1-30-06, 9:02 am

As the “pink tide” fraternity of left-leaning leaders grows in numbers across Latin America, the successes of one of the continent’s less high profile members of this fellowship, Argentina’s Néstor Kirchner, have largely gone unnoticed outside of his country. Together with Venezuela’s Chávez, Brazil’s Lula, Uruguay’s Vásquez, Bolivia’s Morales, and, more distantly, Chile’s recently elected self-professed socialist president, Michelle Bachelet (whose ties with the “pink tide” are questionable), Kirchner is a central player in the hemispheric drift away from untrammeled market policies and towards a socially conscious and state-centric model. Aside from his extraordinary stand against the IMF regarding Argentina’s massive debt problem, Kirchner is not widely known abroad. Distinguishing him from the ranks of the other “pink tide” leaders is perhaps made more difficult because he remains identified with architecting a uniquely Argentine solution for his nation’s economic and political woes, rather than concocting a recipe applicable to the entire continent. In spite of his near invisibility in the U.S., the polls tell us that he is probably the most popular leader in all of Latin America.

Making the Man

Latin America’s leadership has traditionally been educated abroad, but Kirchner was schooled at La Plata National University in Buenos Aires, where he earned his law degree and began his political activism by opposing the brutal military dictatorship of Rafael Videla (1976-1981). While living in the thinly populated southern province of Santa Cruz, Kirchner gained instant popularity as the result of a dispute with the then governor regarding financial policy. This led to Kirchner’s resignation as president of the Rio Gallegos social welfare fund in 1984. Public attention surrounding his highly visible departure from this body fueled the early phases of his political career, when in 1987 he was elected mayor of Rio Gallegos, a small city in the province of Santa Cruz. Kirchner’s success as mayor propelled him to run for the provincial governorship in 1991, where he won with 61% of the vote. During his time as governor, Kirchner demonstrated an ability to curb unemployment and boost productivity through attractive investments, using deregulation and monetary policy to create more equitable distributed wealth, and lower poverty levels in this oil rich province.

Economic Crisis

As Kirchner continued his stint as governor in Santa Cruz, (winning re-election in 1995 and 1999), Argentina’s economy began its free-fall towards a sharp recession. In 2000, Buenos Aires requested helped from the IMF in order to reduce the country’s debt, but the $40 billion aid package proved far from sufficient. By 2001, riots and demonstrations erupted that forced then-president De La Rúa from office. Following the latter’s resignation, a series of presidents briefly held office, which eventually led to the appointment of interim president Eduardo Duhalde in 2002, who was to serve until the 2003 presidential elections. While president, Duhalde eliminated the fixed-exchange rate with the dollar, causing the peso to quickly devalue, sending the Argentine economy further into economic recession. At this point, Argentines began to grievously suffer, as bank accounts were frozen, with many families eventually losing the bulk of their savings. Citizens across the nation were losing all trust in their political leadership, and a profound malaise descended on the country.

Kirchner Emerges

In 2003, Argentina prepared for presidential elections, hopeful of discovering a political figure capable of repairing the economy and bringing about a return to past glories. Almost overnight, the hardly known Kirchner emerged as a powerful challenger to former President Carlos Menem (1989-1999), and quickly gained popularity with his denunciations of the latter’s neo-liberal policies. After sagging in the first round, Menem, whose hands had been repeatedly caught in the national cookie jar, and facing certain defeat, dropped out of the second round runoff, giving the presidency to Kirchner.

Kirchner’s Plan

Kirchner, whose political philosophy draws on a center-left Peronist approach that advocates a strong centralized government free from foreign influence, became Argentina’s president-elect in May of 2003, forcing him to face Argentina’s collapsed economy head on. Not only did Kirchner immediately negotiate an agreement with the International Monetary Fund (IMF) to reschedule $84 billion dollars in debt over three years, he declared Argentina’s independence from the international lending organization, claiming that the open market economic program imposed by the IMF could not be counted on to solve Latin America’s, much less Argentina’s, economic problems. Upon receiving IMF funds in 2001, Argentina had agreed to reduce government spending and raise taxes, which resulted in a lower standard of living and violent confrontations with unemployed demonstrators. The IMF essentially had mandated austerity, cutting back Argentina’s social programs in the face of the country’s crippling crisis, a move which produced a convulsive reaction on the part of the public. Also confronting the new president was the task of dealing with the Argentine Supreme Court, upon which sat a number of judges widely regarded as corrupt, who had been appointed under Menem. Kirchner initiated the departure of several judges, as well as many members of Argentina’s military, both reminders of a wretched epoch in the country’s recent history. Regarding the military, Kirchner’s courageous attitude has been where there is crime there must be punishment, and that those members of the armed forces who had murdered innocent civilians must be made to face their guilt.

Economic Repair

Economic Minister Roberto Lavagna, appointed in 2002 by interim President Duhalde, remained in his post under Kirchner, and played a key role in returning stability to Argentina after the catastrophic freezing of the public’s bank accounts in 2001, termed the “corralito.” Lavagna’s strict fiscal and monetary policies eventually produced outstanding results, as Argentina experienced a growth rate of nine percent in the last three years, and since 2002, the amount of foreign currency in the Central Bank has tripled, with exports rising 50 percent. Though Kirchner and Lavagna together successfully bargained with the IMF, and eventually paid off Argentina’s $84 million dollar debt under very favorable terms, they ultimately disagreed on how to respond to recent inflationary surges. The IMF demanded that Kirchner increase public utility rates, and Lavagna pushed for negotiations with the IMF, but instead, Kirchner fired Lavagna on November 28, 2005, repaid the IMF, and unilaterally installed temporary price controls. This bold act immediately produced an electrifying ripple throughout the populous, causing great concern with respect to Argentina’s economic future. The price controls willexpire this coming June, but may become permanent if inflation doesn’t subside. There is speculation as to whether inflation is a result of lower currency reserves, or a function of Kirchner’s unpredictable behavior, despite his promises to maintain a stable economic atmosphere.

Kirchner’s motives for his economic policy are clear; by repaying the IMF, Argentina gains economic autonomy from an overarching authority which has chronically undermined Latin America’s economic prosperity. Kirchner, like many other Argentine public figures, openly blames the IMF for the economic collapse of 2001-2002, so the public’s desire to be rid of the IMF is more than understandable. In fact, this sentiment is on par with a worldwide trend: Thailand and Indonesia made similar choices in 2003, and Brazil’s Lula announced his plans to repay Brazil’s IMF obligations two days prior to Kirchner’s decision to do so.

Kirchner’s Future- Prospects and Plans

As of now, Kirchner is vastly popular, ticking up a 75% approval rating. This has prompted a certain amount of unease over the concentration of power in his person. Joaquín Morales Solá, a political columnist for La Nacíón, defines Kirchner as having a “personalistic style of governing, with a dose of authoritarianism and hegemony, an aggressive style of induced rupture and confrontation.” Kirchner’s faction of Peronisim, called “Front for Victory” (FV), has gained nationwide popularity, winning 69 seats – 54% of those being contested – in last November’s congressional elections, suggesting that the president’s policies have wide popular backing. One of those seats will be filled by his wife, Cristina Fernández de Kirchner, representing a Buenos Aires district. Among Kirchner’s supporters are the Madres de la Plaza de Mayo (Mothers of the Plaza de Mayo), Argentine mothers who have marched in the Plaza de Mayo for the last 25 years demanding information about the estimated 30,000 people who disappeared during the “dirty war.” The mothers recently announced the end of their marches, noting that they “no longer had an enemy in the presidency.”

Currently, Kirchner’s Argentina is following Chávez and his brethren movement leftward, away from Bush’s free-market economics, and towards Chávez’s populism. Kirchner has given the public every reason to believe in him. Unemployment and poverty have fallen, and economic growth has ensued. Kirchner sees a role for Argentina in the movement, with the long term goal of creating a South American union and confronting Washington and the IMF, if need be. Together, Kirchner and Chávez are working on a southern development fund, a component of which represents Venezuela’s financial aid to Argentina, which has included Caracas’ purchases of about $2 billion in Argentine securities overall . Also, Chávez has made plans with Kirchner and Lula to build a $4 billion pipeline through Peru and Brazil to supply Argentina’s hefty gas demands. The gesture was reciprocated through Kirchner’s stalwart backing of Venezuela’s entrance into MERCOSUR.

Argentina’s traditional U.S.-influenced foreign policy, which was embraced by the Menem administration, has been profoundly altered under Kirchner. Upon coming to office, he suspended Argentina’s policy of “automatic alignment” with Washington, and now no longer is prepared to please the White House by voting against Cuba on human rights issues. Kirchner’s ideology has brought him closer to the other “pink tide” leaders of the continent, among them Brazil’s Lula de Silva, who Kirchner professedly admires as “one of the greatest Brazilian presidents.” Most recently Lula promised Kirchner that he would help overcome trade asymmetries and also help accelerate Argentina’s industrialization, which contrasts with frosty past moments over trade differences. The previously testy relationship between the two South American giants seems to have been somewhat ameliorated by Kirchner’s effectiveness in relieving Argentina’s economic distress. Kirchner also has endorsed newly elected Evo Morales by attending his inauguration in La Paz. And as the threat of an energy crisis creeps near, he has also formed ties with Chávez, resulting in the proposed natural gas pipeline that would link the two nations. In recent weeks, Kirchner’s only spat has been with neighboring Uruguay, which seems to feel alienated by MERCOSUR trade differences, and has heatedly disputed Buenos Aires’ environmental objections to Montevideo’s plans to construct polluting cellulose plants on the border.

Since the 2003 elections, Kirchner has proven his ability to nurse Argentina back to relative health, and remains a highly popular figure among Argentines, yet the country's long-term future remains somewhat uncertain. The Economist Intelligence Unit last month speculated that Kirchner’s government would move towards stabilization as inflation slowly begins to fall from today’s 12% to 10% by the end of this year. Imports will continue to recover, and according to the UN World Economic Situation and Forecast report, in 2006 Argentina will grow by 6%. Kirchner has taken steps to reduce debt and promote social programs that benefit the poor. Yet by accumulating increasing degrees of personal power, Kirchner could be tempting hubris and risking national consensus. Also, whoever follows Kirchner may not possess the wizardry to maintain the pace of economic recovery on the existing too narrow economic base. Critics argue that the continuation of the economic recovery would have to be backed by ongoing investments from disparate sources, or Argentina will once again find itself needful of another Kirchner to save the country from its own indulgences.

From Council on Hemispheric Affairs