TCS Daily

Argentina's Ailment

By Raphael C. Rosen - October 31, 2007 12:00 AM

The next president is the wife of a former president. Yes, their story is familiar by now. The couple met in law school. He became governor of a politically backwater state, before winning election to the nation's highest office on an unimpressive plurality. She then handily won the presidency from her post as the junior Senator from Buenos Aires.

Forgive yourself the confusion. For the law school is not Yale but La Plata. The governorship is not of Arkansas but of Santa Cruz. The president is not Clinton but Kirchner.

The eerie similarities, however, between Argentina's president-elect Cristina Kirchner, who swept to a convincing victory on Sunday night, and Democratic front-runner Hillary Clinton end there. While Hillary has faced criticism and scrutiny regarding her positions on issues running the gamut from Iraq to health care to climate change, Cristina has participated in neither interview nor press conference nor public debate during the entire length of her campaign (a week ago, she provided her first and only two domestic interviews, revealing little about her policies). Moreover, while the billion-dollar American presidential race has sent Hillary traversing the union for a year already with another full year remaining, Cristina has visited rather different states: Mexico, Spain, Germany, Austria, France and the US, eschewing the very nation in which she sought victory. An impressive feat especially given that she announced her candidacy in July, a mere Argentine winter before the election.

Kirchner's facile election reveals a lot about the worrisome state of Argentinean democracy and provides the opportunity to appreciate the relative health of America's.

For all is not well in Argentina. So uncompetitive was the presidential race and so little about her politics did Cristina share, that coronation not election most accurately describes her new-found authority. Gallivanting around the globe during the height of the campaign season, she hobnobbed with foreign dignitaries and financiers. With nonchalance, she informed them she would be the next Argentinean president. In Spain, she even deigned to hold a press conference—but barred Argentine journalists. When Spanish journalists asked her what she would do about Argentina's looming energy crisis, she simply offered nebulous promises that Argentina would overcome the difficulties.

Her global hubris-tour complements the name of her political party (founded by her husband): the Front for Victory. A Peronist populist, Cristina unsurprisingly desires to be known as "the first citizen," a sobriquet unintentionally but disturbingly recalling Maximilian Robespierre's "the first citizen of the republic"—with the people a distant second. She is not afraid of power, especially when it is her own or her husband's. While in the senate in 2006, she gave a televised, two-hour address calling upon Congress to cede more powers to her husband, the president. Previously, when in the opposition and with her husband not occupying the presidential palace, Cristina had denounced the idea.

All of this is unsurprising given the track record of her husband, Nestor Kirchner. From him, Cristina inherits a deeply troubled nation. From him, who never gave a press conference during his four years in office, she developed her media strategy.

Nestor Kirchner did what he had to do, his defenders claim. Indeed, it is true that Argentina's institutions are weak and its parties ever splintering. After the 2001 financial crisis, the people desired a strong president. They received one.

In the course of his presidency, Nestor Kirchner has violated every separation of powers principle that any American fourth grader knows by heart. He obtained the power to allocate funds without going through Congress. He replaced judges on the nation's Supreme Court and obtained a de facto veto over all new Court appointees. His government controlled and distorted economic statistics, and has been accused of censoring the press as well. Politicians from the Front for Victory, as well as other parties, do not hesitate to pay denizens of Buenos Aires's worst shanty towns 50 pesos to come out to rallies in support of their candidates.

Unsurprisingly, with such sprawling unchecked power, cases of corruption have recently come to light, despite government interference. Argentina's finance minister was found with $60,000 squirreled away in her office bathroom. Government oil officials flying from Venezuela to Argentina on an Argentine State Oil company jet were found carrying a suitcase with some $800,000 of undeclared cash.

Why then, have the Argentinean people stood stalwartly behind such bald perversions of democracy?

It's the economy, stupid. When Argentina defaulted on some $80 billion in debt in 2001, that nation's economy faced a monumental crisis even by its own chaotic historical standards. The economy in 2002 had shrunk to its 1993 size. Debt was 130% of GDP, unemployment crept up to 20%, and the poverty rate was an astonishing 54%. All this in a nation that in the early 20th century, thanks to beef and hide exports and a laissez faire approach to immigration and land cultivation, ranked as one of the wealthiest in the world.

Under Kirchner's four years in office the country has witnessed a precipitous economic boom. Since 2002, the economy has doubled, growing 8% annually. Strong global demand for Argentina's soybeans and other agricultural items have been a further boon. The poverty rate has been slashed. Cranes rise as far as the eye can see and construction sites can be found on nearly every block across Buenos Aires. One could easily conclude that the recent weakening of democracy was only a temporary but necessary stop-gap to get the economy rolling again.

Tragically, this is not the case. The current state of affairs looks all too familiar. For some seventy years now, Argentina has gone through an agonizing cycle of economic collapse, rapid, export-led recovery, wild inflation, shrinking government surpluses and eventually, a new economic withering. And the warning signs of a coming Argentinean economic malaise are everywhere.

The official government statistics peg annual inflation at between 8-10%. But outside economists believe see it at least twice as high, with some estimates reaching 30%. The higher numbers are almost certainly more accurate: even the workers at the official government statistics bureau, INDEC, have held protests accusing the government of distorting the data. As economist Carlos Rodriquez Braun has observed, "The government is not trying to control inflation, it is only controlling the figures on inflation."

A quick trip to the grocery store provides a taste of the problems. Many Argentines I spoke with complain about the price of potatoes, a local staple. The price shot up some 40% in a single month and has more than doubled over the course of the year. Tomato prices have tripled form 2 pesos per kilogram to 6 pesos. Much of this increase stems from inclement weather and demand increases, but even as these factors have subsided prices have shown no tendency to return their original levels. Looking at guidebooks to Buenos Aires from only a few years ago show that prices for (even tourist-free) restaurants, cafes, movie theaters, and clothing stores have all sizably increased.

Meanwhile, Cristina Kirchner faces a shrinking budget surplus, an obstacle that no populist government has overcome since Peron brought about the Argentine welfare state. The more the government hands out—which it must to appease its constituents—the worse inflation becomes and the worse the budget constraints become, depleting what had been steadily accruing foreign reserves. All the while, of course, the concentration of power in a single executive upon whom millions depend further wears away at the country's thinning democracy.

Without sapient adjustments to the current economic strategy—or perhaps even with them—the time for a slowdown or even a crash is overdue. The explosive global economy may permit an unusually long boom, but sooner rather than later the Argentinean economy will catch up with the president-elect.

Cristina has therefore won the responsibility of steering a very optimistic boat through decidedly miserable waters. Inflation, an energy crunch, and spiraling violence will besiege her in a matter of months if not weeks. Her election to the presidency without proffering even a hair-brained solution to these issues bodes ill for what ought to be a very robust and wealthy democracy.

"The truth is, and many of my friends feel this way, that there is no candidate who excites me," one Buenos Aires resident told me. One could easily hear such words across the political spectrum in the United States. Yet, while an American voter may feel disappointed with the presidential candidates' proposals, the new president of Argentina has no proposals at all. In a nation torn amongst its fears of the state, of economic collapse, and of a criminal underclass, the people have chosen not to rock the boat in the hopes that a continued imperial presidency will steer the nation clear of economic ills that have plagued the country like a steady tide. Sadly, the undulations of history loom large and tempestuous, and they are already visible.

Raphael Rosen, a freelance writer living in Buenos Aires, holds degrees from Cambridge and Harvard, where he studied history.


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