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What Kirchner’s Win in Argentina Means for the U.S.

Posted By Jen Gieselman On October 27, 2011 @ 1:00 pm In Economics | Comments Disabled

It came as no surprise when Argentine President Cristina Fernández de Kirchner [1] swept the election on Sunday, earning herself a second term. After all, polls [2] had projected her win for weeks beforehand, predicting that she would take anywhere from 52 percent to 57 percent of the votes. In the end, exit polls report that she emerged victorious with 53 percent of the votes.

However, her popularity has not translated so well everywhere. Relations between the U.S. and Argentina have long been tense. Most recently, the two governments butted heads when Argentine officials confiscated military supplies from a U.S. Air Force plane [3] for allegedly violating Argentine law, despite the U.S’s. insistence that the materials were to be used for hostage rescue training. With Kirchner’s reelection, it doesn’t appear that relations between the two countries will see dramatic improvement in the coming years.

Complicating the already chilly relations, clashes between Argentina and U.S. ally Britain over the Falkland Islands [4] have become more intense in the past year. Under Kirchner, Argentina has continued its claim to the Falklands despite the fact that most Falkland residents are U.K. citizens. Showing a strengthened resolve to assert ownership of the islands, Argentina has begun requiring a permit [5] from ships sailing through nearby waters. Now that Kirchner has ridden a wave of popularity into her second term, she isn’t likely to deviate from her position in the near future.

Yet the U.S. has much more to worry about in the wake of Kirchner’s reelection. Among the many world leaders quick to congratulate Kirchner was Hugo Chavez [6], who praised her win by calling it a “victory for the South American union.” Years ago, when Kirchner’s late husband held the presidency, Chavez swooped in to rescue [7] Argentina from heavy debt and a precarious economy. Since then, the bond between Venezuela and Argentina has only tightened, with Chavez donating to Kirchner’s first presidential campaign.

This time around, Kirchner needed little help, but her popularity may be based more on fiction than fact. For example, if you ask Buenos Aires, inflation [8] in the country is less than 10 percent, but if you ask the International Monetary Fund, the inflation rate is “considerably higher than the official inflation rate.” In a recent Chavez-like move, Kirchner has attempted to silence her opposition by masking government statistics [9] of economic indicators like inflation.

In fact, Kirchner has a habit of pursuing risky policies. High government spending coupled with the falling prices of goods in the global market during 2008 resulted in a massive national debt that Kirchner chose to address by nationalizing [7] the private pension system. Immediately after being reelected, Kirchner went a step further, ordering companies to keep a minimum of 30 percent of export profits [10] in Argentina, which will likely decrease the already declining [11] number of foreign investors. From 2001 to 2011, Argentina lost a total of 16.9 points on The Heritage Foundation’s Index of Economic Freedom [12], ranking it 138th out of 179 countries [13]. Not only is the Argentine economy now facing serious dangers, but because of Kirchner’s policies, its trading partners—including the U.S.—may have issues as well.

Although the majority of Argentines clearly have confidence in Kirchner’s presidential abilities, her reelection poses some significant challenges to the U.S. that are unlikely to be resolved anytime soon.

Jen Gieselman and Spencer Irvine are currently members of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm [14]


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URL to article: http://blog.heritage.org/2011/10/27/what-kirchner%e2%80%99s-win-in-argentina-means-for-the-u-s/

URLs in this post:

[1] President Cristina Fernández de Kirchner: http://www.washingtonpost.com/world/americas/argentine-president-cristina-fernandez-de-kirchner-is-reelected/2011/10/23/gIQAAaFUAM_story.html

[2] polls: http://online.wsj.com/article/SB10001424052970203499704576621123467662048.html

[3] U.S. Air Force plane: http://online.wsj.com/article/SB10001424052748703584804576144450144733380.html

[4] Falkland Islands: http://www.heritage.org/research/reports/2011/06/president-obama-should-side-with-britain-over-the-falkland-islands

[5] permit: http://en.mercopress.com/2011/10/24/argentine-patrols-harass-falklands-licensed-jiggers-outside-the-port-of-montevideo

[6] Hugo Chavez: http://www.buenosairesherald.com/article/82612/world-leaders-congratulate-cfk

[7] rescue: http://www.hudson.org/files/publications/ArgentinaFinal.pdf

[8] inflation: http://www.hudson.org/index.cfm?fuseaction=publication_details&id=8415

[9] masking government statistics: http://blog.heritage.org../../../../../2010/08/26/copycat-chavistas-kirchners-seek-to-impose-censorship-in-argentina/

[10] export profits: http://www.bloomberg.com/news/2011-10-26/argentine-oil-mine-exporters-ordered-by-government-to-repatriate-funds.html

[11] declining: http://www.businessweek.com/news/2011-10-26/argentina-s-foreign-investment-dropped-30-in-first-half-of-2011.html

[12] Index of Economic Freedom: http://www.heritage.org/research/reports/2011/03/holding-the-kirchners-accountable-for-argentinas-economic-freefall#_ftnref24

[13] 138th out of 179 countries: http://www.heritage.org/index/Ranking

[14] http://www.heritage.org/about/departments/ylp.cfm: http://www.heritage.org/about/departments/ylp.cfm

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