Southern Cone: Rapid Transition to Non-Conventional Renewable Energy

By Thomas Andrew O’Keefe*

Edificio Alexander

Edificio Alexander, a building in Punta del Este, Uruguay, that produces wind energy on its roof. / Jimmy Baikovicius / Flickr / Creative Commons

South America’s Southern Cone is undertaking a transition to non-conventional, renewable energy resources – that is, production not dependent on fossil fuels or large-scale hydropower – that creates the opportunity for a historic regional consensus on energy policy.  Uruguay and Chile are at the forefront.  Both lack significant fossil fuel reserves and have experienced crises when droughts detrimentally impacted hydro-supplied electricity.  For them, the rapid shift to other forms of domestically sourced renewables is as much a means to guarantee energy security as to combat climate change.  Approximately a third of Uruguay’s electricity is currently generated from wind power (up from only one percent as recently as 2013).  Similarly, about a third of Chile’s electric power – depending on the time of day – is sourced from the sun and the wind.

  • Brazil has also made significant strides in incorporating wind, and to a lesser degree, solar power into its energy matrix. The primary motivation is the need to offset carbon emissions from the burning of rain forests and the country’s greater use of natural gas.  Brazil has long enjoyed the cleanest energy of any large economy in the world because of its heavy reliance on hydropower, which still covers some two-thirds of the country’s electric needs.  Brazil was also a pioneer in the development of more environmentally friendly sugar-based ethanol (as opposed to corn favored in U.S. ethanol production); most passenger vehicles today have flex-fuel engines.  Paraguay gets almost all its electricity from hydropower (and exports the bulk of what it produces).
  • Argentina, while increasing exploitation of its large shale gas and oil reserves, in 2017 expanded renewable energy projects nearly 800 percent over the previous year, according to reports. President Mauricio Macri has created a more inviting investment climate for the private sector, rapidly increasing natural gas output, especially from the Vaca Muerta shale reserves in Patagonia.  He is also encouraging the expansion of renewable energy beyond large hydro by, among other things, allowing long-term power purchase agreements in U.S. dollars as a hedge against currency devaluations.  Furthermore, large industrial consumers face penalties if they do not meet increasing thresholds set for renewable energy use.  Current laws require that at least 20 percent of the nation’s electricity come from non-conventional renewables by the end of 2025, and they include tax exemptions, import duty waivers, and a special trust fund called FODER, created in 2016, to provide subsidized loans and other assistance.

The rapid expansion of the renewable energy sector in the Southern Cone will enable countries to export excess production to their neighbors, facilitated by a robust regulatory framework to facilitate the cross-border trade in energy resources.  In addition, by creating a fully integrated regional market in renewable energy products, a crucial backup is established for resources such as wind and solar power that are inevitably prone to interruptions during the day.  It would also mitigate the impact of droughts on hydro-generated electricity, which are likely to worsen with global climate change.  Accordingly, there are strong incentives to revive efforts begun by MERCOSUR in the late 1990s to integrate energy markets that collapsed with the Argentine energy crisis at the start of the 21st century.  The fact that all the Southern Cone governments are now ideologically aligned in favor of market-oriented economic and investment policies facilitates achieving a regional consensus on energy for the first time.  Governments in the region now need to move beyond the discussion phase to turn all this into a concrete reality.

October 19, 2018

*Thomas Andrew O’Keefe is the President of Mercosur Consulting Group, Ltd. and currently teaches at Stanford University in Palo Alto and Santiago, Chile.

Argentina: From Gradualism to Shock Therapy

By Arturo C. Porzecanski*

Argentine President Mauricio Macri

Argentine President Mauricio Macri. / Wikimedia / Creative Commons

The austerity measures that President Mauricio Macri announced yesterday to deal with the sharp depreciation of the Argentine peso and acceleration of inflation in the past couple of months are a belated but entirely appropriate effort to stem the country’s massive capital flight.  His administration intends to lower government spending and reimpose taxes on exports to reduce the fiscal deficit faster than envisioned in May, when a three-year economic program was agreed with the International Monetary Fund (IMF).  This is in addition to a previously announced government hiring freeze and cuts to subsidies for electricity and other services.

  • Specifically, the goal now is to minimize the public sector’s financing requirement for 2019, limiting it to rolling over debt maturities coming due plus borrowing $15 billion mostly from the IMF, World Bank, and Latin America’s development banks (CAF and IADB), to cover the interest payments coming due next year. All told, the fiscal deficit contraction that would be achieved between 2017 and 2019 is equivalent to about four percentage points of GDP, compared to the previously pledged 2¾ percent of GDP in savings embodied in the IMF program.
  • In return, Macri’s government has requested the IMF to speed up disbursements under the $50 billion loan facility, which had envisioned a $15 billion up-front payment in June, made on schedule, plus installments of about $3 billion per quarter through June 2021, depending on performance and need. The Fund’s Managing Director, Christine Lagarde, has instructed IMF staff to work with the Argentines to reach a rapid conclusion of discussions to present to the Executive Board for approval.

Macri’s announcement was an admission that what had been advertised in May as a strictly “precautionary” loan must now be amended to provide emergency financing full-throttle.  While a number of emerging-market currencies have come under downward pressure in recent months, the sell-off in Argentina is only comparable to that in Turkey: both the Argentine peso and the Turkish lira currently buy about half as many U.S. dollars as they did at the start of the year (now 100 pesos = $2.60 vs. $5.40 then).  The currency downdraft has dragged Argentine stocks and bonds down when measured in dollar terms; the probability of a debt default in Argentina, as deduced from bond yields, currently ranks highest of all in the emerging markets but for Venezuela, in default since late 2017.

  • Last December, the central bank of Argentina (BCRA) committed itself to achieving an inflation rate of 15 percent during 2018, but prices rose more than that just in the first six months of the year. Given the cost-push pressures unleashed by the peso’s sharp depreciation since May, Argentina would be lucky to end the year with inflation cumulating less than 40 percent.  The patent failure of monetary policy to stabilize the currency and curb inflation thus far will probably be hotly discussed during the government’s negotiations with the IMF.  Last week the BCRA hiked its target interest rate to 60 percent from 40 percent in early August, which is more than double the level that prevailed through May.  Chances are that the IMF will pressure the central bank to keep interest rates significantly above expected inflation until the fever breaks.

We wrote in mid-May that we were witnessing in Argentina the demise of President Macri’s cherished – and popular – gradualism in tackling the poisoned inheritance left after 12 years of populism under presidents Néstor and Cristina Kirchner.  Now we are beholding the embrace of “shock therapy” in fiscal and monetary policies by the Macri administration.

  • Macri and his economic team keep blaming adverse circumstances, such as the worst drought in 30 years, which has delivered the poorest harvest since 2009; risk aversion among investors because of the tightening of U.S. monetary policy; and uncertainty generated by the “corruption copybooks” scandal involving Kirchner government officials and construction industry businesspersons. Their diagnosis is patently wrong.  Despite the poor harvest, Argentine export earnings through July have increased in the best performance in several years.  The tightening of U.S. monetary policy has been very gradual and well telegraphed in advance; it has not caused problems in prudently managed countries.  And the recent scandal is tarnishing Macri’s opposition in the legislature and has not reached the scope of the “carwash” scandal in Brazil.
  • Macri and his team are reaping what they sowed. In 2016-17 they claimed that they could do little to address the inherited fiscal and monetary problems because otherwise they would lose precious seats in midterm congressional elections and end up as lame ducks.  And then, after Macri’s party Cambiemos did well in the October 2017 contest, they claimed that in 2018-19 they could do little to address the inherited fiscal and monetary problems because otherwise they would lose the presidential elections in October of next year.  Up until February, local and foreign investors were willing to give the Macri administration the benefit of the doubt, but then they got impatient, started to pare their positions especially in short-term government bonds, and subsequently decided to exit on a large scale when the central bank failed to tighten monetary conditions sufficiently to keep the peso from depreciating rapidly.

September 4, 2018

*Dr. Arturo C. Porzecanski is Distinguished Economist in Residence at American University and a member of the faculty of the International Economic Relations Program at its School of International Service.

Argentina: The Downside of Gradualism

By Arturo C.  Porzecanski*

Tortoise heads down a dirt path surrounded by greenery

Towards Turtle Path / Maxpixel / Creative Commons

President Mauricio Macri made a surprise announcement on May 8 that his government would seek financial support from the IMF to enable the country to “avoid a crisis like the ones we have faced before in our history” – essentially, an admission that time may be up for his policy of gradualism in dealing with the legacy of populism.  Sources in his administration expressed confidence that Argentina could obtain some $30 billion in “precautionary” loans at low interest rates and with few strings attached as an alternative to more borrowing in the international capital markets at higher and rising rates.  His finance minister, Nicolás Dujovne, and other members of the economic team departed Buenos Aires for Washington, DC, that same evening to formalize the request at IMF headquarters and to meet with a top Trump administration official at the U.S. Treasury.  After an initial round of friendly conversations, the parties agreed to meet again starting on May 14 to initiate a negotiation process that they acknowledged would take several weeks.

  • Macri blamed downward pressure on the Argentine peso (despite drastic hikes in short-term interest rates and the sale of one-tenth of hard-currency official reserves), on tighter monetary conditions and on volatility abroad at a time when the government must still raise money internationally to finance its large fiscal deficit.  “The problem that we have today is that we are one of the countries in the world that most depends on external finance, as a result of the enormous public spending that we inherited and are restoring order to,” the President stated.
  • The decision to turn to the IMF surprised observers because it came at an unusually early point in the country’s financial cycle.  Argentina’s central bank still has about $55 billion in international reserves, the equivalent of some 10 months of imports, or three times the amount of foreign-currency government debt maturing in 2018.  Also, foreign investors by no means have slammed the door on Argentina’s face, though admittedly the government probably could not sell another 100-year dollar bond like it did last June, raising $2.75 billion from die-hard optimists.  Argentina in the past, like most other countries, has generally turned to the IMF only in desperation once they were unwelcomed by Wall Street and their vaults were almost bare.
  • The onus placed by Macri on deteriorating financial conditions abroad was also surprising.  After all, the U.S. Federal Reserve has barely begun its monetary tightening process: the overnight fed funds rate, currently around 1.7 percent per annum, is still below U.S. inflation of 2.1 percent, so it has yet to enter positive territory.  Moreover, U.S. bond yields now in the vicinity of 3 percent for 10-year Treasuries, are up from 2.3 percent a year ago but have merely bounced back to a level they were at as of end-2013.  And the financial markets’ “fear” index VIX, a measure of expectations implied by options on the S&P 500 index, has fluctuated in the teens, which while higher than last year’s mostly single digits, remains very far from the range of 30 to 80 seen during prior episodes of extreme risk aversion in the financial markets.

 President Macri’s announcement did not have the favorable intended effect on confidence and market behavior, as evidenced by the peso remaining under downward pressure in the three business days that followed.  Despite renewed central bank intervention to boost the currency, it now takes almost 24 pesos to buy a U.S. dollar when it took fewer than 16 pesos to do so a year ago – a loss of about one-third in the currency’s purchasing power.  One reason is that Macri’s blaming adverse developments abroad for his currency’s woes rings hollow with investors, given how very slowly his administration has moved to reduce a fiscal deficit running above 6 percent of GDP since 2015; how much debt (around $100 billion) he has taken on in just a couple of years; and how timid his central bank has been in its attempt to bring down inflation running at about 2 percent per month.  And the other reason is that it quickly became apparent that any loan from the IMF will come with strict conditionality attached, because Argentina’s request was routed to the Fund’s regular, “stand-by” window – and not to its easier-access, precautionary lending window for highly creditworthy borrowers.  The Fund spelled out its economic policy advice for Argentina in its December 2017 “Staff Report for the 2017 Article IV Consultation,” and it calls for a more assertive reduction in the fiscal deficit, especially by cutting government spending, and for supply-side reforms it called “indispensable” to support economic growth, raise labor productivity, attract private investment, and enhance the country’s competitiveness.  These are all recommendations that fly in the face of President Macri’s gradualist approach to defusing the economic minefield left behind by his populist predecessor, Cristina Fernández Kirchner, and will therefore paint his government into a politically fragile corner.  We are witnessing the demise of Macri’s cherished – and popular – gradualism.

 May 14, 2018

*Dr.  Arturo C.  Porzecanski is Distinguished Economist in Residence at American University and Director of the International Economic Relations Program at its School of International Service.

 

“New Transnationalisms” in Latin American Cinemas

By Dolores Tierney*

Guillermo del Toro speaks on a panel

Mexican director Guillermo del Toro, who won the Oscar for Best Director last month. / Gage Skidmore / Flickr / Creative Commons

When Mexican film director Guillermo del Toro won the Oscar for Best Director for The Shape of Water last month, it was another example of the “new transnationalism” of contemporary Latin American cinemas.  Working across cultures while preserving his Mexican creative identity, del Toro follows in the footsteps of his compatriots, Alejandro González Iñárritu (Best Director for Birdman in 2014 and The Revenant in 2015) and Alfonso Cuarón (Best Director for Gravity, 2013).  An examination in my recent book of these and three other Latin American directors – Brazilians Walter Salles and Fernando Meirelles, and Argentine Juan José Campanella – finds that their work is part of a broader shift toward transnational filmmaking: films made in one country produced with capital, creative input, or paradigms borrowed from another, and actors and directors making films in nations other than their own.

  • To a certain extent, Latin American filmmaking has always involved the use of personnel, equipment, and cinematographic styles from Europe and the United States. This comingling has become more radical, however, since the early 1990s, when neoliberal policies in the three major filmmaking nations – Mexico, Brazil, and Argentina – in particular led to a withdrawal of government financial support for the industry.  State-owned film infrastructures, including film institutes, distribution companies, and theater chains, were dismantled.  Production numbers fell from close to 100 annually in each country to less than ten, and Hollywood films increasingly dominated box offices.  In Mexico, government patronage still contributed to Cuarón and del Toro’s first features, respectively Sólo con tu pareja (1991) and Cronos (1993), but large numbers of directors, cinematographers, and actors left to look for work in the United States film industry.

At the turn of the century, however, production shifted toward a new model of transnational production.  Mexican cinema experienced a box office and critical renaissance because deregulation of movie ticket prices encouraged investment in new U.S.-style multiplex theatres situated in upscale shopping malls and neighborhoods.  Among the hits were Amores perros; Y tu mamá también; El crimen del padre Amaro; and Sexo, pudor y lágrimas.  The new multiplex-goers welcomed a range of Hollywood-derived genre films (romantic comedies, teen films), narratives, and practices (tie-in soundtracks) that reflected Mexicans’ own evolving tastes – finding common ground between Mexican and U.S. culture even if, quantitatively, “Hollywood” films still dominated.  In the same general time period, moreover, Mexican state support shifted toward a new model of privately and transnationally financed filmmaking that includes funds from European countries, other Latin American countries, and the United States.  Iñárritu, Cuarón and del Toro straddled two markets and two cultures, and excelled in both.

  • A similar evolution took place in Argentina and Brazil, with state withdrawal in the early 1990s and then a push to filmmaking in a reformed model of co-production in more recent years. Brazil and Argentina’s most successful domestic films are made with a combination of funds from the state (or state-owned businesses such as Petrobras) and private companies working with foreign partners, such as the Spanish Telefe and U.S.-based Disney affiliate Miravista (in Argentina), and a consortium of foreign firms partnered with Globo in Brazil.

Latin American film critics often lament that the region’s transnationalized cinemas borrow too much from the aesthetic models of the north – the genre templates of the crime film, melodrama, and romantic comedy among others.  But closer analysis shows that, while such artistic appropriation and the international co-producers’ distribution muscle are important, the films’ success also depends on their strong elements of “local exceptionality.”  Transnationally funded artists whose films circulate successfully in Europe and North America have leverage to tackle important sociopolitical aspects of their respective national histories.  Argentine director Lucrecia Martel (La ciénaga, La niña santa, La mujer sin cabeza, Zama) and Peruvian Claudia Llosa (Madeinusa, La teta asustada) are able to get around funding bodies’ prescriptive demands to make films that challenge stereotypes of developing nations.  In his recent Oscar-winning film, The Shape of Water, del Toro has made an English-language adult fairy tale with nods to science fiction, spy thrillers, and the musical, but it is much more than a product of U.S. industry.  It is a transnational film that reflects what del Toro refers to as the contradictions of his Mexican identity – a mixing of the “dark” and the “good” – and explores how Latin American and Latinness function in the U.S. political and racial imaginary.  His transnational film doesn’t diminish his Mexican voice; it enhances it.

 April 2, 2018

* Dolores Tierney is Senior Lecturer in Film Studies at the University of Sussex and former CLALS Fellow.  Her book, New Transnationalisms in Contemporary Latin American Cinemas, was published by Edinburgh University Press last month.

Argentina: Excessive Optimism?

By Nicolás Comini*

Man delivers a speech on an airfield.

Argentine President Mauricio Macri. / Cancillería del Ecuador / Flickr / Creative Commons

Argentine President Macri’s Cambiemos coalition won an overwhelming victory in last month’s legislative elections – a step toward fulfilling his 2015 promise of a “revolution of joy” – but it’s not clear yet whether the administration’s optimism translates into national hope.  The coalition won in 15 of the 24 provinces of the country, including the five largest jurisdictions – the City of Buenos Aires, Buenos Aires, Córdoba, Mendoza, and Santa Fe.  Government officials and Macri’s supporters have expressed optimism that the economy will turn around and political confrontation will be overcome.  Macri won the presidency in 2015 with an alliance that made optimism – and the appearance of optimism – a central theme for overcoming what he called the polarization generated by his predecessor, former President Cristina Fernández.  His discourse was rooted in the ideas of change, happiness, efficiency, and meritocracy.

  • Even critics acknowledge that the government has generated innovation in terms of political discourse and representation, rooted in a greater horizontality of leadership and greater citizen access to public officials. News of some officials’ questionable business practices as revealed in the “Panama Papers” and “Paradise Papers” has caused little or no backlash.  Second, the idea of “normalization” of the country, supported by the media, has had a positive impact on part of society.  GDP growth at almost 3 percent this year and the lifting of exchange controls and imports have also buttressed this theme.  The unfavorable trade balance, with a deficit of US$765 million in 2017, has not been a factor.  Third, the government is still able to blame the country’s problems – including high levels of inflation and indebtedness – on the “received inheritance” from his predecessors, whose rule implied corruption, social polarization, and isolation from the world.
  • Rejection of the legacy of Cristina Fernández and her husband/predecessor, Néstor Kirchner, also seems to be one of the Macri government’s greatest assets. Even though Cristina is the most popular candidate in the opposition, her rejection among the broader population is greater; many of the votes that the government’s allies garnered were “anti-Kirchner” votes.  Cristina won a seat in the Senate, but in national politics, there’s a growing sentiment of “anyone but Cristina,” while a civil war simmers within the ranks of her Peronista base.  The political rise of Macri ally María Eugenia Vidal as governor of the Province of Buenos Aires – historic bastion of Peronismo and the country’s main electoral district – attests to these troubles.

Macri’s gains indicate a significant strengthening of the government, which is key to the reform package that the administration launched almost immediately after the election.  Proposals include aggressive changes in tax and labor matters.  While the tax reform has triggered battles with some large corporations, such as Coca-Cola, that will pay higher taxes, the labor reform has broad support from employers.  The latter faces strong resistance from a large part of society and, above all, of the union and opposition sectors, who fear that it, similar to one already carried out in Brazil, will contribute to job insecurity.  Macri’s increasingly forceful discourse on reducing public employment has also raised concerns despite his assurances that reducing state structures will help create private-sector jobs.

British theorist Terry Eagleton has said that an optimist is someone who thinks that things will improve even if there are no reasons for it.  The optimism of the government and its supporters is as easy to understand – there are some clear reasons for it – as it is palpable.  Macri has a strong government in a Latin America plagued by weak governments.  He not only has power in parliament; the country’s large corporations, mass media, security forces and, of course, an important part of the people are also behind him.  But Argentina is accustomed to living in cycles.  Expecting that in Argentina one or two or even three electoral victories will produce a durable revolution and fundamentally change those cycles, as the current government’s rhetoric suggests, may not be warranted by the facts.  Each administration usually assumes that the previous one did things absolutely wrong, and they will do better this time.  But this kind of impulse has an expiration date.  Joy and good vibes can have a positive impact on a society’s feelings about itself, but a real lasting solution will require addressing the underlying causes of the country’s polarization, poverty, and exclusion.  This implies, above all, state policies and continuity through different administrations.

November 15, 2017

* Nicolás Comini is Director of the Bachelor and Master Programs in International Relations at the Universidad del Salvador (Buenos Aires) and Professor at the New York University-Buenos Aires. He was Research Fellow at CLALS.

Macri in the Next 100 Days

By Nicolás Comini*

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Argentine President Mauricio Macri. / Casa de América / Flickr / Creative Commons

Everybody seems to love President Mauricio Macri outside Argentina – it’s not hard to understand why – but he faces tough challenges at home.  Foreign supporters have plenty of reasons to believe in him.  First, he is not Cristina Fernández de Kirchner, the former president whom they branded a populist too close to Venezuela, Bolivia, or Ecuador.  Like many conservatives inside Argentina itself, they see Macri as the person who avoided the “Venezuelization” of the country, and his market-friendly credentials were sealed through his campaign promise of a “rain of investment” and his government’s implementation of a package of measures aimed at financial liberalization, regulatory flexibility, liberalization of foreign trade, and stronger fiscal discipline.  He has been less confrontational in diplomacy.  “Return to the world,” “de-ideologization,” “pragmatism,” and “transparency” are the continuous slogans that draw the foreign accolades.

Things look different at home, however.  The federal government confronts a convoluted scenario in the next 100 days, during which it will face at least three sets of sensitive issues in the run-up to Legislative primaries in August and elections in October.

  • Domestic issues. The government will have to deal with a hostile internal front.  One challenge will be resolving a long-running pay dispute with teacher unions – especially in the province of Buenos Aires.  Another is quelling complaints about steep increases in the costs of government services and deep slashes in funding for Science and Technology, Culture, Human Rights, Health, Production, and Energy.  Macri’s failure to meet inflation reduction targets (prices rose by 40 percent in 2016); the need to stimulate the economy; and debates on tax reform are a daunting agenda.
  • Controversy over human rights and immigration. One of the Achilles’ heels of the current administration is the imprisonment of social activist Milagro Sala in the northwestern province of Jujuy.  An ally of former President Fernández de Kirchner, Sala was arrested in January 2016 – one month after Macri took office – on highly contested charges: initially of “instigate criminal activity disorder” and later of “illicit association, fraud, and extortion.”  Pope Francis, Canadian Prime Minister Trudeau, and UN officials have expressed concern, fueling tensions inside Argentina.  An immigration reform decree facilitating deportations and restricting access at border crossings has been rejected by social movements, international organizations, and much of the Argentine political opposition.  The repudiation is not only felt in the formal political arena but also on the streets.
  • External dynamics with internal consequences. Brazil’s Lava Jato scandal is splashing as much onto Macri’s government as his predecessor’s.  Officials from both administrations are being accused of receiving bribes from Odebrecht, the largest Brazilian construction company, and no one knows how this process will develop hereafter.  Congresswoman and Macri ally Elisa Carrió claims the whole political elite is complicit in the Odebrecht mess.  The “Panama Papers” – leaked from the law firm Mossack Fonseca, which allegedly was involved in helping companies hide bribes paid to a number of South American leaders – has so far not touched Macri, whose family has links to firms cited in the documents.

The August primaries, followed by full legislative elections in October, are a potential inflection point for both Macri and his opponents.  Neither side has yet announced its slate of candidates, but one essential factor is already clear: the candidacy (or not) of Cristina Fernández de Kirchner.  The primary election will define how the pieces of the political chessboard are placed, and Macri’s handling of his economic, political, and social challenges will be decisive.  Achievement of his reform agenda – including the overhauling the National Institute of Statistics and Census (INDEC, accused of cooking data during previous governments), an ambitious “Plan Belgrano” infrastructure program, and the end of currency controls – may not be enough.  The potential reunification of his key Peronist opponents, increased social unrest, splits in his own coalition, and the spillover from the Brazilian crisis suggest a sobering future.  True love cannot be achieved from one day to the next, but in the domestic political arena it is simple to lose it suddenly.

June 8, 2017

* Nicolás Comini is Research Fellow at CLALS; Director of the Bachelor and Master Programs in International Relations (Universidad del Salvador, Argentina); and Professor at the New York University-Buenos Aires.

Argentina: The (Un)Fulfilled Promises of an Election Year

By Ernesto Calvo*

ArgentineCongressCC

Palace of the Argentine National Congress / Andresumida / Wikimedia / Creative Commons

As the 2017 mid-term election approaches, both Argentine voters and party elites see a gloomy present and a bright future. With only seven months until the October 22 election, the economy still shows few signs of recovery. Patience is running thin in Congress, among governors, and with organized labor – but it seems to be never-ending among voters.

  • For over a year, surveys have shown that a majority of voters perceive their personal economic situation as dire. In survey parlance, each month voters perceive that they are worse off than in the previous month. Yet, to the surprise of specialists, a majority of voters also expect the economy to improve in the next month. Indeed, voters seem as willing to credit the current administration of President Mauricio Macri for its policy choices as they are unhappy with the economy.
  • The opposition is betting its future success on the dismal economic outlook: high inflation, stagnating wages, and lack of growth. The government expects voters’ optimism, the raw expectation of future growth, to carry the day. The increasing gap between current perceptions and future expectations has baffled specialists. The only possible result, many confide, is either a rude awakening for the administration or a real change in the pace of economic growth.

Both parties suffer from divisions. Former President Cristina Fernández’s Front for Victory still carries most support among Peronists, although many fear that a Senate victory by their leader in the Province of Buenos Aires will ensure a divided party in the election of 2019. Peronist dissident Sergio Massa is still running outside the party, and few anticipate any grand-coalition before 2019. The other traditional party, the UCR, remains on life support after a decade of mishaps, and is only a minor partner of President Macri’s party, Republican Proposal (PRO), in the government coalition. Meanwhile, the incumbent PRO has yet to decide their strategy to form Provincial alliances and nominate its candidates.

As the election nears, it is unclear whether voters will hold the government responsible for their current economic malaise or will still believe in PRO’s capacity to deliver a better economy. Voters have one leg in a bad economy and another leg in the promise of a better tomorrow. They are, in the words of the Herald Editor J.G. Bennet, “Like a stork by a frog pond, they are as yet undecided which to rest upon.” Eventually, one of the two legs will have to go up, for either the government or the opposition – but not both – to celebrate on Election Day. Regardless, the mid-term election may provide little information as to who the real winner is. With no presidential candidates on the ballot, no important gubernatorial races to publicize, and only one important Senator on the line (that of the Province of Buenos Aires), the signal will be unclear. If the government does extremely well, it may gather a third of the House vote, all provinces considered together. If the government performs badly, it may get a quarter of the House seats. As the election approaches, it would seem that the only measure of success or failure would be whether the government coalition, Cambiemos, wins first, second, or third place in races for the National Senators of the Province of Buenos Aires. More troubling yet, it is unlikely that the result of the election, whichever it may be, will clarify the choices faced by voters, the future of the Peronists, or the likelihood of a steady government coalition after 2017.

March 9, 2017

*Ernesto Calvo is a Professor and Associate Chair of the Department of Government and Politics at the University of Maryland.

NiUnaMenos Gains Momentum

By Brenda Werth* and Fulton Armstrong

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Protesters gather in Buenos Aires, Argentina as part of the NiUnaMenos movement, which has sparked mobilizations across the country and in many other Latin American cities. / Wikimedia / Creative Commons

Protesters have taken to the streets in Argentina and elsewhere in Latin America to raise awareness about violence against women and girls, pushing for an end to machista culture.  News media estimate that a demonstration under the banner of NiUnaMenos – “not one less woman” due to femicide – in Buenos Aires last Wednesday drew tens of thousands of supporters dressed in black, despite freezing rain.  Other banners declared “We want to live” and demanded “No more machista violence.”  The immediate issue driving the protest was the brutal attack earlier this month on a schoolgirl in Mar del Plata – 16-year-old Lucía Pérez – who was drugged, raped, and tortured to the point of suffering cardiac arrest and died from internal injuries.

  • Argentina passed laws between 2008 and 2012 protecting a range of rights relating to human trafficking, violence against women, marriage equality, and gender and sexual identity, creating new space for discussion of the issue. But the Casa del Encuentro, an NGO that helps victims of gender violence, says that data through 2015 indicate that somewhere in Argentina a woman is killed every 30 hours.  The government’s Secretariat of Human Rights says that 19 women and girls were murdered in the first 18 days of October.  Argentine President Macri, challenged since early days of his administration to address the problem, has reiterated pledges to push legislation that would establish a hotline for reporting abuse and create more shelters for abused women as well as better ways of monitoring abusers.

Similar protests were held in Peru, Mexico, Bolivia, Chile, Paraguay, Uruguay, and El Salvador – with thousands of protesters in capital cities demanding an end to the systematic violation of women’s rights.  Chilean President Michelle Bachelet announced last week that she was joining the NiUnaMenos movement.  She condemned the murder of a 10-year-old girl asphyxiated, burned, and buried by her step-father.  Movement organizers cite research showing that violence against women is a serious problem in much of Latin America.  The Mapa da Violencia published by FLACSO Brazil last year shows that seven of the 10 countries with the highest female murder rate are in this region – with El Salvador (8.9 homicides per 100,000 women), Colombia (6.3), Guatemala (6.2), and Brazil (4.8) near the top of the list.

The demonstrations reflect growing global awareness of gender violence as a violation of human rights and that legislation, while helpful, is not enough.  NiUnaMenos and other groups are also rewriting the traditional definition of violence against women as attacks perpetrated by strangers rather than boyfriends, husbands, or family members – just as coverage of femicide in Mexico in the 1990s raised public awareness of gender violence as systematic and deeply structural as opposed to “every-day,” “familial,” and “private.”  NiUnaMenos is challenging “the culture of violence against women” in machista societies and condemning “the men who think that a woman is their property and they have rights over her and can do whatever they want.”  In Argentina, the mainstream media have stimulated much of the backlash, with reporting that exploits private details of victims’ lives and portrays victims in a manner that suggests responsibility for the crimes committed against them.  This recycling of the “algo habrá hecho” logic that circulated freely during the dictatorship coincides with a renewed focus in Argentine society on cases of torture during those years, treating them specifically as acts of sexual violence.  A week or two of protests obviously will not change ingrained culture, but the burgeoning movement highlighted by NiUnaMenos offers hope of continued progress in protecting the fundamental rights of women throughout the hemisphere.

October 24, 2016

* Brenda Werth is Associate Professor of World Languages and Cultures at American University.

President Obama’s Visit to Buenos Aires: An Important Gesture

By Katherine Hite*

Parque de la memoria Argentina

Parque de la Memoria, Argentina. Photo Credit: Jennifer Yin / Flickr / Creative Commons

While most eyes are on U.S. President Obama’s historic visit to Cuba, the timing and agenda of his follow-on travel to Argentina – while controversial – also is a significant opportunity for the United States to burnish its image in Latin America.  Obama arrives in Buenos Aires on the 40th anniversary of Argentina’s military coup d’etat, marking a brutal period of systematic human rights violations in which the United States lent tacit support.  In an important attempt to ameliorate the controversy over his timing, Obama will be delivering a cache of declassified documents on both what the U.S. knew regarding the 1976-1983 repression and on the green light that Secretary of State Henry Kissinger gave the dictatorship’s dirty war against political opponents during the final year of the Ford presidency.  In addition, the President will visit the Parque de la Memoria, site of a memorial to the thousands of victims of the military regime.  He’d expressed interest in a visit to the ex-Navy Mechanics School (ESMA), notorious former clandestine detention site where an estimated 5,000 Argentines were imprisoned, 90 percent of whom were murdered, but political sensitivities in Buenos Aires precluded it.

Argentina has pioneered efforts to come to terms with the past, from prosecuting and jailing former military officers guilty of violations, to “recuperating” former clandestine detention centers, where citizens were tortured, executed, and made to “disappear.”  Human rights activists have converted several of these former centers, such as the ex-ESMA, into spaces to remember and to educate the public with a message of accountability and of “never again.”  Some memory sites also seek to connect human rights violations of the past to ongoing violations, including police brutality and the abuse of the incarcerated, as well as to present-day struggles for social justice.  Argentine school children learn about their past and study the Universal Declaration of Human Rights.

It is an important moment for the U.S. president publicly to recognize the U.S. historic role in Argentina’s tragic past – and for Argentines to show Washington, itself accused of torture and clandestine detention in recent years within its “War on Terror,” that such abuses can never be tolerated and that perpetrators must be brought to justice for a democracy to be healthy and stable.  Countries throughout the region, including Chile, Uruguay, Peru, Colombia, El Salvador, and Guatemala, have similarly created memorials and museums of memory.  Chile’s Museum of Memory and Human Rights gets over 10,000 visitors a month.  It houses a large permanent display documenting the 1973-1990 dictatorship, and like the ex-ESMA, opens its spaces to human rights organizations, artists, theater groups, and others for workshops, plays, movie series, and more.  In El Salvador, the Museum of the Word and the Image sponsors an exhibit on the roots of the country’s civil war as well as memories of the suffering and resistance.  It has also sponsored exhibits on Salvadoran migration to the United States during the war and connects past to current violence, both within El Salvador and in close relation to the United States.  Together these efforts invite acknowledgment, reflection, and dialogue.  President Obama’s activities in Argentina, like President Clinton’s apology in Guatemala for the U.S. role in past violations in that country, are an important gesture that, within a broader U.S. commitment, could help facilitate a less tarnished image for Washington in Latin America along with his historic shift in policy toward Cuba.

March 21, 2016

* Katherine Hite is professor of political science at Vassar, with special interest in Latin American politics, social movements, and the legacies of violence for governments and societies throughout the Americas.

Behind Argentina’s Making up with its Creditors

By Arturo C. Porzecanski*

Pensive Macri

Photo Credit: Mauricio Macri / Flickr / Creative Commons

A recently concluded agreement in principle between Argentina and most of its holdout creditors is part of a 180-degree turn in economic policy that the new administration of Mauricio Macri is attempting to make in order to end five years of economic stagnation, 10 years of double-digit inflation, and 15 years of isolation from the international capital markets.  President Macri has to navigate very carefully, however.  First, he does not have a majority in either congressional chamber, so he has to work hard to persuade legislators to support his policy initiatives.  Second, the judiciary and the Executive branch are packed with political appointees from the Néstor and Cristina Kirchner administrations, and while some of them have been fired, Macri and his economic team must still tread cautiously.  Third, all the key economic institutions, such as the government’s commercial and development bank (BNA), the central bank (BCRA), and the social security administration (ANSES) have been stuffed to the gills with either risky or unprofitable assets (from bad loans to government IOUs), thereby compromising their effectiveness.  Last but not least, Macri must be mindful of his very fickle electorate: over the past seven decades, Argentines have periodically voted non-Peronists into office to clean up the mess left behind by the Peronists, but then they have soured and yanked their support.  It is a sobering fact that not a single non-Peronist government has ever made it to the end of its constitutional term in office.

This is why the Macri administration is going for some “quick wins” rather than for major structural reforms or the necessary dose of fiscal austerity and monetary restraint.  And this is the context within which his willingness to “bury the hatchet” with private and official creditors must be understood.  As a former businessman, Macri realizes that if one takes over a money-losing enterprise – in this case the public sector, which is running a deficit equivalent to more than five percent of GDP – one needs to cultivate sources of interim financing until the enterprise can be turned around.  After all, the prior government had been living hand-to-mouth on loans from the BNA, the BCRA, and ANSES, with increasingly inflationary consequences.  Having lost official international reserves and seen the currency depreciate rapidly after abolishing capital controls, the authorities are now under great pressure to obtain interim financing from abroad to help stabilize international reserves and support the weak currency.

President Macri faces a very difficult governance challenge in the months and years ahead.  His ability to mend fences with private creditors – Argentina has been in arrears to all its bondholders since mid-2014 – as well as with the IMF, multilateral development banks, and official creditors such as the Ex-Im banks – is crucial to the restoration of financing to the private and public sectors and the fostering of an investment-friendly climate.  Macri’s agreement in principle with most holdout creditors is a big step in the right direction, but he must now secure the requisite congressional approvals to dismantle Kirchner-era legislation inimical to a settlement and obtain interim financing at reasonable interest rates to clear all overdue debts.  These are early and relatively easy tests for a government that is yet to adopt most of the divisive and unpopular austerity measures that circumstances warrant.

March 10, 2016

*Dr. Porzecanski is Distinguished Economist in Residence at American University and Director of the International Economic Relations Program at the School of International Service.