CLAI Commentary

A series of occasional commentaries on important
policy issues affecting Latin America and the Caribbean
May 30, 2003

Will Kirchner Lead Argentina to an Era of Growth?

                               By Dr. James Ferrer, Jr. and Eduardo Segatore1

Whether merely to save face or to destabilize the new government, Carlos Menem’s withdrawal from the second round of the presidential elections catapulted Nestor Kirchner into the Argentine presidency.  With poverty and crime at record highs, the Kirchner Administration faces the truly daunting task of returning Argentina to the path of economic and social stability.  Many observers have asserted that, because Kirchner received only 22 percent of the vote in the first round of the election, this task will be especially difficult.  However, recent polls show that Kirchner enjoys the support of a large majority of the population.  Therefore, if he has the political skill to garner the support of the menemistas (especially the ones who are disillusioned with Menem because of his withdrawal), of the increasingly popular Lopez Murphy, and of the remnants of the Radical Party, he could enter history as the President that finally “cured” Argentina.

The presidential elections, despite Menem’s final maneuver, were actually quite successful.  There were no protests or riots as had been feared, especially after the manipulated provincial elections of Catamarca earlier this year.  Furthermore, although Menem’s team complained about first round irregularities in some districts of
Buenos Aires province (Duhalde’s “territory”), these complaints were never formalized and the elections are considered to have been transparent.  A much more important factor was the attitude of the voters.  The results of the first round indicate that voters acted rationally and that the political environment of Argentina has moderated significantly over the past year.  Elisa Carriσ and Rodriguez Saα, the two most radical of the five candidates who had a chance to enter the second round, ended in fourth and fifth place, respectively.  The decline of these candidates, whose campaigns consisted of old-fashioned dependency rhetoric and accusations, showed that Argentines want a pragmatic approach to government and not a return to discredited policies.  This break with the past was further evidenced by the rejection of Menem in polls taken following the first round of elections.

When Menem and his team realized they could not win the second round (polls showed that he trailed Kirchner by 40 percentage points), the ex-president dropped out of the race.  If his intention in doing so was to deny legitimacy to Kirchner, Menem’s plan backfired.  A poll taken a few days after Menem’s resignation showed that Argentines felt the resignation strengthened Kirchner and further ruined the image of Menem. He is now widely seen as being cowardly as well as corrupt.  Menem’s resignation probably destroyed his prospects of ever returning to power.

Born in Rνo Gallegos,
Santa Cruz, in 1950, Nestor Kirchner became active in the Peronist Party during the early 1970s, when he joined the Juventud Peronista (the youth branch of the Peronist movement).  After serving as the mayor of Rio Gallegos and in several provincial government positions, he was elected governor of Santa Cruz in 1991, and reelected both in 1995 and in 1999.  During his twelve years as governor, he led a very popular and active administration in the sparsely-populated province.  When Duhalde “picked” him as “his candidate” in late 2002, Kirchner was virtually unknown outside of Patagonia.

During his campaign, Kirchner promised to lead
Argentina into a new era.  He said he would do so in gradual steps, rather than with grandiose announcements and plans.  Combating poverty and unemployment are ostensibly his top priorities.  However, he asserts that his social policies will not violate the government’s budget restraints.  Indeed, Kirchner says he will create employment through public works programs that will also repair Argentina’s badly damaged infrastructure (housing, railroads, roads, etc). In foreign affairs, he proposes to give greater emphasis to integration with Latin America, especially with the MERCOSUR countries.

Before his economic and social development promises can be implemented, Kirchner must deal with two large obstacles to sustainable economic growth.  First, he must engage the multilateral agencies and must begin to renegotiate Argentina’s debt.  Without additional international credit, which essentially ceased entering
Argentina in 2001, the Argentine economy will not be able to continue growing. Furthermore, Argentina’s financial sector must be restructured following the devastating effects of the 2002 devaluations and pesofication.  These early measures of the Duhalde administration undermined Argentina’s financial system.  The government must now work to reconstruct the sector in order to have a financial structure capable of supporting and sustaining the economic recovery.  In fact, Kirchner has little room to maneuver.  Argentina’s situation is extremely delicate.  Some sectors may press him to revert to the old, discredited policies of economic nationalism and protectionism.  If he moves in that direction, however, the market reaction would be swift and highly negative, and would very likely end Argentina’s nascent economic recovery.

Kirchner faces an awesome challenge.  He must demonstrate exceptional political ability to carry
Argentina into a new era of economic growth and socio/political stability.  So far he has sent mixed signals.  The day Menem withdrew from the election, Kirchner stated he would combat the “corporations” that “ruled with impunity” during the decade of the 1990s.  His statement sent a very bad message to the business community.  However, his choices for the vice presidency and for his cabinet, especially for the financial team, seem to indicate that the government will not take a radical, leftist stance.  Scioli (Vice-President), Lavagna (Minister of Economy -- he has been in that role for nearly a year), and Gustavo Beliz (Minister of Justice) are young, but also experienced political figures with varying political backgrounds.  Along with the new President, they have the obligation to lead Argentina forward to overcome the numerous obstructions before them, and to take the nation into a new paradigm of growth and stability.

1 The views expressed in this article are the authors’ and do not necessarily reflect the views of the Center for Latin American Issues or The George Washington University