The economic situation in Argentina has continued to deteriorate, with inflation in September coming in at 5.9 percent — the highest figure of the past 12 months — and a widening of the black market premium despite currency controls put in place by Finance Minister Hernán Lacunza and Central Bank Governor Guido Sandleris. With the elections around the corner, only a fool would bet on Macri’s re-election, given that Alberto Fernández not only handily beat him in the primaries, but his positive image appears to have grown strongly since. Opinion polls show that as Alberto rises, his negative image remains relatively subdued, while Macri’s has risen, making it even more unlikely that in a run-off scenario the incumbent would win the day.
Paraphrasing Socrates, we know we don’t know. While Fernández has sent emissaries to different events, he still has to announce a concrete economic plan. Among those spokespeople is Matías Kulfas, a former ally within the Central Bank of Axel Kicillof when the latter was economy minister. Kulfas has said what most reasonable people expect to hear: Alberto’s economic plan is not based on a turn towards Bolivarian populism, instead it will focus on Argentina’s competitive advantages, including Vaca Muerta, but also looking on consumption as the key driver of employment and the economic apparatus. Economists Guillermo Nielsen and Emanuel Álvarez Agis are other close advisors of Cristina Fernández de Kirchner’s appointed presidential candidate, as is Martín Redrado. From these names, supposedly, Alberto will pick his Central Bank chief and economy minister.
Yet, clearly this isn’t clear. As newly minted International Monetary Fund General Director Kristalina Georgieva made clear, there can be no conversation with Argentina until the election is settled and an economic plan is on the table. The markets listened, with the riesgo país or the spread between Argentine and US sovereign bonds rising, the black market premium surging, and the Central Bank intervening. The latter is relevant in that while Lacunza has rejected the idea that capital controls will be beefed up, it’s not what the market is expecting. Economic journalist Alejandro Bercovich has noted that Sandleris’ actions speak louder than words: the Central Bank president re-hired a “capital controls” specialist named Jorge Rodríguez. Lacunza, speaking from Washington, noted the Central Bank’s reserves are sufficient to guarantee a competitive exchange rate through to December 10, when the next government moves into the Casa Rosada. He added Argentina’s foreign debt is “of a reasonable magnitude,” putting it at US$310 billion, 68 percent of the country’s GDP.
Yet that exchange balance will most likely be tied to tougher currency controls. At some point, it will be necessary to know how Alberto’s economic team plans to lift those restrictions without generating hyperinflation, as portfolio dollarization would accelerate. One thing is for sure: Alberto has already indicated he doesn’t want Sandleris in the Central Bank if he wins the election. Reportedly, the Fernández-Fernández tandem would also ask for the head of taxman Leandro Cuccioli (who runs the AFIP tax agency) and Mariano Federici, in charge of the all-important Financial Information Unit (UIF), Argentina’s esteemed money-laundering watchdog.
This last point merits a little more analysis. Federici and his team have been in charge of snooping around all of the suspicious operations of the past several years, most of which have been focused on the crimes of corruption perpetrated by Kirchnerite officials. Under the Macri administration, the Comodoro Py federal courthouse saw Cristina’s acolytes parade through on countless charges of corruption and illicit associations, including the former president herself, with many of them finding themselves behind bars under the so-called ‘Irúrzun doctrine’ of preventive prison. The federal judges were quick to pursue Kirchnerite corruption as society aligned itself with the Cambiemos (Let’s Change) coalition. But, as the tide has begun to turn, so has the Judiciary, which is reverting several of the pretrial detention orders that befell Kirchnerite associates.
In that context, the Judiciary is already playing to Alberto’s tune. Controversial judge Rodolfo Canicoba Corral is investigating whether the Executive ordered “illicit espionage” of magistrates, congressmen, and even journalists, particularly through use of public entities such as the UIF, but also the National Customs Directorate, the Security Ministry, AFIP, Federal Police, and other security forces. Canicoba Corral claims he was under investigation, something that isn’t unlikely if his reputation has something to do with it, and is pointing the finger at Federici’s UIF. While internationally recognized, it appears evident that the moneylaundering watchdog cooperated with Macri in his crusade against Kirchnerite corruption. Alberto Fernández has expressed support for the investigation being led by Canicoba Corral, while the UIF came out with a press release indicating it doesn’t conduct “espionage,” rather it carries out investigations into suspected money-laundering and the financing of terrorism.
Whatever comes of this latest intersection between the shady world of Argentina’s actual and parallel spy agencies, politics and the Judiciary, it’s an indication of how the government to come plans to act. Fernández himself teaches law at the University of Buenos Aires and is the son of a judge, and he’s expected to have a leading role in the organization of the country’s legal system. If it seemed as if the Judiciary under Macri was extremely one-sided — something that was criticized consistently from these lines — then Alberto’s doctrine could, in the face of it, test the limits of the separation of powers.
If indeed the logical thing occurs and Alberto and Cristina overcome Macri and Miguel Ángel Pichetto, it is unclear how the economy will be managed, but it doesn’t seem like there’s likely to be much wiggle room. It isn’t clear who will lead certain key areas tied to the internal investigations of wrongdoing, from the UIF to the Anti-Corruption Office, but it is beginning to smell like revenge is a dish best served warm. And, of course, the supposedly independent federal judges seem to have already jumped ship.
At the end of the day, the greatest enigma appears to be what Mrs. Fernández de Kirchner’s role will be in the coming Peronist coalition. If things continue, particularly with regards to the Judiciary, it won’t really matter.