First Lady Elected President of Argentina

The Argentineans have elected a new president, and she has the same surname as her predecessor, which is not a surprise as the two are married. Cristina Fernandez de Kirchner will succeed her husband Nestor Kirchner. Wags have dubbed her the new “Evita,” and her supporters insist that she is not standing in her husband’s shadow. What is certain is that Argentina has voted for more of the same.

Not that more of the same is a particularly noxious libation. A cheap currency and high commodity prices have helped the Argentine economy grow at the rate of 8% per year since Mr. Kirchner became president in 2003. Unemployment is about half of what it was then, and the poverty levels in the nation have dropped. That’s a welcome change from the Argentine mess of 2001, when the country defaulted on its debts.

The unfortunate fact for Argentines of all political stripes is that the Kirchner years thus far have seen growth based on an artificially low base line. In 2001, the country was far worse off than it usually was. Growing an economy at 8% a year is hard unless the economy has imploded and is recovering in what some call a “dead cat bounce.” Mrs. Kirchner will face a much tougher time as the easy growth is done, and the expansionary policies of the husband’s government have just about run out of juice.

The worst trouble is the result of those expansionary policies – inflation. The government tinkers with the way it is measured to ensure that the rate says in the single digits, but there are suggestions that the inflation rate for Argentina is at around 20%. That is not quite hyper-inflation, but it isn’t prudent policy either. A stronger peso will help as will higher interest rates and less government spending, but that 8% growth rate will drop to 4% or 5%. That is still a healthy march toward prosperity, but people don’t consider that as much as the trend. Rising from 0% to 2% is better than falling from 8% to 4% in most minds, irrational though that is.

Her Peronist party benefited also from a horribly divided opposition. The other traditional party in the country, the Radicals, haven’t recovered from the 2001 meltdown, and they remain on the outs with the voters. So, 13 different candidates challenged her, and split the vote against her. She doesn’t have a lot of time, though, because as the chickens come home to roost, someone in Argentina will emerge to say “told you so.” The reforms need to come quickly, and they need to be effectively almost immediately.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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