By Marcus Turner Jones – After 28 years under the rule of Peronism, Argentina has become an insular nation that is largely detached from the international community. Underpinned by undeniably populist policies, the nation’s economy endured a period of stagnation around the turn of the century and this has left an estimated one-third of the population living in poverty.
The seeds for change were sewn back in 2015, with the creation of a political coalition including the Republican Proposal (PRO), the Radical Civic Union (URC) and the Civic Coalition parties. Known as Cambiemos (which translates into English as ‘Let’s Change’), this coalition enjoyed success when its Presidential candidate Mauricio Macri won his inaugural election in November 2015.
With Cambiemos having also performed exceptionally well in several provinces in the primary elections for the nation’s Congress, the time for change may now be upon us. But what will this entail, and how will it impact on Argentina’s economy.
How Macri is Leading the Charge for Political and Economic Reform
The charismatic Macri has led the drive for change in Argentina, basing the Cambiemos on the notion of reform and the perceived ruins of populist Peronist policies. Citing rising poverty and a decaying infrastructure that has suffered as a result of minimal spending and government oppression, Macri has followed a similar political doctrine that swept Donald Trump to power in the U.S. – by galvanising an electorate which had allegedly lost trust in its leaders.
Having built momentum ever since the November 2015 election and the appointment of Maria Eugenia Vidal as the Minster of Social Development in Buenos Aires and deputy mayor in 2011 (making her the first female and non-Peronist representative since 1987 to be voted into this office), the party is now ready to seize control of Congress. With more than 95.68% of the votes counted in the capital, pre-candidate Esteban Bullrich had earned 34.19% of support and is expected to claim a crucial victory for Cambiemos.
The party has also secured victories in key provinces such as San Luis, La Pampa and Neuquén, as momentum builds ahead of the legislative and Congress elections on October 22nd. This will review a third of the Senate and nearly half of the House of Representatives chairs, while potentially signalling the end of Peronism as a genuine political force.
Why Economic Reforms Have Held the Key for Cambiemos Success
It is not hard to understand the popularity of the Cambiemos movement, particularly given the economic reforms that Macri has also implemented. This has given weight to his criticisms of Peronism, which had presided over more than a decade of strict import controls and currency restriction.
As this resource reveals, there is an intrinsic link between currency and a nation’s macroeconomic performance, which the type of barriers created by Peronism slowed economic growth and inhibited Argentina’s integration with the international community.
Having overturned prohibitive capital controls and scaled back costly subsidies, Macri has already established a market-friendly economy that has seen the nation’s economic climate boom. More specifically, bonds, stocks and the Argentine Peso have surged during recent months on the Forex markets and as the primary election results began to role in, while the value of credit default swaps (CDS) has also tumbled. Robust growth in the manufacturing and construction sectors have underpinned this expansion, swelling Macri’s support nationwide.
The Last Word
Certain populist political parties and policies have earned support in regions such as the U.S. and Europe in recent times.
Yet, Argentina has sought to reverse this trend through the Cambiemos coalition.
Therefore, with economic reforms already underway and the social climate beginning to improve, this autumns Congressional elections may finally see the end of Peronism and a new dawn in Argentinian politics.