DEVELOPMENTS

Argentine President Cristina Fernandez de Kirchner prevailed in a prolonged power struggle over the country’s central bank earlier this month when Mercedes Marcó del Pont was appointed as the institution’s new head. The ascension of Marcó del Pont, an ally of the president, concluded a month of political maneuvering that began when Fernandez de Kirchner tried to dismiss central bank President Martín Redrado on January 7.

His offense? Refusing the president’s demand of $6.5 billion of the bank’s reserves to help pay the government’s debt.

Redrado’s dismissal was done via an emergency decree with Congress out of session, (a time-honored tradition in Argentine politics). The Supreme Court cried foul, briefly reinstated Redrado, and then ruled that a congressional commission should decide his fate. Undeterred, Fernandez appointed the bank’s deputy governor as interim head and barred Redrado from the bank. Awaiting the outcome of the commission, Redrado submitted his resignation on January 30, which was bizarrely rejected by the president, who speciously insisted the commission reach its conclusion.

The unexpected appointment of Marcó del Pont on February 3 confirmed the obvious: the central bank will be under the president’s control for the remainder of her term. The new bank chief said as much upon taking office, when she expressed the view that central bank independence should be limited.

What might Fernandez have in mind for the country’s near record $48 billion of reserves? A rash of spending will probably be needed for Fernandez to revive her flagging popularity ahead of the 2011 presidential elections – or, in a scenario analysts consider more likely, to position her husband and predecessor Néstor Kirchner for a bid to return to the presidency. Either way, the specter of four more years of kircherismo bodes poorly for the state of Argentine democracy. 

BACKGROUND

Néstor Kirchner came to power, as Argentine leaders often do, during a time of crisis. His election in 2003 came as the country was still in the throes of the 2001 financial collapse and reeling from a political upheaval that saw two presidents resign in succession. Kirchner oversaw a return to economic stability, brought inflation under control, and Argentina was soon enjoying so-called “Chinese growth” – the economy grew on average by 9 percent during his term. To accomplish this, Kirchner made generous use of emergency decrees, which allowed him to bypass Congress and essentially impose legislation.

Centralization of authority in the executive might be appropriate in managing a crisis. But problems arise when governing by decree becomes habit. Kirchner would go on to pass 140 “National Unity Decrees” during his first two years in office. In 2006, with the economy humming along, Kirchner was given further control of the budgetary issues.

The preference seems to run in the family. Cristina Fernandez has strong-armed her way through Congress to nationalize $30 billion worth of private retirement pensions in 2008 (again, the government needed money), and again last fall to pass a controversial media law widely believed to be targeting the Clarín group, a staunch Kirchner critic.

The abuse of executive authority reflects fundamental and long-standing weaknesses in the Argentine political system. The Kirchners are members of the Peronist party, which has been the dominant force in Argentine politics since the days of its namesake, Juan D. Perón. No opposition party has managed to mount a consistent, national challenge to the Peronists, which count on strong organization and patronage networks throughout the country. Although there is wide ideological division and opposing factions within the Peronist camp, there are strong incentives, once a Peronist has won office, for everyone else to fall in line. The federal government has wide discretion over budgets in the country’s twenty-three provinces, making regional opposition potentially costly. Would-be defectors usually fail to attract many followers, even when there is a strong Peronist bloc opposing the policies of the government.

The Argentine Congress has been a political backwater. It lacks prestige and independence, and its members are beholden to their provincial governors, who nominate candidates. Congressional loyalty too is often secured by the power of the federal purse.

Finally, Argentine politics appear to be infected with a strong strain of messiah complex, not entirely surprising considering the country’s dominant political figure remains the father of Latin American populism himself. Witness Carlos Menem, the Peronist who authored Argentina’s neoliberal economic restructuring during the 1990s. His program of privatizations, openness to trade, and importantly pegging the peso to the dollar generated high growth for the better part of a decade but ultimately contributed to the disaster of 2001. Still, Menem topped the Peronist ticket in 2003 and actually outpolled Kirchner 24-22 percent in the first round (Kirchner was declared the winner after Menem refused to participate in a run-off). Shockingly, Menem is still lingering on the Argentine political scene despite ongoing fraud investigation and is among the candidates in the 2011 election. As an ex-President, he should have plenty of company.

ANALYSIS

When Néstor Kirchner chose not to seek reelection in 2007 despite his high approval ratings, and instead had his wife and then-Senator Cristina Fernandez de Kirchner run in his place, Argentine political analysts widely believed Kirchner was setting the stage for a 2011 run, thus prolonging a Kirchner dynasty well into the next decade.

That perception persists today, although the Kirchner brand has been severely damaged. The economy has sputtered in the recession and Fernandez de Kirchner has alienated a good deal of the electorate with her nationalization of the pensions and the media law to name only two unpopular moves. Meanwhile Néstor lost a June 2009 bid for Congress in the all-important Buenos Aires province.

Even so, he might be the man to beat. For a while, there seemed to be a political vacuum in Buenos Aires. Recently, Buenos Aires mayor Mauricio Macri threw his hat in the ring. While popular in the capital, it is unclear whether his center-right PRO party can compete in the provinces, always a Peronist stronghold.

After four years of creeping state intervention in the economy, Macri’s pro-business orientation could provide much-needed economic opening. To govern effectively – not to mention win the election – however, he will have to contend with the entrenched Peronist machine, which has historically made life difficult for presidents from other parties. But after eight years of Kircherismo, the country seems ready for change.

Teddy Kahn is a columnist for Foreign Policy Digest.

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