Friday, October 26, 2018

Motherland: Feliz Día de las Madres

Jailhouse campaign: CFK’s regional allies

In remarks at the Wilson Center, Frente Renovador leader Sergio Massa cast doubt on the reelection prospects of a rival Peronist, former President Cristina Fernández de Kirchner, predicting would not “retroceder.” Ms. Fernández de Kirchner, however, does not see it that way. She has consistently indicated she will represent Unidad Ciudadana in next year’s election. It is clear why. In an October survey by Synopsis, the former president’s movement tied Mr. Macri’s Cambiemos coalition at 33 percent, with moderate Peronists, such as Mr. Massa, collectively attracting only 11 percent of support.

Given that public backing, it is no wonder Ms. Fernández de Kirchner sees a bigger threat to her candidacy in the tribunales than from rival Peronists. She is facing a range of corruption investigations – including the “cuadernos” scandal – and the possibility that the Senate will strip her of parliamentary immunity, as did the Lower House to her former planning minister, Julio De Vido, a year ago. That would put Ms. Fernández de Kirchner at risk of pre-trial confinement and produce uncomfortable parallels to her Brazilian ally, former President Luiz Inácio Lula da Silva, whose imprisonment kept him out of this year’s election.

Unlike Lula, who has been convicted of corruption, it is unlikely any of Ms. Fernández de Kirchner’s criminal cases will conclude before the October presidential election. That said, she might end up campaigning from behind bars, and she is clearly spooked by the Lula scenario. In a preemptive strike, she apparently orchestrated a letter to Página 12 – signed by former Presidents Rafael Correa of Ecuador; José “Pepe” Mujica of Uruguay; Lula and Dilma Rousseff of Brazil; Ernesto Samper of Colombia; Fernando Lugo of Paraguay; and José Manuel Zelaya of Honduras – criticizing the corruption investigations in Argentina as “persecución política.”

It is an odd collection of character witnesses. Of the seven former presidents who signed the letter, two were impeached, one was removed in a coup d’état, one is in prison, and one is in self-imposed exile in Belgium. But their travails actually feed into Ms. Fernández de Kirchner’s narrative of a conspiracy against leftist political figures. She has defended Lula and Ms. Rousseff and in Argentina, she has cast her legal troubles as politically motivated, making comparisons to the “Dirty War” dictatorship. Striking a similar tone, the letter from the former presidents warns, “no permitamos que esa forma de violencia institucional vuelva a poner en riesgo el futuro de la paz y la democracia de Argentina.”

Going south: Trump to

High : Low expectations

Argentines are not known for their humility, so the country’s latest president, , stands out for his steadfast refusal to celebrate the peso’s recent recovery.

The peso lost half of its value against the dollar this year, but this month, it has strengthened by 13 percent. That stability followed Argentina’s latest agreement with the International Monetary Fund on a $57 billion bailout – a loan whose requirements of steep budget cuts and tight monetary policy led to ’s resignation as central bank president and Mr. Sandleris’s appointment as his successor. Demand for dollars is down, Argentina’s trade deficit is narrowing, and analysts are beginning to trust the central bank’s exchange rate projections.

Yet even as @ArgentinaProj’s “vital signs” daily report shows a stable currency, Mr. Sandleris has remained wary of premature celebration. In an interview with The Financial Times, Mr. Sandleris – who holds a Columbia PhD and an LSE Master’s, and has taught at Johns Hopkins – adopted an aw-shucks attitude about the peso’s performance. It is “definitely too soon” to declare an end to Argentina’s economic turbulence, he said, citing an uncertain external environment and the Argentine central bank’s “sad record.”

His caution is no doubt genuine. Mr. Sandleris, 47, is Mr. Macri’s third central bank president. As inflation this year approaches 50 percent, his predecessors are being lampooned online – for wildly unrealistic inflation projections, and Mr. Caputo for boasting last year that Argentina would be “the star of emerging markets for the next 20 years.” (“I don’t mean to be cocky, but it’s very evident,” he said at the time.) After Mr. Sandleris accepted the promotion, Bloomberg called his job “one of the most volatile positions among developing nations.”

Meanwhile, though Mr. Sandleris’s commitment to the IMF program has reassured markets, his commitment to his former boss, Finance Minister Nicolás Dujovne, could lead fears to resurface about central bank independence, especially if next year’s presidential campaign leads to political pressure to lower interest rates or deviate from the IMF’s monetary policy stranglehold.

To learn more about Argentina’s economic crisis and prospects for recovery, register for our November 5 round table, featuring top analysts from J.P. Morgan, Credit Suisse and UBS.

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