Kirchner’s Successor Likely to Be More Business Friendly

Whoever succeeds the Argentinian president is likely to pursue a less interventionist economic agenda.

President Cristina Fernández de Kirchner of Argentina greets a crowd in Buenos Aires, October 6, 2011
President Cristina Fernández de Kirchner of Argentina greets a crowd in Buenos Aires, October 6, 2011 (Casa Rosada)

As President Cristina Fernández de Kirchner comes to the end of her second and final presidential term, Argentina’s October elections could bring a new party to power for the first time since the 2001 economic collapse. Conservative businessman Mauricio Macri leads the polls after a 12 percent upsurge in the past year.

After Argentina defaulted on its debt last year for the second time in less than two decades, all the major parties acknowledge a need for economic reform.

New economic policy announcements from the incumbent government are unlikely to carry much weight, however, given how little is left of Kirchner’s presidency. Still, it is possible to gauge the mood of the country based on the reaction to her latest policies.

Although Macri, of the conservative Propuesta Republicana, leads the polls, Kirchner’s leftist Front for Victory still holds the majority in both houses of Congress.

Argentinian politics have long leaned toward the sort of Peronist populism Kirchner’s party represents. But it seems the country is increasingly yearning for a change — especially since the suspicious death of prosecutor Alberto Nisman in January, the latest in a series of political scandals that has seen allegations against high-ranking officials.

The most likely candidate to replace Kirchner as party leader is Buenos Aires governor Daniel Scioli. A former businessman, he disagrees with the president’s protectionist economic policy and would be likely to steer the economy in a more liberal direction.

Since last year’s default, the government has backpedalled on some of its interventionist policies and offered an attractive package to energy sector investors in an attempt to lure them back, utilize the country’s vast energy reserves and address its electricity shortage.

However, this package has managed to unite all parties against it who deem it too generous. Should a conservative government be formed in October, economic liberalization would probably be curtailed by a divided Congress.

Kirchner’s recent deals with China have also met with opposition. While intended to prevent further raids of the central bank’s reserves and strengthen ties with an emerging superpower, following last year’s $11 billion loan, it may result in further dependency on China, hamstringing the incoming president. A new leader may want to reaffirm Argentina’s ties with the rest of Latin America and the United States in order to counterbalance its increasing attachment to China.

Given the uncertain nature of the economic and political landscape, it is too early to predict the outcome of the election. But whichever of the two leading candidates wins, policy is likely to become more friendly to investors.