Mauricio Macri, president of Argentina, won a decisive victory in Sunday’s midterm elections, gaining seats in both house of congress and beating his opposition in the country’s main population centres.
His Cambiemos (Let’s Change) party performed around 20 percentage points better nationwide than the lead faction of the bitterly divided populist Peronist party. But the numbers matter less than the strategic impact. Macri’s victory gives him a sizeable mandate for reform.
‘Everyone knows that what’s coming will be hard,’ to quote Alec Oxenford, one of Argentina’s most successful entrepreneurs and chief executive of online classified advertising company OLX and mobile marketplace Letgo. ‘Macri has to cut spending dramatically, fire many people, and keep the unions on board. What’s remarkable is that people voted for this – change with pain, not more instant gratification and populism.’
After this election, Macri is the firm favourite to retain the presidency in 2019. ‘Macri won real power in Argentina this past weekend,’ said commentator Joaquin Sola. ‘It makes him the owner of an enormous victory, and of a serious mandate.’
The morning after Macri was bristling with ideas, and challenges. ‘We need a national conversation, bringing in those who didn’t vote for us, to build a plan for dealing with our economic problems,’ Macri said. He revealed that he will use, if necessary, the power of decree to push through reforms, specifically in the labour sector.
No single vote mattered as much as that for senate in the province of Buenos Aires, home to 40% of the population. Former President Cristina Fernández de Kirchner placed herself centre-stage in challenging Macri’s candidates there.
For the first time in her long career, she lost an election. And although her second-place finish assures her of a senate seat, it signals the end of any hope that she may run again for the presidency in two years’ time. Fernández will at least be pleased that parliamentary immunity may protect her from jail; there are pending charges of corruption and money laundering against her.
Her erstwhile cabinet ministers will not be so lucky. This week Julio de Vido, planning minister in Fernández’ last government and the controller of a vast public works budget, will be imprisoned on charges of embezzlement involving billions of dollars. This will happen despite his seat in congress.
‘Cristina could be next,’ according to one lead prosecutor. ‘She is closer to prison than the senate.’
For Macri such disarray in the opposition presents opportunities. He is calling this week for a summit of provincial governors, as well as roundtable meetings with trade union bosses and leading businessmen.
‘The president has tough calls to make, tackling the enormous fiscal deficit, changing our labour laws to make us competitive, convincing foreign investors that this change is for real, because we lag well behind other Latin American economies in terms of outside investment,’ according to a Macri adviser. ‘The hard part is now.’
The numbers suggest Macri has made a sound start. Inflation has halved to 20% since last year, and the government is on target to reduce the deficit to 4% of GDP this year. The country has returned to economic expansion, with International Monetary Fund estimates indicating 2.5% growth for 2017.
‘We are the generation that will face the truth about ourselves, no longer a country ducking our responsibilities,’ the president told his supporters on Sunday. ‘It’s all about hard work, and teamwork, from this point on, for all Argentines.’
David Smith is a Member of the OMFIF Advisory Board and represented the United Nations Secretary-General in the Americas between 2004-14.