Argentina

Numerous countries will hold elections in 2023. Here are five to watch. 

Already the most dangerous region in the world for journalists, press freedom in Latin America is under attack. A recent case in Argentina underscores the pressures journalists face in speaking truth to power. 

When a majority isn’t a majority…

With elections approaching, Argentina faces yet another debt crisis.

The ascent of leaders who favor free trade opens space for real integration.

A hapless political opposition fails to capitalize on the president’s mistakes and adapt to the future.

This week's G20 summit promises to be a dramatic spectacle. The ongoing U.S.-China trade war, a showdown in the Kerch Strait, and an international murder mystery will be among the intrigues. 

Latin America’s judiciaries are engulfed in corruption scandals. In Colombia a former Supreme Court member was arrested on charges of corruption and bribery. In Peru multiple judges stand accused of trading favorable rulings and shortened sentences for money and perks. In Guatemala, lawyers and justices face charges of rigging Supreme Court appointments. And in Mexico the attorney general's office fired one of its own for delving too deep into alleged bribes to the former head of the national oil company Pemex, a close confidant of President Enrique Pena Nieto. These acts, more than similar crimes by dirty politicians, undermine the region’s fragile rule of law, revealing deep-seated corruption among those responsible for holding others to account. They show that the widespread legal reforms of the last two decades, while necessary, weren’t enough. The next essential step is professionalizing the judiciary itself. Argentina, Chile, Colombia, Mexico, Peru, Uruguay, and others have overhauled their legal systems, introducing oral trials, arbitration, and mediation alternatives, and strengthening due process and the presumption of innocence. As part of larger shifts from inquisitorial to adversarial systems, these efforts have begun to make justice more transparent, effective, and fair. Many Latin American countries have also passed specific anticorruption measures. Brazil criminalized bid-rigging, bribery, and fraud in public procurement. Argentina outlawed nepotism, and along with Peru and Colombia upped the penalties for corporate bribery. Mexico created a new national anti-corruption system, explicitly outlawing bribes, embezzlement, and the failure to disclose conflicts of interest, and creating a dedicated prosecutor to go after perpetrators. Legislators also gave prosecutors new corruption-fighting tools. Brazil’s successful Lava Jato (Carwash) investigations, leading to more than 200 convictions of politicians and business leaders for bribery and kickbacks, including former president Luiz Inacio Lula da Silva, have hinged on plea bargaining, introduced to the fight against organized crime by a 2013 law. Nearly a dozen nations in the region claim similar statutes that enable court officials to ease sentences in exchange for information on accomplices and higher-ups. Yet as the ongoing wave of scandals attests, beyond new laws Latin American nations need judges and lawyers able and willing to wield them. This in turn requires a professional legal bureaucracy. Although harder to conjure than legislation, a qualified civil service is possible to build. Look, for instance, at Chile and Brazil. Chile has a long history of meritocratic public hiring, drawing on credentials and examinations rather than party links. Attesting to the respect afforded their profession, judges, like other bureaucrats, often come from well-heeled families and elite schools. In the wake of Chile's own corruption scandals, one involving former president Michelle Bachelet's son and daughter-in-law, the government expanded efforts to inculcate legal impartiality and professionalism beyond just the courtroom, introducing civic and ethics education to elementary schools nationally. Brazil’s merit-based system for choosing most judges and prosecutors was inscribed in its 1988 Constitution. Over the last 30 years its judicial core has evolved, the politically appointed judges of the past retiring and their replacements rising up through the new technocratic process. Judge Sergio Moro of Lava Jato fame is but one of these new professionals, respected and well remunerated for their technical acumen and political autonomy. Throughout the region citizen anger over corruption is growing. Promises to take on widespread graft helped to catapult Mexico’s president-elect Andres Manuel Lopez Obrador to a historic victory. Corruption preoccupied Colombians heading to polls last spring, and ranks high among voter concerns in Brazil’s upcoming presidential race. In Peru it brought down the previous president and threatens the current head of state, Martin Vizcarra, if he can’t harness the momentum to his cause through a pending referendum. Yet what Latin American leaders must now do is to change career incentives, ensuring that judicial robes aren’t bought but earned, and that merit trumps connections. They need to create respected and rewarding professional paths, enticing the talented and ambitious to the fight against corruption rather than succumb to its temptations. Brazil and Chile show that changing the makeup of the justice system is possible. But a process that takes a generation will surely test the patience of Latin America's voters. View article originally published on Bloomberg.

This weekend a beleaguered Argentina hosted the G-20 finance ministers to work out the agenda for their leaders’ December conclave in Buenos Aires. While officially focused on infrastructure and the future of work, these more technical discussions were overshadowed by U.S. tariff threats and President Donald Trump’s belligerence toward allies and the World Trade Organization. The U.S. attack on the global trading system comes as Latin America is finally embracing free trade. In a resurgence of market-friendly leaders, politicians from the left and right are seeking to expand their nations’ global commercial footprint through a flurry of free-trade and investment agreements. In normal times, they might have turned to the U.S., a top investor and trading partner for most every nation. Yet Trump’s obstinacy throughout the NAFTA negotiations suggests few deals are to be had to the north. As a result, a marked shift is now underway. The European Union (EU) has become a favored partner: Mexico advanced the renegotiation of its 2000 agreement in April, opening up the agricultural, services, and digital goods sectors, simplifying customs and harmonizing regulations to make it easier to sell across borders. Mercosur, the trading bloc founded by Brazil, Argentina, Uruguay, and Paraguay, is pushing to complete an EU agreement that has been marinating for almost two decades. Latin American free traders are also taking their cause to Asia. Mexico, Peru, and Chile were founding partners of the Trans-Pacific Partnership, now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after the U.S. withdrawal, and neighboring Colombia is among the nations clamoring to join. Mercosur is eyeing negotiations with South Korea, following a path laid out by Costa Rica, El Salvador, Honduras, Nicaragua, and Panama, which all signed bilateral deals this year. Panama has begun negotiations with China, while Colombia and Mercosur are flirting with the idea. And the South American trading bloc has started talks with Canada and reached out to New Zealand and Australia to gauge interest in boosting trade ties. The main Latin American economies are also moving to make real the long elusive dream of regional economic integration — in which it lags every region but Africa. This week, leaders of the Pacific Alliance, a comprehensive free-trade agreement begun by Mexico, Colombia, Peru, and Chile, will meet their Mercosur counterparts in Puerto Vallarta to discuss collaboration and even a potential merger. An agreement would bring together 80 percent of the region’s gross domestic product, creating a $4.3 trillion dollar market. While not as large a prize as the EU or China, this preferential agreement could be more important for Latin America’s future prosperity. Intra-regional trade and investment lean toward medium to higher technology sectors — including chemicals, cars, and pharmaceuticals — and higher value-added industries that bring in technology, enhance productivity, and create better jobs. If Latin American nations want to prosper from global supply chains, they must develop regional production to the point where they can compete with the integrated enterprises of Asia, Europe, and North America. Of course, Latin America’s current free-trade fervor could wane. After Argentine president Mauricio Macri plays host at the end of the year, the G-20 mantle will move on to Japan. Mexico’s president-elect Andres Manuel Lopez Obrador’s NAFTA-friendly comments sit uneasily with his more protectionist calls for self-sufficiency in food and energy. And in Brazil, the next president, who will take the helm in January, could reaffirm or discard the nation’s newfound trade enthusiasm. In that respect, the concrete results of the agreements now on the verge of completion will be critical. Yet even if there is an ebb and flow in sentiment, Latin America’s trade horizons have broadened. While geography remains in large part destiny, Latin America for now is moving on without the United States. After the NATO summit, Germany’s foreign minister proclaimed that the European Union can “no longer completely rely on the White House.” At least on trade, that lesson is one Latin America has already learned. View article originally published on Bloomberg.

Markets welcomed the International Monetary Fund’s (IMF) $50 billion rescue stabilization package last week, which seems to be stabilizing the peso. But the financial umbrella will be costly. Rightly or wrongly, Argentines blame the IMF for precipitating their country's worst economic crisis. In the eyes of many voters, the mere association will damage President Mauricio Macri’s standing. As detrimental, the IMF entrance means an end to the economic gradualism of the last two-and-a-half years: Macri's strategy of trying to right the policy wrongs of more than a decade of mercurial rule by his predecessors while avoiding the political pain of austerity. Despite the public messaging that Argentina will make the decisions, and that social policies will remain in place, the new economic constraints accompanying the package threaten the political future of one of Latin America’s most market-friendly leaders. Macri’s fate shows how hard it is to recover from economic populism. Despite a deep bench of technocrats and broad societal support for change, Argentina’s structural flaws remain, hampering growth, productivity, and competitiveness. Gradualism achieved some real results. Macri freed the exchange rate, eliminated capital controls, and reduced agricultural export taxes. He rebuilt the statistics agency, gave the Central Bank back its autonomy and opened up infrastructure projects to private investment. He began to tackle the gaping budget deficit by hiking utility prices, re-calculating pension benefits, and resolving a protracted dispute over financial transfers to the provinces. All of these market-affirming steps were incremental—slowly reducing distortions of quotas, subsidies and other taxes, and trimming or re-orienting government spending. And they were complemented by millions more in social assistance and by billions more in public investments. The economy bounced back. By the second half of 2017 construction was flourishing and manufacturing recovering. Inflation finally started to decline. What didn’t change was the government’s need for cash, as economic gradualism required lenders to keep it afloat. After resolving claims from Argentina’s debt default saga, Macri’s administration swiftly became one of the most active international emitters—placing more than $100 billion in debt. Yet now, hit by a global investor pullback from emerging markets, the worst drought in three decades and a few homegrown political stumbles, Argentina is again being forced onto a more orthodox economic and financial path. With the IMF back in the picture, inflation will have to come down faster. This means the Central Bank will keep interest rates higher for longer, choking the incipient economic recovery. The deficit, too, has to be cut more drastically. Infrastructure spending that might otherwise spur growth will take a hit. But the real budget-buster is public sector employment, which grew under the Kirchners to represent nearly one in three jobs. To balance accounts, Macri will have to take on government workers. And voter patience is finally wearing thin. Since his victory in the October 2017 midterm elections, polls show Macri losing ground; fewer than half of Argentines approve of him or his government. Economic austerity will further erode this base. The crisis has become a rallying point for a deeply divided opposition. For the first time since Macri came to office, Peronist and Kirchner congressional delegates have teamed up, passing a bill that lowered utility tariffs back to November 2017 levels and forcing the president into an uncomfortable veto. Macri and his team still have 16 months before the next presidential election. The economic pain could fade before voters truly contemplate their vote. A push for concessions and other infrastructure partnerships could let private investors pick up some of the public-sector slack, lessening the cost to jobs and growth. And while the opposition shows signs of coalescing, it is far from uniting around a candidate to challenge Macri in the 2019 election. Macri’s stumbles also highlight the systemic destruction economic populism reaps. Debt can be renegotiated, currencies devalued, and other one-time shocks absorbed and overcome. But the entrenched political clienteles created by subsidies, quotas, bloated public payrolls, and other forms of political patronage are much harder to break up. Public largesse in the form of expanding benefits and entitlements become both unassailable and unsustainable. Even the ways of doing business change the calculus of the profit-minded, at least in some sectors, to favor rent-seeking over market-based competition. To reverse these pernicious shifts requires more than one presidential term. Sadly, Argentines may not grant Macri’s Cambiemos coalition the benefit of the doubt. View article originally published on Bloomberg.