Editorials

Macri's moment has come

Mauricio Macri, a conservative, is Argentina’s new president. His victory in a ballot earlier this month ends 12 years of rule by the Peronist Justicialist Party and heralds fundamental shifts in the country’s economic and foreign policies. While change is needed, it will be difficult; the Peronists still control the legislature and the hole that has been dug means reform will cause real pain if it is to be effective.

Macri won just over 51 percent of the votes in a runoff election against former Vice President Daniel Scioli. Scioli prevailed in the first-round vote but did not have a sufficient majority to prevent a runoff. While turnout in the runoff was 82 percent — high enough to claim a mandate — the margin of victory is still slim enough to empower the opposition to resist Macri’s agenda.

That agenda is pro-business. He comes from a family of business professionals — his father, one of Argentina’s richest men, made his money in construction — and Macri was the head of Boca Juniors, one of Argentina’s most popular soccer teams. Success there propelled him into politics: He served two terms (eight years) as mayor of Buenos Aires, which served as his gateway to national politics.

The most pressing task is putting Argentina’s economy to right. Formerly one of Latin America’s growth stories, Argentina’s economy has stalled in recent years, with anemic growth insufficient to tame inflation reckoned at 30 percent — official estimates are unreliable since the former government censured the agency charged with producing statistics — and handle a fiscal deficit that now exceeds 7 percent of GDP, the largest amount in over three decades. Currency reserves have been dwindling and some fear a foreign exchange crisis in the coming year. Foreign investors have been wary of Argentina since the government of outgoing President Cristina Fernandez de Kirchner refused to pay bond holders over a dispute dating back to a 2001 default; that failure triggered another default last year.

Macri seeks market-oriented reforms such as a currency devaluation, privatization of state businesses, lower energy subsidies and the end to protectionist policies that have undermined Argentina’s once-booming agriculture sector. He promised to cut the 35 percent tax on soybeans, the country’s largest source of export revenue, by 5 percent annually. He also pledged to bring inflation under 10 percent in two years.

While those measures make sense — and reform was likely whoever won the recent ballot — they will be hard to implement. Macri must do business with a legislature dominated by the Peronist party, which has run Argentina for over half a century. That history, in combination with his slim margin of victory and the Peronists’ “take no prisoners” approach to politics, will weigh heavily on Macri.

He has several assets that will help balance the scale, however. First, there is exhaustion with the outgoing president’s style of governance. She was abrasive, exclusive, combative and defensive. Macri has promised a more consultative, consensus-based politics. Then there are the strategic alliances he has forged with other parties and the trade unions. Especially valuable is the victory of Maria Eugenia Vidal, deputy mayor under Macri, in the race for governor of Buenos Aires Province, the home to about one-third of the population.

Macri also benefits from the disarray in the Peronist party after its defeat in the ballot. He will have a chance to find his feet as the opposition identifies a new leader. Contributing to the confusion is the defection of important Peronist legislators who have signaled a readiness to deal with Macri. His supporters believe this is a sign of a changing political culture that seeks compromise and workable solutions over ideological purity and conflict. Finally, the new president’s support for many of his predecessor’s social programs, such as public schools, state-funded health care and senior citizen care, will blunt the impact of his reforms.

On foreign policy, Macri has said that he will distance Argentina from Venezuela and the revolutionary rhetoric of its president. He has made clear his support for opposition politicians, and said that he would propose that Mercosur, the region’s trade bloc, suspend Venezuela for “undemocratic” actions against them. He also said that his government would nullify a memorandum of understanding his predecessor signed with Iran obliging her to try to lift an Interpol arrest order for 10 Iranians wanted in connection with the 1994 bombing of a Jewish building in Buenos Aires that resulted in 85 deaths. That is a welcome correction.

The most important foreign policy move, however, will be economic. If Macri can settle the dispute with foreign bond holders, it will open the doors to new investment that will be critical to getting Argentina’s economy back on its feet. While he originally promised to pay those arrears, he has changed his position, saying the country’s dwindling foreign currency holdings create too much uncertainty to judge the situation in advance. Such uncertainty will cloud Macri’s tenure. If he can deal with it, he may succeed in his new post.