Macri Wins Argentina's Presidential Election by a Narrow Majority

Argentina’s 32 million voters went to the polls on Sunday, 22 November to elect their next President in an unprecedented run-off for the Presidency between the pro-Peronist candidate, Daniel Scioli, supported by President Cristina Fernandez de Kirchner, and the pro-business former Mayor of the City of Buenos Aires, Mauricio Macri.

Macri won by 51.4% of the votes to Scioli’s 48.6% - a narrower margin than predicted by the pollsters (but they had been wrong in October when they thought that Scioli would win sufficient votes to avoid a run-off).  Analysts suggest that poorer voters were concerned that Macri might undo the state welfare system that the more populist Kirchner regime had built up.  Against that, Scioli may have been tarnished by the backing of Cristina de Kirchner, who was increasingly unpopular in the latter days of her Presidency, even though her personal support for Scioli was somewhat lukewarm (they had never got on) and she did relatively little to help him.  But overall Macri’s campaign slogan of ‘Cambiemos’ (‘Let’s change’) may just have been more attractive to a disillusioned electorate.

The result does not give Macri the broad electoral support in Congress that he would have wanted.  It was a close run thing.  Kirchner’s party is still the largest bloc in the Chamber of Deputies, albeit in a minority, and firmly controls the Senate.  Macri will, therefore, not find it easy to push through his policy of political and economic reforms.

But reform he must, if he is turn Argentina’s problems around.  When he assumes the Presidency on 10 December, Macri will inherit a stagnating economy with almost zero economic growth, rising inflation (at 26-30%), depleted reserves at $26bn (much lower than required for an economy of Argentina’s size), entrenched social spending by government, and with debt problem that has kept Argentina out of the international credit markets.

Macri has promised more business-friendly policies that will make Argentina more attractive to foreign investment.  But easing currency controls, whilst it would remove the black market in currency exchange, would lead to a sharp devaluation of the peso lowering the country’s purchasing power and causing a sharp rise in inflation.  Deconstructing Kirchner’s protectionist policies by lowering tariffs, abolishing domestic price controls, reducing corporation taxes, doing a deal with Argentina’s outstanding creditors, and reducing the role of the state in the management of the economy, might generate more business activity and jobs, as Macri has promised, but it could also disadvantage the more vulnerable sections of Argentine society – at least in the short-term.  The Catholic University of Argentina assessed Argentina’s national poverty rate as 27% in 2014.

Macri’s opponents have already warned of a likely reversion to the neo-liberal politics of Carlos Menem, whose free market policies of privatising state utilities and reducing the numbers employed by the state, were perceived to have led to Argentina’s economic collapse and debt crisis of 2001-2002, which the Kirchners inherited on the election of Nestor Kirchner in 2003.

Macri has also promised a realignment of Argentina’s foreign policy by warming up relations with the US and the UK.  This may result in a shift away from the confrontational policies of the Kirchner regime over the Falkland Islands.  Macri has undertaken to ‘tone down the rhetoric’ on Falkland Islands issues and to abolish the post of ‘Malvinas Secretary’ created in 2013 and held by Daniel Filmus.  But whether he will go as far as trying to decriminalising trade with the Falkland Islands, for example, remains moot.  Realistically, any new initiative that compromises Argentina’s constitutional claim to the Falkland Islands would face strong opposition in the Argentine Congress – and Macri has many more pressing decisions to face.  But let us see.