero poverty. A marvelous phase is beginning for Argentina." Macri's speech last night was unconfrontational and light on policy, as has been his campaign in general, reported the New York Times earlier this weekend.

It marks the end of an era which rewrote the country's social contract, says the Associated Press, and ushers in a period of a more free market course with less state intervention in the economy.

The Wall Street Journal says the winner's platform resonated with an electorate weary of a stagnant economy and high inflation.

It's the beginning of a major shift in regional politics, according to the Washington Post which says the Kirchners' protectionist policies and anti-American rhetoric isolated Argentina and diminished its influence in the hemisphere. (A very debatable stance.)

The stunning opposition victory marks a major shift in Latin American politics, ending a dozen years of leftist rule, first by Nestor Kirchner and then his wife, Cristina Fernández de Kirchner, a tenure marked by increasingly fiery anti-American rhetoric and protectionist policies that isolated Argentina and diminished its influence in the hemisphere.

In their victory speeches last night both Macri and the vice-president elect sought to assure citizens that they will seek to reduce poverty, responding to a key fear that the new right wing government will end 12 years of expanded social welfare policies.

The pro-business president elect promises to implement market friendly reforms however, and to strengthen the country's relationship with the United States, reports the Associated Press. But Macri inherits a complicated economic panorama. Inflation is pushing 30 percent, economic growth nearly nil and social spending is unsustainable, according to economists cited in the piece.

Macri has been vague on specific proposals but has said he would make government more “intelligent” and reduce a fiscal deficit that is expected to reach 7% this year, a reflection of Kirchner’s election-year spending, reports the Los Angeles Times.

Macri has promised to immediately lift unpopular controls on the purchase of U.S. dollars and thus eliminate a booming black market for currency exchange. Doing that would likely lead to a sharp devaluation of the peso, with serious social impact, warns pro-government economist Alfredo Zaiat in Página 12.

While the electorate might be divided, investors certainly aren't, reports Bloomberg, which says that their excitement is "tangible." Markets have been rallying in anticipation of a Macri victory, and he has said that settling outstanding debts with defaulted sovereign debt holders will be a priority. 

Macri, who won the backing of the farm lobby with a broad free-market platform, has promised to eliminate corn and wheat export taxes and ditch the quota system that controls international shipments of both crops, reports Reuters. The move would eliminate export taxes put in place to ensure domestic food supplies at cheap prices.

But things might get worst before they get better, warns the Bloomberg piece. (Isn't that what advocates of neoliberal policies always seem to say?) Tough measures such as budget cuts and a devaluation of the peso are expected, Oxford Economics says gross domestic product will likely contract the next two years before rebounding to post growth of more than 5 percent by 2019, according to Bloomberg.

Many voters expressed fatigue with President Cristina Fernández de Kirchner's style of governance and reports of widespread corruption among officials, reports the New York Times. Macri's bid was strengthened by a door-to-door campaign that seems to have convinced voters in key districts in October's election. (See Oct. 26th's post.)

Opposition victory in the Peronist stronghold of the province of Buenos Aires, governed by Scioli for the past eight years, was also a determining factor in tilting the election in Macri's direction, reports Página 12. He confirms a long running trend of governors of the province, Argentina's most populous, who fail in their presidential bids.

On a foreign policy Macri promises a radical change away from Venezuela, and is expected to draw the country closer to market friendly government's in the region like Mexico, Chile and Colombia. (See Friday's briefs.) This morning he already said he'd seek Venezuela's suspension from South America's Mercosur trade bloc because of accusations of rights abuses committed by President Nicolas Maduro's socialist government, reports Reuters. The Washington Post reports that Lilian Tintori, the wife of jailed Venezuelan opposition leader Leopoldo Lopez, showed up at Macri's victory celebration.

The New York Times has a feature on Andy Tow, a statistician star in Argentina whose maps and programs aggregating electoral and political data became increasingly prominent during the long presidential campaign.

News Briefs

  • Venezuela's opposition said shots were fired at one of its candidates' campaign caravan in a poor neighborhood of Caracas yesterday. The allegations come amid rising tension ahead of the Dec. 6 National Assembly election in which the government is widely expected to lose its majority, reports Reuters.
  • A a coalition of Venezuelan NGO's has presented a new electronic platform to harness citizen monitoring of the "6D" elections: Guachiman Electoral (Electoral Watchman). The program allows people to send denunciations directly on the webpage, through Twitter, text message, or WhatsApp. If the complaint contains the required information it is registered on a map of Venezuela, which reflects if it has been confirmed or not. It is "perhaps the most important innovation in domestic observation," say David Smilde and Michael McCarthy at Venezuelan Politics and Human Rights. They also review a number of highly-competent non-governmental organizations working on electoral issues in Venezuela, noting that they will send observers to locations of their choosing. 
  • While Smilde and McCarthy paint an interesting and nuanced picture of Venezuelan civil society and why the government is likely to respect the results (see last Wednesday's post), other commentators are far more negative. Last Friday's edition of the InterAmerican Dialogue's Latin America Advisor asks experts whether Venezuela's election will be free and fair. Experts who responded say the playing field is already very stacked in the direction of the government and note the lack of international observers who could lend credibility to the process. It is important that the UNASUR accompaniment mission (see Oct. 21st's post) establish itself as a credible interlocutor says Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution. " ... There is a significant possibility that the opposition will underperform its polling numbers," he says. "In a country that is highly polarized and where only a third of the population has confidence in the electoral authorities, such an outcome, especially if the gap between polls and announced results is large, is likely to be interpreted as fraud."
  • The 6D elections will be the most undemocratic in the region, with the possible exception of Cuba, yet the opposition is expected to win by a landslide, says the Miami Herald's Andrés Oppenheimer
  • So far this year, 125 policemen have been killed in Venezuela. In many cases their vehicles, body armor and weapons make them targets of crime in a country where access to guns is theoretically highly regulated, reports the Miami Herald.
  • As a measure of goodwill, the Colombian government says it will pardon 30 Farc guerrillas who are currently serving sentences in prisons across the country. The move was intended as a confidence-building measure in its peace talks with the rebel group, reports the BBC. In an effort to speed peace talks President Juan Manuel Santos sent his brother to privately meet with FARC rebel leader "Timochenko," according to Colombia Reports. Santos has said he will face major political problems if the Colombian people reject a peace agreement being negotiated with the Farc rebel group, reports the BBC separately. A peace accord will be signed in March 2016, putting an end to more than five decades of conflict. However, the agreement will not become valid until the Colombian population has voted on it. Last week the Senate decided that citizens will have the option to approve or reject to an eventual peace deal with FARC rebels with a plebiscite, according to Colombia Reports.
  • The controversial front-runner in Haiti's presidential elections last month, government backed Jovenel Moise, defended the process in a Miami visit this weekend, rejecting opposition allegations of fraud, reports the Miami Herald "Of all the candidates, I am the only one who had a program," said Moise, a serial entrepreneur who is now in the banana exporting business. The accusations have triggered a post-electoral crisis and growing protests. (See Thursday's post.)
  • Central American foreign ministers are expected to meet tomorrow to take up the issue of approximately 2,000 Cuban refugees who are stuck in Costa Rica after Nicaragua denied them permission to travel through the country on their way to the United States, reports the Associated Press. (See Nov. 16th's post.) Costa Rica said Friday it will keep giving transit visas to U.S.-bound Cuban migrants despite the border row, reports AFP. In the meantime the backlog of refugees in Costa Rica has filled seven shelters around the country and continues to grow. VICE reports that the Costa Rican foreign minister wants to wants to negotiate a "humanitarian corridor" allowing Cubans to legally travel through the nine Latin Americans nations on their route to the U.S.: Ecuador, Colombia, Panama, Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala, and Mexico.
  • At the heart of the situation are conflicting Cuban and U.S. laws, explains the Miami Herald. A few years ago the Cuban government changed its migration policy, eliminating the exit visa and permitting citizens to move more freely. In the meantime, the U.S. maintains its preferencial migration policy towards Cubans, which grants them fast-track access to permanent residency, no matter how they get to U.S. soil. Because of changes in Cuban law, Cubans who receive residency within a year of getting to the U.S. can even travel back and forth between the two countries, leading many to question the preferential treatment they receive by U.S. law.
  • Guatemala's Congress has approved reforms regarding how the government awards and issues service contracts, reports InSight Crime. The modifications aim to improve transparency in state contracting, in the wake of corruption scandals that rocked the political establishment this year and led to the early resignation of former President Otto Pérez Molina in September. The reforms limit Congressional representatives and family members from bidding for state contracts and also place restrictions upon political party and electoral campaign financiers to participate in bids. 
  • InSight Crime also has an English translation of El Faro's interview with CICIG head Iván Velásquez who says there has been a transformation in Guatemala this year. "Since April, the mobilization of society, the reaction after the customs fraud case of La Linea was revealed, led to a social awakening. At first this was expressed in almost a completely spontaneous way, and which soon began creating enough levels of coordination -- although without much preparation -- that certain actors began talking amongst themselves. ... This has been greatly beneficial for the country, having a common cause, because there has been much division within civil society and among people who view others' activities with mistrust. The issue of corruption managed to bring people together for nearly 20 weeks, leading to what you could call public manifestations en masse in a country that has experienced a lot of apathy."
  • A startling turnaround in the Dominican Republic's homicide rate -- numbers are at the lowest they've been in years -- might reflect a strengthening of organized crime there, reports InSight Crime. While the numbers might represent a success of a strategy that has deployed the military alongside police in high-crime areas, external studies say this is unlikely. Another explanation might be a "Pax Policia" (a play on Pax Mafiosa), says sociologist Lilian Bobea, who proposes that corrupt security forces have managed, for the most part, to subjugate petty criminals, resulting in less violence by authorities. It might be the calm before the storm, however, says InSight, noting that given the dominance of cocaine smuggling cartels in the area, its only a matter of time before crime starts creeping up again.
  • Lawmakers in the Parliamentary Front Against Hunger in Latin America and the Caribbean have decided to work as a bloc for the passage of laws on food security – an area in which countries in the region have show uneven progress reports InterPress Service.

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