Argentina’s New President and Economic Reform

For the first time in 14 years, the people of Argentina said “no” to the Peronist regime and elected a conservative, non-Peronist as president. Mauricio Macri was sworn in as president of the country on December 10^th and his swearing-in marks a departure from the leftist ideology that has pervaded not only the presidency, but the legislature, for more than a decade.

Like many of the other Latin American countries, Argentina has been crippled by indebtedness, hyperinflation, stagnation, deficits, and corruption, that has steadily increased since World War II.[1] The Peronist party ruled the country by nationalizing rather than privatizing many of the country’s industries. In the Economic Freedom of the World Report for 2013, Argentina was ranked 151 out of 157 countries.[2] Ex-President Cristina Kirchner and her husband, Nestor Kirchner, before her sharply increased spending on social welfare programs and raised tariffs in attempts to protect local industries.[3] They also aligned the country with leftist leaders like late Venezuelan President Hugo Chavez and Bolivian President Evo Morales.[4] The country’s poverty and inflation are nearly 25 percent, some of the highest rates in all of Latin America.[5]

President Macri has vowed for economic reform. His political promises included, among many, the development of infrastructure and the development of industries in many of Argentina’s providences.[6] As one of the richest men in Argentina and as former mayor of the city of Buenos Aires, Macri understands the importance of capitalism and how the government should not be in complete control of industry.

This change in ideology, will mean good things for the United States and for Argentina. Macri has already spoken with Vice President Biden about strengthening cooperation between the countries.[7] Relations with the United States have been strained for the past decade due to enormous debts owed to United States creditors. One of the ongoing cases has been with the recent court ruling that U.S. hedge funds do not have to accept restructured loan payments on bonds. This bitter fight was undertaken by the ex-president who had legislation passed in defiance of the U.S. courts’ rulings.[8]

Presumably with Macri, the situation will improve and relations with the United States will only get better. It will be a long journey until the country is able to come out of the economic crisis it has made for itself. However, with strong leadership and a proactive government it will be possible for Argentina to one day join the ranks of the most prosperous countries.

 

Tom Osborne is a 3L and a senior editor of the Journal of Law and International Affairs at the Penn State University Dickinson School of Law.

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[1] Doug Bandow, Mauricio Macri Takes Helm In Argentina: Tough Battle With Vulture Politicians Ahead, Forbes, Dec. 10, 2015.

[2] Id.

[3] Argentina: New President Macri Promises Major Changes and Honesty, NBC News, Dec. 10, 2015.

[4] See Id.

[5] Taos Turner, Argentina Inaugurates President Mauricio Macri, The Wall Street Journal, Dec. 10, 2015.

[6] Id.

[7] Readout of Vice President Biden’s Call with President-Elect Mauricio Macri of Argentina, White House Press Release, Dec. 5, 2015.

[8] Argentina accuses US judge of being ‘imperialist’ after debt plan ruling, Reuters, Aug. 22, 2014.