The Long Agony of the Kirchner’s Argentina - Brookings · The Long Agony of the Kirchner’s Argentina ... express authorization of Poliarquia Consultores. Title: Microsoft PowerPoint

Washington DC - March 24, 2014

The Long Agony of the Kirchner’s Argentina

Sergio Berensztein / Director

Argentina’s Economic and Political Outlook

THE BROOKINGS INSTITUTION / AMERICAN UNIVERSITY

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Confidential

Contents

2

I. What Argentina is Not

II. Social and Economic Context

III. Political Context

IV. Electoral Indicators

V. Final Comments

I. What Argentina is Not


Confidential

Argentina in the News

4

Venezuela

• Is ruled by a civic-military regime, increasingly more and more authoritarian.

• It manages huge oil resources –the main source of its popularity and electoral support.

Argentina

•Is ruled by an increasingly more and more pragmatic government that lacks those resources and popular support.

•The Armed Forces are not a significant player (consider the late designation of General Cesar Milani).

•The energy crisis is one of the most important problems of the country.

•Regardless of hyper-regulation and controls, agribusiness is not going to be confiscated and therefore the government depends upon farmers to get hard currency.


Confidential 5

We tend to analyze the current context through the same theoretical frame as recentcrises (1975, 1982, 1989, 2001). But the contexts are different, both external anddomestic.

• Thanks to the soybean revolution, and despite capital flights, Argentinagenerates more hard currency than ever and has more central bank reserves.

• Despite reputation and pending litigation, liquidity and a low debt/GDP ratioallow Argentina to go back to markets as we speak.

• Although there are mounting labor conflicts, there is no vacuum of power; norelevant actor wants the current administration to collapse. Furthermore, PopeFrancis generates a tempering effect on the entire polity.

• The size of the State is the largest in Argentine history (more than 50% ofGDP); poverty alleviating / clientelistic programs help soften the consequencesof stagnation.

Argentina in the Past

II. Social and Economic Context


Confidential

General Country Situation

Source: Poliarquía Consultores.

Dif (+) (-) Positive Regular Negative

20

53

12

59

34

46

811

54

-40

-30

-20

-10

0

10

20

30

40

50

60

MAONJFMJAONDJFMAMJJ ASONDJFMAMJ JASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJ ASONDJFMAMJJASONDJF

06 2007 2008 2009 2010 2011 2012 2013 2014

%

“How do you evaluate the general country situation?”

7


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Evaluación retrospectiva y prospectiva de la situación del país

Retrospective Evaluation Prospective Evaluation

General Country Situation


Dif (+) (-) Better The same Worse Dif (+) (-) Will be better Will remain the same Will be worse

1612

71

-60

-40

-20

0

20

40

60

80

MAONJFMJAONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJF

06 2007 2008 2009 2010 2011 2012 2013 2014

29

5357

2321

44

814

44

-20

-10

0

10

20

30

40

50

60

MAONJFMJAONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJF

06 2007 2008 2009 2010 2011 2012 2013 2014

8


Confidential

Argentina´s Prospective Economic Situation

“How do you think will the economic situation be a year from now?”

Dif (+) (-) Better Worse


19

40

57 65

23

61

-40

-20

0

20

40

60

80

MAONEFMJAONDEFMAMJJASONDEFMAMJJASONDEFMAMJ JASONDEFMAMJ JASONDEFMAMJJASONDEFMAMJJASONDEF

06 2007 2008 2009 2010 2011 2012 2013 2014

%

9


Confidential

“In Argentina it is often to have good times and high consumption that finally end in crisis. In your opinion, how likely is it that in the next 2 or 3 years there will be a new economic

crisis in our country?”

Probability Assigned to a Potential Crisis in the Medium Term

Very likely Quite likely Not very likely Not at all likely N/A


38% 64%23 23 26 24 2230 32 29 31 32 33 30 32 34 33 32 33 32 32 36 32 32

23 28 27 25 30 35 42

15 1719 17 20

20 25 23 24 26 19 23 23 22 22 22 20 21 25 2425 20

25 19 22 2423

2122

43 4343

39 47 3635

34 34 30 38 35 34 29 34 31 35 35 30 31 31 34 36 40 36 3435 30

25

17 15 11 16 9 12 8 11 10 10 9 9 9 13 8 12 9 10 10 7 9 10 10 11 13 12 9 9 7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

O N D E F M A M J J A S O N D E F M A M J J A S O N D E F

2011 2012 2013 14

10


Confidential

Indicadores de inflaciónInflation Indicators


Perception of Inflation (last month) Inflationary Expectations (next year)

Average MediumPrices have substantially increased Prices have moderately increasedPrices have remained stable / decreased

8583 79

11

50

18

2

18

0

10

20

30

40

50

60

70

80

90

MAONEFMJAONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEF

06 2007 2008 2009 2010 2011 2012 2013 4

%

05

1015

202530

3540

4550

ASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEFMAMJJASONDEF

2006 2007 2008 2009 2010 2011 2012 2013 4

11


Confidential 12

Labor Conflict in Argentina

13

3

5

9

3 10

1

0

2

4

6

8

10

12

14

Alf

onsí

n

Men

em (1

)

Men

em (2

)

De

la R

úa

Duh

alde

Kir

chne

r

CFK

(1)

CFK

(2)

0100200300400500600700800900

1000

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Most of the conflicts take place in the public sector: Over the last couple of years,labor conflicts in the private sector have remained stable, while conflicts in the publicsector have increased significantly. In 2013, the public sector accounted for 60% of thelabor conflicts, in fact, during the last trimester that proportion grew up to 66%.

Labor Conflicts (1983-2013) General Strikes by Presidency

Source: Nueva Mayoría and Observatorio del Derecho Social (CTA).

III. Political Context


Confidential

Cristina Fernández de Kirchner's Image


Dif (+) (-) Positive Regular Negative

34

56

20 21

42

12

46

57

-40

-30

-20

-10

0

10

20

30

40

50

60

70

JASONDJFMAMJ J ASONDJFMAMJJASONDJF MAMJ JASONDJFMAMJ JASONDJFMAMJ J ASONDJFMAMJ JASONDJF

2007 2008 2009 2010 2011 2012 2013 2014

%

14


Confidential 15

Presidential Approval

“Do you approve or disapprove Cristina Fernández de Kirchner’s administration as President?”


Diff (+) (-) Approves Disapproves

%

40

26

75

27

57

70

24

68

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

MAONJFMJAONDJFMAMJ JASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJF

06 2007 2008 2009 2010 2011 2012 2013 2014


Confidential 16

Trust in Government Index (ICG-UTDT)

Source: UTDT / Poliarquía Consultores February 2014.

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4


Confidential 17

Trust in Government Index: Capacity to Solve Problems

Source: UTDT / Poliarquía Consultores February 2014.

The Gov. is solving the problems It needs time to solve them

Does not know how to solve them

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4

IV. Electoral Indicators


Confidential

Feb-13 M ar-13 Apr-13 M ay-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Reduced

Sergio Massa 8 9 6 7 9 9 17 18 13 22 23 16 19 23

Crist ina Kirchner 18 18 19 20 18 20 15 16 17 11 8 8 9 10

Mauricio Macri 7 8 6 4 6 5 6 6 8 8 7 9 8 10

Daniel Scioli 6 6 8 6 6 4 5 7 7 7 7 8 6 6

Hermes Binner 5 5 4 6 5 6 5 4 5 6 4 4 4 6

Julio Cobos _ _ _ _ 1 0 2 1 1 2 2 2 2 2

Elisa Carrió 1 2 1 4 2 2 1 1 2 1 1 1 1 2

Amado Boudou 0 1 1 1 1 1 0 0 1 1 0 0 2 2

Ricardo Alfonsín 0 1 0 1 2 1 1 1 1 1 0 2 0 1

Alberto R. Saá 2 2 1 1 2 1 1 1 1 0 0 0 0 0

Francisco de Narváez 1 1 3 4 2 3 1 0 1 1 1 1 0 0

J.M. de la Sota 1 0 1 1 2 0 1 1 1 1 1 0 0 0

Eduardo Duhalde 0 1 0 1 0 0 0 0 0 0 0 0 _ _

Others 7 7 6 8 8 5 7 8 9 9 10 10 10 11

N/A 43 38 44 34 38 43 38 35 33 29 36 38 37 25

Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Electoral Preferences for 2015Spontaneous Answer

“¿Who would you like to be the next President of Argentina?”


19


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Electoral Preferences for 2015Guided Response

“If the Presidential Elections were held today, who would you vote for from the following candidates?”

32 32 37 39 34 35

23 25 22 2021 24

14 16 15 14 18 1714

13 13 12 10113

3 3 3 5 215 11 10 12 12 10

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

Sergio Massa Daniel Scioli Mauricio MacriHermes Binner Jorge Alt amira N/A


20


Confidential

The Image of the Main K Leaders

21

4435 29

21 20 19 15 14 10

32

2430

25 31 2623 21

18

2040

2134

38 47

3144

6

4 1

20 1911 8

3121

66

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Daniel Scioli

Cristina Kirchner

Florencio Randazzo

Jorge Capitanich

Aníbal Fernández

Amado Boudou

Axel Kicillof Máximo Kirchner

Julián Dominguez

Positive Regular Negative N/A


V. Final Comments


Confidential

Global Stability Index of Argentina -GIA-

ICG

0

100

25

50

75

28

ICC

0

100

25

50

75

34

IOC

34

GIA

32

100

25

50

75

0

25

50

75

100

0

The GIA reflects the social climate and is constructed from three indicators ...

23


Confidential

Close to a Crisis, but not there yet

CRISIS

CONFLICT

STABILITY

0

10

20

30

40

50

60

70

80

90

100

2006 2007 2008 2009 2010 2011 2012 2013 4

24



Confidential 25

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The Long Agony of the Kirchner’s Argentina - Brookings · The Long Agony of the Kirchner’s Argentina ... express authorization of Poliarquia Consultores. Title: Microsoft PowerPoint