Argentina’s President-elect Mauricio Macri (2nd L) is greeted by a resident (L) as he walks along Paulista Avenue before attending a meeting with businessmen in Sao Paulo, Brazil, December 4, 2015.PAULO WHITAKER/Reuters
Mauricio Macri takes office on Thursday as Argentina's new president in a transition that seems certain to be dramatic.
The days leading up have been tempestuous: Mr. Macri and outgoing president Cristina Fernandez de Kirchner have squabbled openly about how and where she will hand over power. She tweeted that he shouted at her; he made a speech decrying her behaviour. The outgoing president went on a furious 11th-hour legislating-and-spending spree that could charitably be interpreted as solidifying her legacy (or, in Mr. Macri's view, trying to "create as many problems as possible for the new government").
The feud took on an air of farce when the sixth-generation silversmith who makes the official presidential baton told reporters that staffers for both the old president and the new had called him up and ordered him not to give custody of the ceremonial wand to the other side.
One way or the other, the baton will get passed to Mr. Macri, only the third non-Peronist president to take power in Argentina's modern democratic history – and then things get really complicated.
He takes over a country shut out of international capital markets, where inflation is at 30 per cent, the central bank is broke and the budget deficit is nearly 7 per cent. There's more: The black market dollar is worth nearly 50 per cent more than the official one, and exports, growth and job creation are all frozen or contracting.
Yet Argentines remain weirdly optimistic about their economy. The streets of this city are filled with shoppers, the restaurants full of expansive diners. Mr. Macri campaigned on a platform of aggressive pro-market reforms, but he won his new job with a narrow mandate, so he has little political capital to spend pushing economic reforms that make life harder for the poor and middle class.
During the campaign, Mr. Macri said he might make some significant changes – such as liberating the exchange rate and slashing export taxes – on his very first day in office.
Many who voted for Mr. Macri were drawn less to his right-leaning economic policies than to the promise he offered of a calmer governing style. Ms. Fernandez de Kirchner leaves office still enormously popular with half the population, but she has been a combative leader who has engaged in fierce battles with the opposition, investors and media organizations.
"People voted against the President because it was exhausting – she was confrontational about everything," said Mabel Thwaites Rey, a professor of political sociology at the University of Buenos Aires.
But, she said, those same people are also anxious about what Mr. Macri's plans may mean for their family budget. To rein in the deficit, he will need to slash Ms. Fernandez de Kirchner's popular transport and energy subsidies, which account for 4.5 per cent of gross domestic product. Energy prices could quickly be raised by 400 per cent, some analysts predict, and the lifting of currency controls will almost surely send inflation up, before, Mr. Macri hopes, bringing it down.
The team he has overseeing this is not long on political experience, added Prof. Thwaites Rey, calling them "more surprised than anyone" that they ended 12 years of Kirchner rule.
"The markets love that his cabinet is full of former CEOs of multinationals," she said. "But that doesn't mean they know anything about running a country as complicated as this one."
Fausto Spotorno, director of a Buenos Aires-based economics consultancy called OJF, predicted that one of the new president's first moves will be to reach a settlement with holdout hedge funds in New York. Ms. Fernandez de Kirchner's refusal to pay what she called the "vulture funds" full value on Argentine debt was politically popular domestically, but resulted in the country's isolation from international capital markets.
"Both sides want to get this resolved fast, and Macri's people may find international banks willing to give them bridge loans if they [do] it," he said. "Then, if you get the deficit down to 4 per cent, if you get to being some sort of normal economy, you will likely see growth by the end of 2017."
Certainly there is strong international hunger on the part of international investors to get into the market in Latin America's second-largest economy; stock markets and bond prices have surged since October when it began to seem Mr. Macri had a shot at the presidency.
But many of these steps will require legislative approval, and Mr. Macri may struggle to obtain it: he does not control Argentina's Congress, and only two of the powerful provincial governors are from his party. He does have an ally taking over his job as Mayor of Buenos Aires, and another as head of Buenos Aires province, which together are home to nearly half the population and a similar share of economic production. The Peronists in Congress have been divided into feuding factions, but could unite to oppose Mr. Macri's agenda, and his reforms will likely be opposed by powerful trade unions.
Ms. Fernandez de Kirchner, meanwhile, isn't going anywhere. She was prevented from running in this election by term limits, but could stand again in four years; her frenetic last days in office suggest she has no intention of abandoning the "Kirchner project" and retiring to a nice farm in the south.
Mario Antonio Sapato will be watching the key moment of the baton passing more anxiously than most: He plans to produce dozens of copies of a photograph of the moment. For the past 15 years, he has made a living as a street vendor of pictures of key moments and figures in Peronist political history – glossy portraits of Ms. Fernandez de Kirchner, her predecessor in office and husband Nestor Kirchner, and the iconic first lady Eva Peron. Now, with the swing to the right, he's going to need new pictures and a new market. "Everyone, the Peronistas and the anti-Peronistas, is going to want a picture of this moment," he predicted.
Mr. Sapato, 68, said he is grateful to Ms. Fernandez de Kirchner that he now has a pension, and he worries that Mr. Macri's cuts to subsidies are going to push up fares on the buses he relies on. For that matter, he said, the Macri administration probably won't approve of people selling in the street. "We don't know what this government is going to do – but we the poor always seem to pay the price," he said. "I hope he does well, for the good of everyone."
