By Matthew Barbari
Days after his historic trip to Cuba, President Obama headed to Argentina, another country in Latin America that has had less than favorable attitudes toward the U.S. over the years. Plagued by a major economic crisis in 1998-2002, Argentina defaulted on its $132 billion debt, after the Bush administration was reluctant to support more IMF help for the country. With a 11% percent economic contraction and over 50% of Argentines plunged into poverty, public opinion turned against the U.S., blamed with the IMF for the country’s woes.
This contributed to the 2003 elections of Peronist candidates Néstor Kirchner and subsequently his wife Cristina Fernandez de Kirchner, who promoted populist policies and regularly lambasted America, neoliberalism and the Washington Consensus.
Obama has set out to improve economic and political ties with the country since the election of Mauricio Macri, a centrist pro-market president that vowed to break from the Kirchner legacy. In addition, Obama also apologized for the U.S. role in supporting the military junta that ruled Argentina from 1976 until 1983, and promised to release records and information to elucidate the U.S. involvement in the “Dirty War.”
Elected back in December 2015, Macri is the first non-Peronist president of Argentina in nearly 16 years. He ran on a campaign of fixing Argentina’s economy and opening up trade by resuming relations with the U.S. and other major powers have been unwilling to invest in Argentina since the economic meltdown and default. Under the Kirchners, Argentina had refused to pay back debts accumulated and was soon cut off international financial markets. Macri recently reached a deal with Argentina’s debtors, a first step in revitalizing the country’s economy.
Much of Obama’s trip aimed restoring economic relations between the two countries: he hoped to discuss with Macri the possibility of Argentina joining the Trans-Pacific Partnership (TPP) in order to increase foreign investment opportunities and lower barriers to trade. The U.S. delegation also sought to open up talks with Mercosur, a custom union between South America countries including Argentina and Brazil, about a possible free trade agreement (FTA) between the trading bloc and America.
Previous attempts from the U.S. at a FTA have been blocked by leftist governments in Venezuela and Argentina under the Kirchners. But with Obama hoping to “reset” relations with a less protectionist Argentina, discussions about a possible FTA seem more likely. While much of Latin America remains distrustful of the U.S. and free-market policies, this provides an opportunity for Argentina to take the lead and to become the region’s preferred interlocutor with the U.S.
Despite Macri’s pro-U.S views, many Argentines are still hesitant. Obama’s trip triggered public protests in which American flags were burnt and signs saying “get out Obama” were waved. Indeed, in a 2015 Pew Research Center poll, 43 percent of Argentines responded that they had an unfavorable view of the U.S.
Notwithstanding popular antagonism and a hostile Peronist-controlled Congress, Macri has succeeded in passing many of his economic reforms. After winning the election by managing to unite a fragmented opposition that craved for change, he must now rally the Argentinian people behind his new liberal model that will result in short-term pain but yield great economic benefits down the road.
The Argentinian economic recovery is still far in the horizon. Macri has inheriting a 7% government deficit and an inflation rate of over 20% that has actually increased with the decision to devaluate the Argentinian peso. Cutting a bloated federal budget, including welfare benefits and social programs may provoke serious popular backlash and thus decrease his ability to further reform the economy. The next years are full of promise for Argentina if the country lives up to its potential.