From Argentina with Love: Why the next president will seek favor with Washington
Monday, July 27th, 2015
Thirty one years ago, Edward Schumacher authored an essay for Foreign Affairs in which he referred to Argentina as “the bad boy of the Western Hemisphere”. The southern country was a tenacious detractor of United States foreign policy towards Latin America for most of the 20th century. Although Schumacher’s title would later be claimed by Hugo Chavez’s Venezuela, Argentinian leaders have since faced a balancing act between cultivating meaningful relations with Washington while assuaging a staunchly anti-American public.
Yet this equilibrium is being redrawn as the Argentine 2015 presidential race heats up. The three leading contenders recurrently state they prefer closer ties with the United States. Why are they so eager to espouse an unpopular opinion when Electoral Campaigning 101 dictates that they should be doing otherwise? To answer this question, we need to take a closer look at the predicaments faced by the Argentine economy and how a friendly United States can help in the way of investments and international borrowing. But any analysis would be incomplete without assessing the political dilemmas faced by the front-runners.
So close, so far
Argentines are a tough crowd for American overtures. Animosity towards its northern neighbor runs deep. According to the Pew Research Center, unfavorable opinions on the United States amount to a whopping 43%, ninth highest of all surveyed countries in 2015. 
More often than not, Buenos Aires resents what it perceives as Washington’s dismissive attitude. Nonetheless, relations warmed during the 1990s during Carlos Menem’s administration, which fervently complied with Washington-sanctioned economic austerity reforms. Menem even broke ranks with its regional partners to join Operation Desert Storm in 1991. Yet Argentines felt cold-shouldered when the United States failed to devote more attention to averting the cataclysmic 2001-2002 economic meltdown. Since then, both countries have eyed each other with suspicion. Argentine politicians perceived as excessively intimate with American interests were, at the very least, frowned upon.
The bilateral relation during incumbent president Cristina Kirchner’s administration has been sour. Tentative diplomatic advances from either side came to naught. Instead, Argentina privileged diversifying its association base abroad—oftentimes with countries unfriendly to Washington, like China or Russia. In the last year Beijing pledged $4.4 billion for two new hydroelectric dams and $2.1 billion to overhaul the railway system in Argentina. Financial connections prospered after the People’s Bank of China approved an $11 billion currency swap agreement.
Relations with Russia have also featured prominently. Extensive cooperation in the energy sector was crowned with a “comprehensive strategic partnership” agreement signed by Cristina Kirchner and Vladimir Putin. Among other items, it commissions to Moscow-based Rosatom the construction of Argentina’s sixth nuclear power plant.
Change of direction
Yet the top candidates raise eyebrows by insisting that they prefer improving relations with the United States. All three of them are pragmatic moderates who agree that Argentina has been sidelined from finance and investment markets for far too long. Regardless of who wins, the next president will need a surge in foreign investments and credits to kick-start economic growth.
The tortuous issue of Bonar 2024 sovereign bonds illustrates the hard time Buenos Aires experiences when borrowing abroad. After the 2001 default, a handful of hedge funds refused to join the 2005 and 2010 debt restructuring plans. These holdouts have taken legal action to make Argentina pay in toto. In the latest act of their feud last February, a US federal judge in New York instructed banks managing Bonar 2024 to halt the operation. After much kerfuffle, the bonds were finally issued in April but with tepid results. Their yield reached 9% and was further increased to 10% by mid-June, well above South America’s average. Even Iraq fighting ISIS faces better access to credit at little over 8%.
Argentina’s three main presidential candidates admit that adjustments are unavoidable. Their economic advisors have already disclosed to American businessmen and Department of State officials that they plan to ease restrictions on currency controls and tackle fiscal imbalances. Foreign policy priorities will be redrawn. But most importantly, they concede that a diplomatic rapprochement with Washington is critical for attracting investors and financial flows.
Bring in the candidates
But the assumption that the nominees will indiscriminately implement economic reforms to improve relations with the United States is inaccurate. The contenders face their own political conundrums they must solve before they can fully implement their agendas.
Leading in the polls is Governor Daniel Scioli from the ruling Peronista party. He is the main man from Buenos Aires province, a mammoth electoral district that accounts for nearly 40% of Argentina’s population. Welding an affable personality, Book of Job patience and an uncanny ability for timely decision-taking, he secured the nomination for the coveted top spot on the Peronista party ticket. It is an admirable feat given that relations between Scioli and Kirchner had been bumpy on numerous occasions.
As all Argentine incumbent presidents realize early on, former presidents are not easy to live with. Maybe even more so if both belong to competing factions within the same party. Cristina Kirchner will surround her fellow Peronist successor with her personally devoted followers. Occupying key policy positions and seats in Congress, they will zealously safeguard Kirchner’s legacy of anti-austerity economics and nationalist foreign policy. How much breathing space will Scioli be able to secure for his own policies? Will they be strangled in the cradle? Hoping to avoid a showdown within the party before he is in command, he has been the most cautious of the trio when suggesting a change of direction.
Scioli has already displayed signs of autonomy. His economic advisors openly discuss potential austerity measures. He also met recently inaugurated United States Ambassador to Argentina, Noah Mamet, on his own. He even shared with Ambassador Mamet his sketch for a positive working agenda for both governments.
Closely behind Scioli ranks Buenos Aires City Mayor Mauricio Macri. He first became a household name as president of Boca Juniors, one of Argentina’s most popular fútbol clubs. During his tenure, Boca won numerous local titles and reached the upper echelons of international competition. His reputation as a competent CEO encouraged him to establish his own party (PRO), which has been part of the opposition throughout Kirchner’s term. PRO tends to favor business-friendly and fiscally responsible policies. Its membership consistently supports closer relations with the United States.
Despite its leader’s fame, PRO experienced lukewarm electoral support outside the capital district of Buenos Aires throughout the decade. Macri’s presidential aspirations encouraged him partner up with the Radical party—Argentina’s second largest. If he wins the presidential race, he will begin his term with restricted room to maneuver. Macri will need to keep his negotiation skills sharp both with his Radical allies and the opposition, as the Peronista party is expected to keep the Senate and a plurality in Lower Chamber. Major policy changes will possibly have to wait until a PRO electoral victory at the 2017 legislative elections.
The last member of the trio is Buenos Aires province Congressman Sergio Massa. He first caught the public eye as director of social security (ANSES) during Néstor Kirchner’s presidency—Cristina Kirchner’s predecessor and late husband. The most media-savvy of the three contenders, he cemented his popularity within key demographics such as the elderly and social security recipients. Massa took his first steps into the political wilderness during the 2013 congressional elections. At the eleventh hour, he split from the Peronista party and inflicted the national government an unequivocal defeat at the strategic Buenos Aires province.
Massa is the most vocal among the presidential candidates in his support for a friendlier stance towards Washington. But he came under fire in the aftermath of the 2010 WikiLeaks scandal for this very reason. While still a high-ranking member of Cristina Kirchner’s administration, a leaked cable originating from the United States Embassy in Buenos Aires described as Massa viciously insulted her and Néstor Kirchner. Allegations that his political career was favored by the United States soon followed.
But Massa’s presidential campaign momentum has been fading. Key backers—most conspicuously his cohort of city mayors throughout the Buenos Aires province—are turning their backs. The latest approval ratings are uninspiring. His strategy of speaking for the Peronist-voting electorate disenchanted with Cristina Kirchner’s second term is losing its punch as Scioli and Macri polarize the election. But even if his plans for highest office fall short, he still influences a significant slice of the electorate. Macri and Scioli will probably court him if they are unable to achieve the minimum electoral majority on their own. Though nothing beats being king, kingmaking remains a fairly illustrious profession.
Foreign policy rarely features as a talking point during Argentina’s campaign season. Candidates stick to truisms or simply ignore international politics all together. Fortunately the 2015 presidential race might prove different. For the first time in Argentine history, all nominees will participate in a series of televised debates. It is up to the public to encourage candidates to explain how they expect Argentina to perform abroad. Scioli, Macri and Massa should state if an approachment with Washington would imply a reassessment of current agreements with other international partners. But more importantly, they must detail how revitalized relations with the United States would contribute to advancing policy objectives.
Pablo Scuticchio is an International Politics graduate student at San Andrés University in Buenos Aires, Argentina. He holds a BA in International Relations from Di Tella University. He can be reached at [email protected], and his Twitter handle is @PabloScuticchio.
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 Judge Thomas Griesa’s decision was a legally questionable move since the Bonar 2024 bonds were specifically issued in Buenos Aires to avoid his jurisdiction. Critics are right in pointing out his authority overreach.
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