Covid-19 has silver linings for Argentina’s president

Covid-19 has silver linings for Argentina’s president

Fernández’ gains strong approval ratings and legitimate excuse in debt negotiations

Relatively unknown to Argentines a year ago when he was picked by Cristina Fernández de Kirchner as the Peronist presidential nominee, Alberto Fernández was at risk of remaining under the influence of the country’s former populist president.

But the coronavirus crisis has since unfolded — emerging as a health and financial curse for the newly elected leader, but also a political blessing.

The Covid-19 pandemic has cut Mr Fernández’s political honeymoon short. The first case was confirmed in Argentina on March 3, less than three months after the 61-year-old politician took office. The crisis has allowed him to slip away from Ms Fernandez de Kirchner’s grips and consolidate his leadership.

His action to deal with the pandemic has boosted his approval ratings to 53.2 per cent, from 42 per cent in September, according to pollster Synopsis. Meanwhile, those of Ms Fernandez de Kirchner — now deputy to Mr Fernandez — have slid to just 27.5 per cent, from 44.5 per cent in September.

“It has fit him like a ring on his finger to consolidate power,” says Luis Tonelli, a political scientist.

The pandemic has provided a distraction from Argentina’s existing economic woes. Before the arrival of Covid-19, the economy was already due to contract for a third consecutive year in 2020. It had one of the highest inflation rates in the world at around 50 per cent, and the odds of a default on $65bn in sovereign debt for the ninth time in its history were high.

Now Mr Fernández can blame the deeper recession looming ahead on the pandemic. Many analysts argue that the health crisis provides the government with a legitimate excuse to stop paying Argentina’s creditors. There is also still time to use the Covid-19 crisis to push for greater debt relief, if a default is avoided.

“What’s valuable for Fernández is that [a default] will not be as damaging as it would have been without the pandemic. He can now blame it on the current economic circumstances,” says Jimena Blanco, head of Latin America at Verisk Maplecroft, a risk consultancy. 

But such benefits from the crisis may be shortlived. “You don’t build [lasting] leadership in an emergency. What matters is how to sustain that leadership once it’s over,” says Graciela Romer, a sociologist. “You need a strategy, and I’m not sure if there is one.”

Ms Fernández, who is not related to the president, is probably waiting in the wings to recover her power when the right moment comes, some political analysts say. The unity of the disparate ruling coalition will be strained in the run-up to midterm elections next year. As the recession deepens, the social movements that are loyal to Ms Fernández are expected to take to the streets to demand handouts from the state, causing difficulties for the sitting president.

The social needs caused by the coronavirus crisis will place pressure on state finances, which are already stretched to the limit. Mr Fernandes has broken from the previous government’s austerity drive backed by creditors and is now aiming to only eliminate the fiscal deficit by 2023. Meanwhile, officials say plunging oil prices have killed the near-term prospects of a vast Patagonian shale deposit conveniently known as Vaca Muerta, or dead cow, depriving the country of future export revenues.

The government has increased money printing to cover its costs, with the risks of fuelling inflation even further despite falling oil prices. Some analysts warn of a repeat of the experience after Argentina’s last big economic collapse in 2001-02, when regional governors resorted to issuing their own quasi-currencies. Others even fear that hyperinflation could be lurking around the corner.

“If it turns out to be a tsunami, there’s no one who can withstand that,” says Mr Tonelli.

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