The Argentine Election, Its Economic Implications And Its Relation To The US Election

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General elections in Argentina took place on October 15, 2015, to determine who would be the successor to Cristina Fernández de Kirchner. Kirchner’s family had been in power for 12 years, though as the election approached it was clear there was no chance her reign would continue. In short, her Presidency was a mess. Kirchner’s Presidency left Argentina troubled economically, and while initially favored by the people her popularity sunk following multiple economic crises and unpopular decisions. Her unpopular decisions included implementing a sliding-tax system on agricultural imports in 2008 which led to farmer strikes after it would raise fees on export crops by about 10%, enacting a controversial anti-terrorism law in 2011, and maintaining foreign exchange (forex) controls. Many Argentinians were ready for change in the country. In a new President, they demanded economic reform, change in foreign policy and somebody who they could trust.

 

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          Mauricio Macri, new President of Argentina, pictured (center)

 

Pro-business, right-leaning Mauricio Macri narrowly won the election. Earlier in the campaign, he promised to tackle inflation, bolster the Argentine currency and stop relying on the US Dollar, and begin to grow the economy both domestically and abroad. He has already taken steps to lift “El Cepo” (“The Clamp”) – or, forex controls that make it difficult to purchase foreign currency and impossible to purchase large sums of currencies. El Cepo led to inflation and complicated international trade. He lifted El Cepo on his first day in office, on December 17th. The move was backed by his voters and many Argentines, but it is yet to be seen whether it will have the intended result. The peso crashed as a result of the move, and currently stands at a 14:1 exchange rate between the peso and the US Dollar. But naturally, the drastic moves in the short-term are driving an objective of strengthening the value of the peso and lowering inflation. It is yet to be observed whether the changes will result in any positive impact. Hopefully the Argentines got their holiday shopping in before December 17th

What is interesting is that Macri ran under the “Cambiemos” (Let’s Change) political coalition. In a practical sense, he was a third party candidate. The recent popularity of Sanders and Trump, running in the 2016 election in the United States, is strikingly similar to Macri’s rise. While in the United States a third-party candidate has nearly impossible odds of winning. Ralph Nader mustered up just 2.75% of the popular vote in 2000, and even that was a shock to many. When voters are uneasy, they will seek more radical candidates to alleviate economic issues, like Franklin D. Roosevelt in resolving the Great Depression. Trump and Sanders portray themselves as honest candidates and men of their word, much like Macri. Macri removed forex controls as soon as humanly possible as he promised. Now the question up north is, will either of those men, if elected, stick to their word?

 

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About the author

Harry Kuperstein is 17 years old, hails from Southborough, MA and is a VI Former at St. Mark's School. He will be attending Johns Hopkins University as a member of the Class of 2021, majoring in Neuroscience. He is a captain of the school's boys JV soccer team and robotics team. He is interested in investment strategies, and all things science and writing. Unsure of the future, but motivated and driven, he aims for nothing but success, whatever “success” means.

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