Macri-nomics: Argentina’s Fast and Furious Return to Neoliberalism

When on October 25, 2015, Cristina Fernández de Kirchner’s (CFK) designated presidential candidate, Daniel Scioli, won the first round of elections by a 3% margin, many viewed it as a defeat. There are good reasons for this.

Most polls had predicted Scioli would obtain at least an 8% lead over Mauricio Macri, the pro-business, pro-US neoliberal candidate. Some had even predicted a wider lead, fueling hopes that a runoff election could be avoided.

Also, few considered Macri would ever get enough votes to become president and yet, there he was, very well positioned for the runoff election a month later.

Finally, many of CFK’s supporters remembered her 54% victory in the 2011 presidential elections and believed that a similar outcome was possible for her candidate in 2015.

The Nov. 22 runoff election between Daniel Scioli and Mauricio Macri took place resulted in a Macri victory by 2.68%. This result marked two important landmarks in Argentine political history. First, it was the first electoral defeat of a Peronist presidential candidate ever. Peronist candidates also lost key electoral districts, such as the province of Buenos Aires and several historically Peronist working class municipalities in the greater Buenos Aires metropolitan area. Second, Macri’s victory is the first time that a member of Argentina’s economic elite became president through elections and not through a military coup.

On December 10, 2015 Macri took office as President of Argentina. Exactly fourteen years before, in December 2001, Argentina was in political and economic chaos, the product of a decade of profound neoliberal transformations. Massive protests took place daily against banks, the IMF, neoliberal policies and corrupt politicians. “¡Que se vayan todos!” (Out with all of them!) was the rallying cry of the protestors. Why then was an explicitly neoliberal president elected fourteen years after the crisis? What can we expect to happen based on Macri’s first 100 days in office? What are the implications for regional cooperation?

Twelve Years of Kirchnerismo

Néstor Kirchner took office on May 25, 2003 as the massive 2001-2002 political and economic crisis was beginning to wind down. The country was still in significant political and economic turmoil, the product of more than a decade of neoliberal economic policies, which resulted in deindustrialization, substantial increases in inequality, unemployment, poverty and hunger, financial speculation and unsustainable public debt growth. Popular discontent and mobilization were high, with strong anti-IMF and anti-neoliberalism sentiment widely expressed. A wide anti-politician sentiment prevailed, with most politicians perceived as corrupt and inefficient.

Kirchner, and his wife Cristina Fernández de Kirchner, were shrewd politicians, although relatively unknown outside their southern province of Santa Cruz. While as provincial governor Néstor and his wife had supported the neoliberal policies and privatizations of the 1990s, they accurately read the new political situation and tuned their campaign discourse and later government policies to cater to the profound popular discontent. Néstor served one four-year term (2003-2007) and Cristina two consecutive terms (2007-2011 and 2011-2015). The successes and failures of Kirchnerism are central to deciphering the 2015 election results.

The Kirchners helped set in motion a series of trials for human rights abuses committed during the 1976-83 military dictatorship. This resulted in support from human rights groups and broad segments of society.

Néstor Kirchner also promoted the renewal of the highly discredited Menem-era Supreme Court, establishing a more participatory and transparent nomination process to fill vacancies. The Kirchners also promoted the expansion of social and civil rights, passing a national gay marriage law, a “universal” subsidy for children, social security benefits for retired housewives, and other social programs.

Both Kirchners revitalized the role of the State as a fundamental institution for economic development, and to keep powerful actors in check. Economic performance between 2003 and 2009 was very good, with high growth rates, employment creation, and overall improvement in social indicators. These factors and a combative, generally progressive rhetoric gained them support from broad sectors of the population.

However, there were aspects of the Kirchner administrations, especially CFK’s, which impacted negatively on public opinion. When inflation began to increase in 2006, rather than trying to diagnose it and effectively deal with it, the Kirchners chose to gut the national statistics agency, producing data to their liking but quite unrelated to reality. As a result, Argentina was left without credible official data on the economy, employment, poverty, etc., and an annual inflation rate above 20% between 2007 and 2015. High inflation, an inconsistent exchange rate policy, and a decreasing trade surplus led to increasing capital flight and eventually the imposition of exchange controls (people were not allowed to freely purchase foreign currency), leaving people few legal options to safeguard any savings from inflation. These factors, together with a slowing economy since 2011, resulted in an increasing erosion of support for CFK. Her combative rhetoric, considered divisive by many, and multiple weekly national addresses drove many voters to vote for a “change”.

Macri’s Campaign–Promises of Change

Like the Kirchners, Macri too is a product of the massive Argentine 2001-2002 crisis. However, rather than adopting an explicitly ideological political rhetoric, he adopted the “anti-politics” or “outsider” approach. As a two term mayor of the City of Buenos Aires (2007-2011 and 2011-2015), Macri always campaigned as the political outsider, with a private sector background, whose only interest was to improve people’s quality of life. The way to do this was solving problems with technical efficiently, avoiding unnecessary and inefficient political discussions. (Whether after eight years in office as mayor of the City of Buenos Aires he really qualifies as an outsider is subject to debate, however, that continues to be a part of his strategy which people, apparently, buy.)

For many, this non-confrontational, technocratic style was a breath of fresh air compared to CFK’s combative and ideological discourse. Macri’s presidential campaign centered on a few relatively empty slogans about uniting Argentines, “returning to the world” (i.e. financial markets), ending exchange restrictions, fighting inflation and, surprisingly for a right wing candidate, ending poverty (pobreza cero).[1] Macri also cleverly stated that his intention was to continue the good things of the Kirchner governments and review those that needed improvement—in other words, one should expect a fair amount of continuity.

Macri’s economic team was instructed to curtail public statements during the campaign, since their policy proposals would likely scare voters away. Still, from what little they did say it was clear that there would be an orthodox, pro-austerity turn. Macri’s economists promised inflation targeting, a floating exchange rate, and an independent central bank—all standard IMF-promoted policies around the world. In addition, they spoke in favor of free trade agreements, re-aligning Argentina’s foreign policy with that of the US (and away from other center-left Latin American countries). In other words, they clearly favored a return to free-market policies, to international financial markets, debt accumulation, etc.

The First 100 Days–Wall Street In Charge (Again)

Macri took office on December 10, 2015 and very quickly went to work on his version of “change.” He took a number of bold steps during his first 100 days in power, steps that in clearly differentiate his administration from those of the last 12 years. Macri’s economics team is made up of ultra-neoliberal economists, former international bank execs, and former transnational corporation CEOs. Such is the corporate bias in Macri’s economics cabinet, that some in the press have dubbed his government a CEOcracy, the government of the CEOs. went even further—a March 8, 2016 article proclaimed: “Wall Street is in charge in Argentina (again)”. The policies so far implemented tend to confirm this:

Devaluation. Very early on Macri’s economics team eliminated the exchange restrictions, liberating the foreign exchange market from the controls it had had for the last four years. Liberating the exchange market, however, resulted in a 40% currency devaluation and, consequently, a spike in inflation. During Macri’s first 100 days in office inflation was approximately 12%. Inflation is problematic because it erodes purchasing power of workers on fixed income providing windfall profits to exporters.

Export tax elimination. Another policy implemented by Macri shortly after taking office was the elimination of export taxes on all agricultural exports except soya, and some minerals (such as gold). Export taxes were implemented in the aftermath of the 2001-2002 crisis after a major currency devaluation. Export taxes are important in a country like Argentina that exports primary products, many of which are locally consumed. First, it de-links domestic prices from world prices, reducing the impact of a devaluation on local prices and product availability. Second, it puts a cap on export sector profits, transferring a part to the state (which in turn can use those funds for public programs). The elimination of these subsidies fed into the inflation caused by the devaluation and provided an additional boost to export-sector profits.

Macroeconomic policy. The removal of exchange controls was the first move in the implementation of an inflation targeting monetary policy and, eventually, a freely floating exchange rate. This is the policy framework promoted by the IMF and the US Treasury, which focuses exclusively on keeping inflation as low as possible, ignoring other policy objectives such as high levels of employment, economic development and income distribution. So far, the result has been very high interest rates (38% in pesos and 20% in US dollars), providing windfall profits for the banking sector, a deepening of the economic slowdown and no effect on inflation.

Massive public sector layoffs. During his presidential campaign, Macri repeatedly promised that no state worker who was actually working needed to worry about losing their job. However, his actions from his first day in office show that his campaign promises were empty words. Spearheaded by the newly created State Modernization Ministry, many thousands of state workers have been fired. According to one organization that tracks layoffs, by March 18, 2016 almost 32,000 public-sector workers had lost their jobs at all levels of government.[2] It is expected that many more layoffs will come as contracts come up for renewal throughout the year. Despite a resounding lack of historical evidence that a minimalist State ever led to economic development, Macri and his team of CEOs believe that the State should be as small as possible and not intervene in the economy, since the “market knows best.” In this way, Macri has begun to dismantle key State productive enterprises revitalized during the Kirchner years.

Surrender to vulture funds (and Wall Street). In 2012, when Judge Griesa of the New York District Court issued an outrageous ruling in favor of the vulture funds[3]—a ruling that was upheld by the appeals court and the US Supreme Court—Macri, then mayor of the City of Buenos Aires, said that he believed one had to comply and pay up. In this way, he took distance from CFK’s more combative, non-compliance stance. As president, Macri rapidly set in motion negotiations to pay off the vulture funds and remaining defaulted bond-holders (known as hold-outs).[4] An agreement was met, which looks a lot more like a capitulation, which will require issuing bonds for $12 billion, a 10% increase in the stock of Argentina’s dollar-denominated public debt. However, to be able to pay off the vultures the Argentine Congress needs to repeal two laws that currently prohibit such payments. In order to get the needed congressional votes, Macri used scare tactics saying that if Congress didn’t repeal the laws, the country would fall into hyperinflation. In other words: “vultures or hyperinflation,”[5] a dramatic discourse change from CFK’s “homeland or vultures.”

Free trade and unilateral alignment with US. Macri explicitly campaigned on what he called “returning to the world” (volver al mundo), which essentially means returning to neoliberalism, free trade and an explicit alignment with US economic and foreign policy interests. Macri’s economic policy initiatives, vulture fund capitulation, and returning to IMF tutelage are indicators of what “returning to the world” means. However, the clearest example of Argentina’s new stance in the world was the visit by US President Barak Obama on March 23-24. President Obama praised Marci’s economic policies and set him as an example for Latin America. The agreements signed between the two presidents cater to a broad range of US interests, including security, the war on drugs, intellectual property rights, and free trade.[6]

Closing Thoughts

Argentina’s shift to neoliberalism and unconditional alignment with the US are viewed with concern by those who remember the country’s experience during the 1990s and the massive 2001-2002 crisis. Macri’s policies so far (especially the devaluation and export-tax elimination) have resulted in the greatest transfer of income from working people to banks and exporters in decades. Furthermore, public sector layoffs, when added to substantial private sector layoffs and a recessionary macroeconomic policy framework are resulting in a deepening economic slowdown.

Macri’s alignment with the US is also a clear break with the Kirchner’s policies of strengthening regional political and commercial ties. The Kirchner’s were clearly aligned with Venezuela (Hugo Chávez and Nicolás Maduro), Ecuador (Rafael Correa), Bolivia (Evo Morales) and Brazil (Lula da Silva and Dilma Rouseff) and against the US security and free trade agenda. Those days are over, at least while Macri is in office. It is unclear what direction MERCOSUR (the Southern Cone regional trade block) will take, but Chávez’s and Lula’s regional political initiatives, ALBA and UNASUR, are no longer priorities for Argentina under Macri.

Argentina continues to be caught in what the late economist Aldo Ferrer, and Marcelo Diamand before him, called the Argentine pendulum: since the end of World War II, Argentina swings endlessly between expansionist/populist and neoliberal regimes. Each phase has its period of expansion and crisis, leading to the next. After twelve years of expansionist/populist Kirchnerismo, Argentina is now headed to neoliberalism once again. If the pendulum continues its trajectory, and if past neoliberal cycles are an indication, the future is not a bright one.

If there is a sign of hope, it is that workers and the poor have a substantial degree of organization after twelve years of kirchnerismo. On February 24th public sector workers went on strike and there was huge mobilization to Plaza de Mayo, the historic site of many protests across from the Pink House (the seat of the executive branch of government). On March 24th, the 40th anniversary of the military coup, a massive demonstration filled Plaza de Mayo and the streets around for many blocks. Unions, political and social organizations flocked massively to the Plaza in remembrance, but also to protest Obama’s presence and Macri’s neoliberal policies. Time will tell if Macri’s opposition is able organize an electoral alternative before the next crisis hits.


[1] Macri has yet to make explicit how it is that he intends to eliminate poverty. So far, the set of policies implemented are in the exact opposite direction, causing many to believe that it was an empty campaign promise.

[2] See

[3] For an account of the Argentine experience with the vulture funds, see “Towards justice centred debt solutions: Lessons from Argentina”, a report prepared for the Debt and Development Coalition Ireland by the author, available at:

[4] In December 2001 Argentina defaulted on roughly $80 billion of its public debt. In 2005 and 2010 Argentina made restructuring offers, by the end of which 93% of defaulted debt had been restructured. The remaining 7% held out for full repayment. 1% of these hold-outs are vulture funds. See report mentioned in previous footnote for a more detailed account.

[5] This a clear scare tactic, since there is no clear economic foundation for an acceleration in the inflation rate were Argentina to chose to continue its non-payment stance.

[6] For a list and brief description of these agreements, see: