The Center for Latin American Issues
of the school of business and public management
 &
the Latin American Studies Program
of the Elliott School of international Affairs

Present

Will Argentina's Next President Address the Country's Social and Economic Needs?

 

 

 Monday, April 7, 2003


SYNOPSIS

  
On April 27, Argentines will go to the polls to elect a new president. The new executive will face extremely difficult economic and political circumstances in the wake of the December 2001 economic crisis. His Excellency, Eduardo Amadeo, Ambassador of Argentina to the United States, feels that although Argentina’s economy is still reeling, there are reasons to be optimistic about his country’s situation. Several recent indicators show a moderate recovery in the early part of 2003, e.g., exports have increased sharply during the past few months. In addition, a more stable macroeconomic environment should help allay fears of another slump and should improve investment conditions. Demand for pesos is high, and the Central Bank has not intervened in market the economy for seven months.
 
According to Ambassador Amadeo, these conditions are the result of efforts by the Duhalde administration to pursue sound economic policies; in fact, the current administration has more than met the fiscal and monetary terms laid out in its agreement with the IMF. The successes of the Duhalde administration are strong incentive for the next president to stay this course and to lead with consistent, orthodox management of the economy. The new president must behave predictably in order to build on this groundwork. 

Ambassador Amadeo presents an optimistic view of Argentina’s economic situation. The panelists voice their concerns to the audience.

Poverty is the most critical issue that the new administration must work to alleviate in order to avoid further social unrest, challenges to the political system, and unstable conditions that discourage foreign investment. The most positive aspect of the current crisis in Argentina is that the political and democratic institutions have proven remarkably resilient. Even during the worst period of crisis, each transition of power has been made peacefully under the terms dictated by law. In many ways, says Ambassador Amadeo, coping with the turmoil through these stable institutions has improved the quality of political dialogue.
 
Ambassador Amadeo sees several major potential obstacles ahead for any president who hopes to keep Argentina on the path toward a sounder economic footing. The first task awaiting the next president will be to renegotiate the enormous debt, with both private lenders and international institutions. Second, the world situation presents a great liability for efforts to attract investment and to spur economic growth. The United States, while instrumental in supporting the most recent Argentine-IMF agreement, is focusing heavily on the Middle East; there is presently no real agenda between the United States and Latin America. The global economic situation does not work to Argentina’s advantage either, as recent net flows of financing are negative for the Latin American region. Finally, the failure of the most recent Doha trade-negotiating round means that increasing trade in the short term through reductions in trade barriers will be difficult.
 
Professor Gonzalo Paz of the Latin American Studies Program at GW sees signs of damage to the system of representation in the current political campaign. The top three presidential candidates are all from the Peronist Party, and the consensus of opinion is that two of these will compete in a second-round runoff. This is the first time in 20 years that only one party is seriously involved in elections, indicating a fragmentation of the party system.

Professor Gonzalo Paz discusses the challenges that will face Argentina’s next president. The panelists listen to a question from the audience.

Paz believes that, in addition to maintaining the economic recovery and dealing with the IMF, the next president also must focus on achieving less-quantifiable goals. Among these are rebuilding the trust, social capital, and institutions that were severely damaged as a result of the crisis of December 2001. Ambassador Amadeo agreed that cultural shifts would be as important as economic policies, noting that the middle class tends to spend as if it were rich; all Argentines will have to learn to live within their means. Part of the effort to build a sound economy will be increased training for mid-level government officials, many of whom lack the expertise necessary to implement effective economic policies.
 
In order for the power transition to go smoothly, President Duhalde must prepare well to avoid even the appearance of illegal manipulation of elections, which some observers are already warning against. Paz noted also that the results of the parliamentary elections in October 2003 will provide key information for evaluating the prospects of success for Argentina’s next president.
 
Regarding regional issues, Ambassador Amadeo noted that Colombia is not exclusively a problem for the United States to deal with, but that it is important for all the nations in the region to support efforts to end the conflict. It is amazing, he said, that the FARC’s foreign assets have not been frozen; this would be a relatively easy first step in reducing that group’s power.