Dec 12, 2019
Expert Voices

Fernández faces political balancing act to boost Argentina’s economy

Alberto Fernandez standing inside Argentina's National Congress

Alberto Fernández at his Dec. 10 inauguration ceremony in Buenos Aires. Photo: Mario De Fina/NurPhoto via Getty Images

Newly inaugurated President Alberto Fernández seeks to pull Argentina out of its economic slump, but has yet to reveal how he will do so while balancing demands from vying political factions.

Why it matters: Fernández emerged as the latest standard bearer of the heterogenous Peronist movement after proving himself a deft political operator, but his approach to governance is just beginning to take shape. His rise marks a leftist resurgence that could redraw Latin America’s geopolitical map and create new tensions in U.S relations with the region.

Background: Historically a left-wing, trade union–based movement, Peronism underwent a market-friendly shift during Carlos Menem’s presidency (1989–1999) before swinging back to the left under Nestor Kirchner (2003–2007) and Cristina Kirchner (2007–2015). That evolution has yielded a party of starkly contrasting views on the economy.

  • Since the campaign, Fernández has been dogged by persistent questions about whether he or his vice president — former President Cristina Kirchner — will call the shots.
  • The party’s largest congressional bloc is under Kirchner's sway. Fernández seems to be hewing toward a center-left position to avoid alienating other groups.

Where it stands: Fernández has described Argentina's skidding economy as in "virtual default," despite a record $57 billion IMF bailout loan.

  • Bond prices rose as markets reacted favorably to signs of a restructuring proposal that eased fears of an outright debt moratorium.

What to watch: Fernández appears to be calling for a standstill, hoping he can buy time to stimulate demand and brighten growth prospects while keeping the IMF and other investors at bay.

  • The new economic minister is viewed as a Fernández-Kirchner consensus pick, but his lack of government experience leaves lingering uncertainty.

Between the lines: Argentina's economic policies could have an impact on ties with the U.S., the IMF's largest shareholder.

  • Meanwhile, President Trump has added pressure with his threat of aluminum tariffs. And one of his top Latin America advisers publicly expressed displeasure with the presence of several left-wing leaders at the inauguration ceremony, including a high-ranking, U.S.–sanctioned official from Nicolás Maduro's government.

Michael McCarthy is a research fellow at American University’s CLALS, an adjunct professor at George Washington University's Elliott School for International Affairs, and the founder and CEO of Caracas Wire.

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