The Other Shoe Drops

Following the bloody dictatorships that spread across the region in the 1970s, and after a decade of financial tailspin beginning with the 1982 foreign debt crisis, in the 1990s, Latin America came to embrace globalization as the path to economic growth and modernization. As pro-market reforms, lowered tariffs, and free capital movement became global policy standard, peripheral countries were “invited,” often forcibly, to join the club.

But the financial crisis of 2008 threw a wet blanket over fantasies of a new globalized economic order, but the emergence of a new wave of regional progressive governments had already started to chart a separate path some years before. Without being able to fully reverse the dependent nature of peripheral economies, these center-left coalitions embarked on a process of income redistribution built in part on the windfall from a commodity boom. The result, almost across the board, meant a reduction in poverty and inequality levels, although social indicators still lagged behind those of most developed countries.

The improved standard of living for Latin America’s masses also raised expectations for the future, but policies promoting upward social mobility eventually became problematic for progressive governments as they entered a phase of economic stagnation and declining growth. Many one-time beneficiaries — the Latin American middle class in particular — failed to see the connection between decades of progressive redistributive policies and their own expectations for future prosperity.

This narrative seems to be one way of understanding 2015, the watershed year when the Pink Tide began to recede. The neoliberal triumph of Mauricio Macri in Argentina that year was followed shortly afterward by the election of Pedro Pablo Kuczynski in Peru, the impeachment of Dilma Rousseff in Brazil, the crisis in Venezuela, the rise of Jair Bolsonaro, and Sebastián Piñera’s return to power in Chile.

Macri’s Rude Awakening

Mauricio Macri took office in 2015 after narrowly defeating Peronist candidate Daniel Scioli in runoff elections. “Zero poverty” was the government motto for an administration presenting itself as the solution for “seventy years of populist mismanagement.” But rather than achieving “zero poverty,” Macri leaves office on December 10 with nearly 40 percent of the population living below the poverty line.

Rabidly anti-populist (read: anti-Peronist), coming from an elite class background with the blessings of the world’s core financial institutions, plus degrees from Ivy League universities, Macri’s attachment to an outmoded free-market globalism was particularly incongruent with Argentina’s place in the global economy.

To understand why, it is important to review some recent history. Following the country’s 2001 financial crisis, Argentina experienced a period of robust economic growth between 2003 and 2011. That decade was marked by improved income redistribution and, with it, a rise in the standard of living for popular sectors. Three successive Kirchnerist administrations effectively set the bar for future expectations: sustained economic growth and improvements in material well-being had become, in the intervening years, a near universal social demand.

At the same time, the Kirchners came to power in the midst of an enormous political legitimacy crisis — part and parcel of the 2001 financial crisis. They managed to effectively restore faith in institutional politics, laying the foundation for a formidable level of political organization in both government and civil society. This encompassed a vibrant, mostly young collection of organizations, for the most part grouped within the Peronist Party and marching under the banner of Cristina Fernández, as well as a reinvigorated trade-union movement, and a crop of new social movements that organized the long-neglected sector of workers based in the informal economy.

Macri’s first years in office thus had to reckon with a politically organized and confident civil society. This meant that, even while liberalizing the economy, structural reforms remained relatively limited and the fiscal deficit was not reduced — at least until 2018. When the government did begin to reduce the fiscal deficit, it was largely a debt-fueled policy: Macri’s administration would settle with the so-called “vulture funds” — bondholders pressing for full payment on repackaged debt obligations — and obtain short-term credits to buoy public spending. However, by 2018, international lenders had begun to lose patience, unhappy with the pace of the promised economic reforms; Argentina therefore went to the IMF, effectively reversing Kirchner’s decision in 2005 to cut all ties with the organization.

At the same time as Macri’s economic policy had run into the reality of a hostile global climate, his political ambitions were hitting a barrier. Argentines were ill disposed to accept a fall in real wages, even if, according to government spokespersons, that would mean a boost to exports. The country had already endured a round of savage structural reforms in 1990s — and seen that system’s collapse in 2001. Argentines knew better: IMF bailouts, pension system reform, and cuts to wages would not go unnoticed.

And so when Macri attempted to vote through unpopular austerity measure in Congress, or when sectoral wage negotiations became particularly gridlocked, the streets of Buenos Aires overflowed with demonstrators. And in 2018, when the crisis became increasingly acute, a widespread feeling of frustration began to wash over Argentine society.

The Triumph of Realpolitik

Primary elections in August 2019 were the first official measure of that growing discontent. To the shock of many who had predicted a tight election, Alberto Fernández swept that contest with 47.8 percent of the vote, while Macri took a dismal 31.8 percent.

Early analysis of those results suggested that the economic downturn had been determinant. While no doubt true, the political dimension of that victory has received insufficient analysis.

Fernández’s and Kirchner’s Frente de Todos (Everyone’s Front) was notably effective in establishing itself as a political reference point in which competing particularist demands — feminism, labor, leftists, but also business and middle-class concerns — could be articulated under the banner of a broader political identity that transcended them. This was possible because the retreat of the Pink Tide served as a wake-up call: there was a need for political maturity, meaning that the Kirchnerist faithful and their rivals at the political center needed to set aside their own political ambitions and present a viable, progressive option for the Argentine electorate. Thus, the Frente de Todos managed to reunite a long-fragmented Peronist party while incorporating other, adjacent center-left currents, all in a bid to establish a broad-based national party that could simultaneously be receptive to particular sociocultural demands.

Cristina Fernández de Kirchner herself led the charge in this call to set aside old quarrels in the name of defeating Macri. The two-time president was indeed leading every poll in early 2019, but it was also growing clear that she would be facing an uphill battle to win elections; even more significantly, the magnitude of the looming economic crisis would require working with large governing majorities and forming political alliances. Her choice to run as vice president alongside Alberto Fernández, an on-again-off-again political comrade and rival, was thus a bold message and a masterstroke of political strategy: a clear statement of intent to form the most competitive political alternative to Macri in the face of the impending economic crisis.

The Day After the Day After

October’s general elections proved somewhat disappointing for those who expected a victory as resounding as the primaries. Although Fernández won a similar number of votes, and indeed easily took the presidency in the first round, Macri posted a healthy 40.3 percent. The fact that Macri’s support could rebound, and at a time when the economy was in fact doing worse than ever, is enough to give pause.

In the context of the economic stagnation that his government oversaw, Macri’s electoral performance is respectable. His conservative coalition will go forward as the main opposition, and will spend the next four years gathering strength in the hopes of reconquering government. The rebranded Macrista vehicle Juntos por el Cambio (Together for Change) will feel more emboldened than ever. A true novelty in Argentina, Macri and his associates have managed to form an unprecedented, lasting, and competitive center-right political alternative that, most important, can compete toe to toe with Peronism.

Macri’s self-defined “democratic” and “modern” right, however, already began to pursue a harder social authoritarian line as the crisis began to deepen. Now, the fact that fledgling far-right parties (both neoliberal and ultraconservative) won five percentage points at the last election suggests the viability of a further rightward drift for Juntos por el Cambio.

As in so many other parts of Latin America where the evangelical right has fused with the mainstream neoliberal agenda (the coup in Bolivia being only the most recent example), a war against the so-called “gender ideology” has become a hobbyhorse of Argentina’s far right. On that point, Macri’s political evolution has been illustrative: whereas early on he sought to flaunt his liberal credentials by hosting abortion debates in Congress, he has more recently warmed to social conservatism and declared himself to be opposed to the legalization of abortion.

A Two-Party System or Polarization?

The moderately positive performance of Juntos por el Cambio suggests Argentina could be entering an era of bipartisan politics. Across the aisle, too, the united front of Peronists and leftists seem to conform to the logic of an emerging two-party order, the long-fragmented Peronist party finally uniting in its opposition to Macri.

While for some this is evidence of the country’s political stability, others question whether the bipartisan context is simply a temporary breakwater for increasingly entrenched social polarizations that, in the event of another recession, could see apparent political allegiances evaporate and produce a seismic event like those seen recently in Chile and Ecuador.

While for now, this progressive coalition indeed appears strong, Alberto Fernández and the associated Front leaders will face important challenges upon taking office. An electoral coalition can easily mix and match slogans on the campaign trail, but governing together is a much trickier matter.

At the same time, Argentine polarization (with its long-running division between populism and liberalism, Kirchner and Macri, Peronism and anti-Peronism) may be a phenomenon that is not entirely reconcilable with the emerging two-party system. Only time will tell if the Argentine electorate is lining up behind two opposed political projects — the one more progressive, the other conservative — or if a generalized discontent is encouraging systemic negative voting trends.

To steady the political ship, the country will need to secure some form of economic stability. Argentines are growing increasingly restless after eight years of nonexistent growth. Alberto Fernández, for his part, will need to open his term with a mega-distribution package to offset deep social unrest, but he will also look to favor exports as a means to service foreign debt.

Wage negotiations could be a major sticking point in this balancing act between political and economic stability. Increases in real wages could potentially trigger a surge in the already high rate of inflation, and in Argentina, the specter of hyperinflation carries with it the memory of institutional collapse. The aim of Fernández’s recently announced “social pact” is to bring industrialists, the agricultural sector, and trade unions together around the table to reach an agreement on wages and production goals — a scenario that will probably irritate many leftists in Argentina and abroad.

Failing to do so, a hyperinflationary spiral could produce one of two eventualities: a flow of votes back to Macri’s neoliberal project, or a generalized social upheaval, the political effects of which are unpredictable. This would mean a stress test to see if the two-party system is in fact as stable as it appears.

Which sector of society will pay for the much needed redistribution measures is a question that has so far gone unanswered yet has great consequences for the redistribution debate. Cristina Fernández de Kirchner solidified her reputation as a foe of the landed ruling class when, in 2008, she sought to bring the agricultural export sector to heel with a set of tax measures that would also curb their political power. Those efforts consolidated her political core and engendered a still active left-wing Kirchnerist mythology, but it also burned bridges with important sectors of the dominant and middle classes.

Meanwhile, Alberto Fernández has been talking up the possibility of “taking on the banks,” with rumors circulating that he will raise an extraordinary tax on the financial sector. Banking and finance have earned an understandably bad reputation in Argentina, and, unlike Cristina’s previous campaign against the agro-export elite, there would be little love lost between the average Argentine and a parasitic system dedicated to facilitating capital flight for the ultrarich.

Dancing on a Tightrope

Buoyed by resurgent popular optimism, the Fernández administration will have to balance that optimism with a frankly dour international and national outlook. Argentina so far seems to be presenting itself as a model case for institutional resilience in the face of intense economic chaos, capable of steering unfolding class tensions away from internecine social unrest and into open political contests. Time will tell whether the even spread of votes between Fernández and Macri is the outward sign of the latter, or is rather an expression of a society on the brink of the type of social conflicts seen in the Andean region. As the case of Brazil has shown, this could be a fertile ground for the emergence of a far-right outsider such as Bolsonaro.

But what kind of prognosis can we make for a political force like Frente de Todos, a party founded on the Peronist political legacy of social justice and state-managed peripheral development?

Perhaps we can find some partial clues, and a good dose of hope, in a new generation of political representatives that have arrived on the scene alongside Fernández’s triumph. The most noteworthy of these young, left-leaning political operatives has been Axel Kicillof.

Cristina Kirchner’s former economy minister, with an extensive Marxist and Keynesian background (leading to comparisons with Greece’s Yanis Varoufakis), Kicillof won the governorship of the all-important Buenos Aires province in spectacular fashion: running against a social-media, bot-driven campaign that took several pages from Bolsonaro’s “fake news” blitz, Kicillof took to traditional-style politicking in public forums and effectively obliterated his Macrista opponent María Eugenia Vidal. The night of his victory, former Ecuadoran president Rafael Correa announced with excitement that the charismatic former student-movement leader would be the ideal presidential successor to Alberto Fernández.

Before Correa’s predictions can possibly become reality, the incoming Fernández administration will have to navigate the coming economic storm.