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Analysis
Strikes fail to dent Argentine optimism

Strikes fail to dent Argentine optimism

Macri plans model economic future

by David Smith in Buenos Aires

Mon 10 Apr 2017

Imagine for a moment the following scene. A country’s president welcomes more than 1,000 luminaries, multinational executives, economists, other leaders and foreign ministers to a summit organised by the World Economic Forum. Outside, kept at a distance by police using tear gas, hundreds of thousands of people are joining a general strike. ‘Well, the good thing is that we are here,’ says the president, pausing to add, ‘Working!’

This is how the 6-7 April economic summit in Buenos Aires opened. And contrary to expectations, the first gathering of the WEF in Argentina seemed to deliver a boost to President Mauricio Macri.

The summit brought together regional chief executives from Latin America, including notable individuals from Argentina, Brazil and Mexico. The World Bank, United Nations and the Bank for International Settlements also attended. 

Some of those at the summit expressed dismay at the strike, the first Macri has faced since taking power. An executive from a major UK energy consortium said, ‘A shame the strike paints such a negative picture of a country that so needs foreign investment.’ A visiting foreign minister added, ‘This is not a week to persuade the world at large that you are changing the way you do business.’

But others came with a more positive outlook, as well as clout and investment dollars. Luis Moreno, head of the Inter-American Development Bank, remarked, ‘We see a government doing the right thing, thinking medium to long-term. We are raising our financial support.’ Cristiano Rattazzi, president of car-maker Fiat Argentina said, ‘We are here demonstrating, too, that we want a serious country.’

Klaus Schwab, head of the WEF, was strikingly supportive. ‘It’s a crucial moment in this country,’ he said, ‘with a government opening up markets to the world, searching for a strong relationship with business. And its aim is to build growth while confronting poverty.’ In the light of images of police fighting with strikers for control of Buenos Aires’ main roads, and of bus, train and plane travel suspended, Macri’s government has emerged from the week in a position of surprising strength.

The themes that dominated the summit help to explain why. Macri returned often to the subject of truth-telling: ‘Our future in Latin America revolves around admitting to ourselves the truth. We begin with the truth, be it poverty, or inflation, or unemployment, or the failure of protectionism, our lack of competitiveness, or the corruption we inherited. We start at the bottom, with the truth, then we know what we have to do, and recovery begins.’

Another prominent topic was the rule of law. Carolina Stanley, Argentina’s minister of social development, said: ‘The world has come to Buenos Aires, and sees us respecting the right to strike, and the right to demonstrate. But the world also sees an independent judiciary, bringing powerful people to justice. It’s accountability, transparency, a confrontation with corruption.’ From Bogotá, to Brasília, to Buenos Aires, the campaign to establish the rule of law is being welcomed by those who want to believe, and invest, in Latin America.

The importance of regional co-operation was highlighted by Francisco Cabrera, Macri’s minister of production, when he spoke at a breakfast meeting: ‘Argentina will grow by 3% this year, and I’ve just signed a ground-breaking agreement with Brazil, our number one market, to cut import-export tariffs dramatically. For us that is major.’ The sight of rivals working together, particularly Argentina and Brazil, speaks volumes about regional governments’ desire to break with the past.

One summit does not amount to a transformation, but it is hard not to feel positive. Macri, while facing a violent strike that brought to mind Argentina’s revolution of the 1950s, signalled his country’s intent to leap forward half a century and become a model for Latin America. He wants Argentina to demonstrate how the politics of the past can be overcome to create the economy of the future.

David Smith is a Member of the OMFIF Advisory Board and represented the United Nations Secretary-General in the Americas between 2004-14.

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