A new beginning
A semblance of joy has returned to Argentina with the inauguration of President Nestor Kirchner. Hisham El-Naggar writes from Buenos Aires
Nestor Kirchner
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Time for a party. Well, sort of, after all Argentina has barely begun to recover from a four-year depression, and the wounds of the upheaval which unseated President Fernando de la Rua a year and a half ago are still fresh. But the Argentines seemed to be in a mood for celebration. On 25 May, Nestor Kirchner, the elected president, took over from the provisional -- and unelected -- Eduardo Duhalde.
This implied a crushing defeat for ex- President Carlos Saul Menem, who stepped down to avoid being trounced in a second round. Kirchner, however, had to make do without a landslide second-round victory. In the first round, in which there were many opponents, he scored a modest 22 per cent. Undaunted, however, Kirchner leapt into power with every intention of making his authority felt.
Though he belongs to the Peronist Party, the same which served Menem as a power base while he drifted ever more to the right, Kirchner has cultivated a "progressive" profile. His first act as president was to retire more than half of the top officers of the armed forces. It was time, he asserted, for a young generation of officers to take over from an old generation badly compromised by the memory of the savage repression which the military unleashed on the country during their illegal tenure of power between 1976 and 1983.
When the outgoing Chief of Staff General Brinzoni protested publicly, Kirchner remained firm in his response that the army has no business making political statements. Kirchner then took on the owners of the privatised utilities who had flourished under Menem, exploiting their power monopoly unashamedly. In response to requests by companies for higher tariffs to compensate for the devaluation of the peso, company practices employed by the mostly foreign bosses were examined closely to see if they were in line with investment pledges stipulated in the privatisation contracts. Since most had not, in fact, made the required investments, this was a clear signal that not everything had been laid on the table.
In case the point had been missed, Economy Minister Roberto Lavagna announced that the toll highway concessions would be put up for tender once the contracts expired later this year. Before his first week in power was over, Kirchner had travelled to the province of Entre Rios, where he settled a two-month long teachers' strike, and to the province of Formosa, where he signed a new resource-sharing agreement with the governor.
He sent half his cabinet to the province of Santa Fe to coordinate help for victims of the recent flooding. If Kirchner is the least bit intimidated by the anticlimactic victory which made him president, it does not show. Has a new age begun in Argentina, one in which the International Monetary Fund (IMF) will matter less than pressing domestic concerns?
The media is certainly portraying it that way. As several Latin American presidents flocked to Argentina for Kirchner's inauguration, voices were heard in praise of the country's new- found Latin American "vocation". Argentines were not merely reconciled to being part of Latin America rather than Europe, they were positively exultant.
The inauguration itself was quite a media show. Cuba's Fidel Castro and Venezuela's Hugo Chavez were feted by local parliamentarians and an enthusiastic crowd. Brazil's Luiz Inacio da Silva --"Lula" -- was warmly welcomed as the Argentinean president's most valuable strategic ally. He responded by affirming that he hoped to join forces with other South Americans to form an "axis of good".
The notion of "Kirchnerism" can probably only be understood in a regional context. The gung-ho market reforms of the 1990s have fallen into discredit throughout the entire region. Whatever the IMF may say, and it appears to be sticking to the same old script, social concerns are now foremost on the minds of regional leaders. The state, dismissed as useless or worse by the market gurus who ran the show until recently, is making a comeback, not as a Soviet-style central planner, but as a firm regulator of privately owned monopolies. And hopefully also as a source of succour to beleaguered citizens.
The model is, without a doubt, that of Lula's Brazil. Observers take heart from the fact that the markets, far from castigating Brazil for electing a socialist politician with a trade unionist past, have rallied in response to Lula's sober fiscal policies. This is the key: new priorities, a new role for the state, but none of the irresponsible deficits which plunged the continent into recurrent inflationary spirals in the 1980s.
This is not to suggest that Lula's task is an easy one. Some of those who had supported him now criticise him for being fiscally more prudent than his predecessor, Fernando Henrique Cardoso. But fiscal prudence is a major ingredient of his programme: as long as he generates surpluses rather than deficits, he can ignore the antediluvian market fundamentalism preached by IMF dinosaurs.
For Argentina, the challenge is bigger. Brazil's surpluses were designed to exorcise the fear of debt default. Argentina, which has already defaulted, must regain access to capital markets by rescheduling its debt. To do so, it needs to prove its ability to run budget surpluses comparable with Brazil's. Argentina is succeeding, as it turns out. The modest recovery, as well as cautious fiscal measures pushed through by Lavagna, has generated promising surpluses.
The next step is clearly a renegotiation of the country's debt, including a significant debt reduction and lower interest payments. And this is being done without resorting to the classical "adjustment measures" so dear to the IMF -- namely, balancing the budget on the back of the poor. A few weeks ago, the IMF's Anne Krueger grudgingly conceded that Argentina had returned to growth, to her surprise and, one could almost hear her say, disappointment.
The very opposite of disappointment is what Argentines are beginning to feel at last. Hence their willingness to indulge in that most precious of human passions: hope.
