During his recent visit to Buenos Aires, President Barack Obama enthusiastically embraced Argentina’s new president, Mauricio Macri, who took office last December promising to overhaul the country’s economy, politics and foreign policy, including its endemic anti-Americanism. Obama appeared eager to endorse Macri’s new approach, and while thousands protested the visit, Obama made a statement that expressed surprisingly lofty ambitions for the new administration in Buenos Aires.
“Argentina,” Obama declared, “is re-assuming its traditional leadership
role in the region and around the world.”
The notion of Argentina becoming a regional leader will strike some as awkward.
Latin Americans frequently decry what they view as a degree of arrogance from
their Argentine neighbors, whom they accuse of viewing themselves as European,
somehow superior to the rest of the region.
In light of this legacy, can Macri become a regional leader for Latin America?
Latin Americans will express deep skepticism, but, in fact, Macri has arrived
at precisely the right moment. If his ideas prove successful in Argentina, they
are sure to inspire at the very least interested examination and probably
reluctant emulation elsewhere.
That’s because Latin America is experiencing something of an identity crisis,
its citizens distressed over the crumbling structures their leaders built
during the political and economic experiments of the past decade or two. Macri
is implementing his plans even as those socio-economic and political models in
neighboring countries are unraveling.
The guiding imperative in the region remains the need to tackle poverty and
inequality. Over the years, political leaders have tried their hand at new
philosophies and new approaches on how to do that. The result, as is now
apparent, has been a series of disappointments.
That
is most evident in Venezuela, where the “21st-century socialism” invented by
the late President Hugo Chavez has produced an economic calamity of
breathtaking proportions. It has also created profound and acrimonious
political divisions, which are as harmful to the country’s well-being as its
plunging GDP. The model was, and still is, characterized by income
redistribution programs, aggressively intrusive government intervention in the
free market, and an oversized role for government spending in the economy,
financed by income from oil exports. The system was already veering toward
self-destruction even before oil prices went into a tailspin. Government
intervention destroyed incentives for production and created absurd obstacles
for the functioning of business. Once global oil markets went into a downward
spiral, the entire economy started to crumble.
A rival left-leaning model was implemented by former Brazilian President Luiz
Inacio Lula da Silva. Lula, as he is known, maintained market-friendly
policies, but introduced programs aimed at lifting the poor out of poverty
through cash transfers and the like. The model seemed hugely successful. The
economy grew; the very poor did better; and the fast-growing economy allowed
the moderately poor to move into the middle class. But the plan suffered from
some grave flaws. It relied excessively on commodity exports, and it allowed
corruption to take root and grow. Today, the economy is contracting; President
Dilma Rousseff, Lula’s successor, is facing impeachment; and even Lula has come
under scrutiny for his role in corrupt activities.
In Argentina, Macri’s predecessors, Cristina Fernandez and her late husband
Nestor Kirchner, crafted their own leftist project, another blend of
redistributive policies alongside a market economy hindered by a heavy
government hand. As in Venezuela and Brazil, the breakdown of commodity prices
showed the hollowness and vulnerability of the model.
Macri campaigned on a promise to integrate Argentina in the global economy,
aiming to boost investment and trade with neighbors as well as distant trading
blocs and economies, such as the U.S. and the European Union. In addition,
Macri vowed to repair relations with the U.S., which has been painted as the
global ogre by Latin America’s left.
Not everyone at home is happy with the plan. Obama’s visit, on the 40th
anniversary of a military coup that was initially backed by Washington, brought
out thousands of protesters. And critics say Macri is reviving the failed neoliberal policies of the past.
But the policies that brought the economic collapse at the turn of the
millennium were founded on out-of-control borrowing; those that followed after
Kirchner defaulted on the country’s debt relied on tinkering with the domestic
economy, spending massively on domestic subsidies, while building a moat
against the rest of the world.
Macri has already moved to repair relations with creditors burned in the
Kirchner default. He has cut energy subsidies and has lifted exchange controls
and trade restrictions.
It’s early yet, and many enormous challenges remain. There is no clear evidence
of how successful his plan will be, but there are hints. The American Chamber of
Commerce in Buenos Aires says American firms will invest $2.3 billion in
Argentina in the next 18 months. That is a very significant sum.
Argentinians have seen their hopes raised in the past, and history has
taught them to keep their expectations from getting out of control.
Barely a century ago, Argentina was one of the 10 richest economies in the
world. In 1929, Argentinians enjoyed the world’s fourth-largest per capita
income. The U.S. and Argentina were relatively similar in size and outlook.
They both had vast expanses of land and horse-riding ranchers—cowboys in the
U.S., gauchos in Argentina. And both attracted refugees and fortune-seekers
from a restive Europe.
But their trajectories quickly diverged. After World War II, the U.S. helped build
the Bretton Woods international global order. Argentina was led by coup-leader
Juan Peron, who promoted intense nationalism, a personality cult and economic
self-sufficiency.
Peronism remains an integral part of Argentine politics. The previous
government was led by the Justicialist Party, also known as the Peronistas.
Macri, of the center right, is now reversing the inward-looking, nationalist
policies of his predecessors. Obama called him “a man in a hurry.” So did we.
Obama’s visit was a vote of confidence for his plan. If Macri and Obama are
right, the Macri Model could become the wave of the future in Latin America.
**Frida Ghitis is an independent commentator on world affairs and a World
Politics Review contributing editor. Her weekly WPR column, World
Citizen, appears every Thursday. Follow her on Twitter at @fridaghitis.
