Friday, October 26, 2018

Motherland: Feliz Día de las Madres

Jailhouse campaign: CFK’s regional allies In remarks at the Wilson Center, Frente Renovador leader Sergio Massacast doubt on the reelection prospects of a rival Peronist, former PresidentCristina Fernández de Kirchner, predicting Argentina would not“retroceder.” Ms. Fernández de Kirchner, however, does not see it thatway. She has consistently indicated she will represent Unidad Ciudadanain next year’s election. It is clear why. In an October survey by Synopsis,

the former president’s movement tied Mr. Macri’s Cambiemos coalition at33 percent, with moderate Peronists, such as Mr. Massa, collectivelyattracting only 11 percent of support. Given that public backing, it is no wonder Ms. Fernández de Kirchner seesa bigger threat to her candidacy in the tribunales than from rival Peronists.She is facing a range of corruption investigations – including the“cuadernos” scandal – and the possibility that the Senate will strip her ofparliamentary immunity, as did the Lower House to her former planningminister, Julio De Vido, a year ago. That would put Ms. Fernández deKirchner at risk of pre-trial confinement and produce uncomfortableparallels to her Brazilian ally, former President Luiz Inácio Lula da Silva,whose imprisonment kept him out of this year’s election. Unlike Lula, who has been convicted of corruption, it is unlikely any ofMs. Fernández de Kirchner’s criminal cases will conclude before theOctober presidential election. That said, she might end up campaigningfrom behind bars, and she is clearly spooked by the Lula scenario. In apreemptive strike, she apparently orchestrated a letter to Página 12 –signed by former Presidents Rafael Correa of Ecuador; José “Pepe”Mujica of Uruguay; Lula and Dilma Rousseff of Brazil; Ernesto Samperof Colombia; Fernando Lugo of Paraguay; and José Manuel Zelaya ofHonduras – criticizing the corruption investigations in Argentina as“persecución política.” It is an odd collection of character witnesses. Of the seven formerpresidents who signed the letter, two were impeached, one was removed ina coup d’état, one is in prison, and one is in self-imposed exile in Belgium.But their travails actually feed into Ms. Fernández de Kirchner’s narrativeof a conspiracy against leftist political figures. She has defended Lula andMs. Rousseff and in Argentina, she has cast her legal troubles aspolitically motivated, making comparisons to the “Dirty War” dictatorship.Striking a similar tone, the letter from the former presidents warns, “nopermitamos que esa forma de violencia institucional vuelva a poner enriesgo el futuro de la paz y la democracia de Argentina.”

Going south: Trump to Buenos Aires

High inflation: Low expectations Argentines are not known for their humility, so the country’s latest centralbank president, Guido Sandleris, stands out for his steadfast refusal tocelebrate the peso’s recent recovery. The peso lost half of its value against the dollar this year, but this month, ithas strengthened by 13 percent. That stability followed Argentina’s latestagreement with the International Monetary Fund on a $57 billion bailout –a loan whose requirements of steep budget cuts and tight monetary policyled to Luis Caputo’s resignation as central bank president and Mr.Sandleris’s appointment as his successor. Demand for dollars is down,Argentina’s trade deficit is narrowing, and analysts are beginning to trustthe central bank’s exchange rate projections. Yet even as @ArgentinaProj’s “vital signs” daily report shows a stablecurrency, Mr. Sandleris has remained wary of premature celebration. In aninterview with The Financial Times, Mr. Sandleris – who holds aColumbia PhD and an LSE Master’s, and has taught at Johns Hopkins –adopted an aw-shucks attitude about the peso’s performance. It is“definitely too soon” to declare an end to Argentina’s economicturbulence, he said, citing an uncertain external environment and theArgentine central bank’s “sad record.” His caution is no doubt genuine. Mr. Sandleris, 47, is Mr. Macri’s thirdcentral bank president. As inflation this year approaches 50 percent, hispredecessors are being lampooned online – Federico Sturzenegger forwildly unrealistic inflation projections, and Mr. Caputo for boasting lastyear that Argentina would be “the star of emerging markets for the next 20years.” (“I don’t mean to be cocky, but it’s very evident,” he said at thetime.) After Mr. Sandleris accepted the promotion, Bloomberg called hisjob “one of the most volatile positions among developing nations.” Meanwhile, though Mr. Sandleris’s commitment to the IMF program hasreassured markets, his commitment to his former boss, Finance MinisterNicolás Dujovne, could lead fears to resurface about central bankindependence, especially if next year’s presidential campaign leads topolitical pressure to lower interest rates or deviate from the IMF’smonetary policy stranglehold. To learn more about Argentina’s economic crisis and prospects forrecovery, register for our November 5 round table, featuring top analysts

from J.P. Morgan, Credit Suisse and UBS.

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