Macri’s Moment: Can Argentina’s New President Live Up to the Hype?

Macri’s Moment: Can Argentina’s New President Live Up to the Hype?
Argentine President Mauricio Macri at the government house, Buenos Aires, Argentina, April 7, 2016 (AP photo by Natacha Pisarenko).

Argentina’s new president, Mauricio Macri, is creating a buzz on the international circuit, but he won’t have an easy time installing a new paradigm in a deeply divided society.

On March 24, Argentina marked the 40th anniversary of the military coup that ushered in a brutal seven-year dictatorship in 1976. As has become customary, tens of thousands marched on Plaza de Mayo, in central Buenos Aires, to remember the atrocities of that era and chant the universal slogan, Nunca Mas—Never Again.

But this year, the march was different. Just 24 hours earlier, the same historic square had been adorned with the stars and stripes to welcome U.S. President Barack Obama on his first visit to Argentina. Obama’s presence did not sit well with those who remembered U.S. backing for the 1976 coup; an American president’s visit would have been unthinkable at any of the previous gatherings since the day of memorial was made a public holiday in 2005.

Obama’s attendance was a clear symbol of the radical change underway in Argentina. Four months earlier, the country had voted Macri into the Casa Rosada—the Argentine president’s executive office and mansion—breaking with 12 years of the Kirchnerismo ideology practiced by former Presidents Nestor and Cristina Fernandez de Kirchner. Since taking office in December 2015, businessman-turned-politician Macri has set about hastily redefining Argentina’s political, economic and cultural landscape. In his whirlwind first 100 days, he dismantled currency and capital controls, slashed export taxes, and settled a 15-year dispute with holders of defaulted debt. Gone is the fiery anti-imperialist rhetoric of the Kirchner administration; Obama’s visit and endorsement was a triumphant showcase for Macri’s campaign to “bring Argentina back into the world.”

Macri and his supporters claim this is the beginning of a bright new era for Argentina, in which the country is no longer held back by ideological struggles and can finally reach its potential as a regional or even global power. Macri has the backing of the local business community and is building cross-party political alliances. He has been a star figure at international summits and, until his name appeared in the Panama Papers leaks in April 2016, was showered in accolades by the world’s media.

However, this wave of positivity cannot disguise the challenges Macri still faces at home, where he must convince a deeply divided society to support a painful transition. As international headlines celebrated Argentina’s record-breaking return to global bond markets on April 19, public mood was turning as rampant inflation and a wave of job cuts led to a series of strikes and protests. Despite his electoral victory, the president’s orthodox economic policies and his background as part of the Argentine business elite still bristle with many in a broadly progressive population that has long suffered from inequality. Rather than embracing Macri’s promise of a new dawn, some fear a return to the darker days, with a rollback of the social gains made in recent years.

With the traditional honeymoon period for a new government now over, a fundamental question emerges: Can Macri succeed where no other conservative Argentine leader has before, and implement a modern, market-friendly paradigm in a country still traumatized by its late 20th-century experience with neoliberalism?

A “Miracle” Campaign: The Rise of Macri

“It was a miracle that Macri won,” admitted the president’s long-time political adviser and campaign strategist, Juan Duran Barba, in a recent interview with El Pais.

Winding the clock back 12 months, it was inconceivable to many that Macri would be the one to defeat the seemingly invincible Kirchnerist movement. In a country that had never democratically elected a conservative president, the son of a business magnate at the head of a relatively young center-right party seemed like a difficult sell.

Macri’s Republican Proposal party, known as Pro, was one of several that emerged from the rubble of Argentina’s 2001 economic and political crisis. The Kirchnerist Victory Front (FpV) was another product of that era, but was firmly rooted in Peronist thinking. Pro was different: It drew together dissident politicians from diverse backgrounds, but its core personnel and identity, like that of its leader, were drawn from outside the traditional political sphere—businesses, think tanks and nongovernmental organizations.

After failing at his first attempt in 2003, Macri was elected mayor of Buenos Aires in 2007, and over two terms nurtured a solid support base among the predominately urban middle class voters of the capital. Yet it still looked like too big a step to launch a national campaign without the established political structures and mobilization capacity of the country’s traditional parties. Though Cristina Fernandez could not run for a third term, her preferred candidate and FpV nominee, Daniel Scioli, a two-time governor of the crucial province of Buenos Aires, held a double-digit lead in opinion polls going into the electoral season.

There are many factors that could explain the turnaround, but it’s clear now that at least three things were not fully appreciated at the time: the degree of simmering discontent with the ruling administration; the failure of the FpV to find a suitable successor to Fernandez; and the ability of Macri’s campaign to exploit both.

Rather than attempt to construct his own party structure across Argentina’s vast territory, Macri wisely formed an alliance with the Radical Civic Union (UCR), the country’s oldest political party that boasts a solid, if depleted, national base. The new coalition sought to capitalize on social frustrations after more than a decade of the same leadership—with its inevitable shortcomings—and named itself Cambiemos, or “Let’s Change.”

However, the key turning point came in the Buenos Aires mayoral election in July 2015, less than a month before the national presidential primary, after Macri’s candidate, Horacio Rodriguez Larreta, narrowly won the race to succeed him in the post. Speaking at the celebration that night, Macri wrong-footed many by declaring that, as president, he would not reverse flagship Kirchnerist social policies such as the Universal Child Allowance or privatize state-run airline Aerolineas Argentinas and oil company YPF.

U.S. President Barack Obama with Argentine President Mauricio Macri,
Buenos Aires, Argentina, March 23, 2016 (AP photo by Victor R. Caivano).

While risking a backlash from his conservative base and exposing himself to accusations of flip-flopping, Macri set up a contest in which he could sidestep attempts to typecast him as a member of the traditional elite and avoid being drawn into a traditional battle of left-versus-right politics.

“Kirchnerism has tried to sketch a caricature of ‘who Macri is,’ but it’s not real,” read a missive released by Pro to justify the change in discourse. “They are going to end up fighting against a caricature that doesn’t exist.”

This suited Pro’s modern ethos, inspired more by the entrepreneurs of Silicon Valley than Chicago School academics. “Our ideology is to solve, to act, to build concrete things,” Macri said on the campaign trail. Unattached to a rigid doctrine, he could present himself as a business-friendly candidate who would make ending poverty in Argentina his No. 1 priority. By annexing certain Kirchnerist policies into his manifesto, always with the caveat that he would administer them more effectively, Macri could reassure voters that they would keep their basic social rights and focus his promise of change on less-daunting issues of style. He pledged to replace the self-eulogizing and confrontational ticks of Kirchnerism with a government of unity, transparency and dialogue. The message was always positive and aspirational; together, he said, Argentines could create a “happiness revolution.”

Tardy efforts by Scioli to pin Macri down on the specifics of his economic plan or highlight flaws in his track record as city mayor were brushed aside as part of a fear campaign. Macri became the only option for voters wanting something different, whatever that might be. “You don’t represent change,” Macri said to Scioli during the final presidential debate. “You decided to represent continuity.”

On Nov. 22, 2015, the miracle was confirmed: Macri was narrowly elected Argentina’s new president, and his party would also control the city and province of Buenos Aires, a nucleus containing more than a third of the country’s total population.


However impressive Macri’s electoral victory was, he faces the formidable task of implementing a radical paradigm shift toward his vision of a 21st-century Argentina, where politics takes a backseat to problem-solving. The president took office with a divided electorate—49 percent voted against him in the electoral run-off—and a minority in both houses of Congress; over half the provinces around the country are run by opposition governors. He probably doesn’t need reminding that the last non-Peronist president to serve a full term was Marcelo T. Alvear in 1928.

The key battleground, as ever, is the troublesome economy, which wary locals will tell you is doomed to suffer “a crisis every 10 years.” Here, Macri has an advantage rare for a new president since the return to democracy three decades ago. The country he inherited is a long way from the hyperinflation of 1989 or mega-default of 2001, which both prompted a break in constitutional order. At the same time, few would argue that the economy was in good health when the presidential baton changed hands.

Macri took over an economy shaped, and contorted, by 12 years of Kirchnerismo, a broadly Keynesian model with heavy state intervention to redistribute wealth and protect domestic industry. In the early years after his election in 2003, Nestor Kirchner oversaw a rapid recovery from the debt default, the country’s worst-ever crisis. He used revenues from a commodity-led export boom to stimulate domestic demand, rebuild local industry, and tackle critical social problems. Confidence in the economy returned as the government maintained twin budget and trade surpluses, a stable exchange rate and a relatively orthodox monetary policy. International reserves built up quickly, and a restructuring of most of Argentina’s defaulted debt relieved pressure on the external accounts.

Sidelined from the global financial system and with the help of aggressive fiscal expansion, the country navigated the credit crunch comparatively well. But by then, domestic capacity constraints were beginning to manifest themselves in the form of soaring inflation and infrastructure bottlenecks. As export demand waned and capital flight accelerated, evidence mounted of a recurring structural problem in the Argentine economy: a shortage of dollars to cover import needs and service foreign debt.

The key battleground, as ever, is the troublesome economy, which wary locals will tell you is doomed to suffer “a crisis every 10 years.”

Immediately after winning a landslide re-election in 2011, Cristina Fernandez—who had succeeded Nestor, her husband, in 2007—tried to stave off an inflationary devaluation by introducing strict currency controls and import restrictions. This set the tone for a difficult second term, characterized by anemic growth, entrenched double-digit inflation and increasingly heavy-handed economic management. Political meddling in data collection, particularly regarding inflation, shattered the credibility of official statistics and deepened suspicions of trouble. The Central Bank was hemorrhaging reserves to prop up the currency, while a parallel “blue dollar” market, running at a premium of more than 50 percent over the official rate, only added another layer of distortion. While external demand floundered, the government doubled down on efforts to stimulate the internal market, and shore up political support, by adding new social programs for housing and education to existing energy and transport subsidies and above-inflation hikes for pensions and welfare. Price controls were expanded to soften the impact of inflation on low-income households.

Though this battery of measures helped avert a deep recession, they did little to restore confidence in the government’s handling of the economy, and became increasingly unsustainable as the budget deficit widened. The government couldn’t seek international financing to stabilize the situation without first reaching an agreement to settle with the “holdout” creditors who had refused to accept the debt restructuring on Argentina’s defaulted debt from 2001 and continued to demand full payment. Fernandez refused to cave, leading a campaign against the so-called vulture funds that were challenging the country’s sovereignty. The message resonated among her core supporters, but by the time of the 2015 presidential election, there was broad consensus that something had to give. The public decided it would be the Kirchnerismo model.

Macri arrived at the Casa Rosada with a promise to swiftly remove the straitjacket that had made the Argentine economy one of the least free in the world. Within a week of taking office, his financial team had lifted all currency and capital controls and removed export taxes for agricultural and industrial goods; levies on the mining sector were eliminated shortly afterward. The Central Bank returned to a more orthodox approach, making inflation control its main priority, hiking interest rates, and ending monetary emission to finance the Treasury. To tackle the fiscal deficit, the government began rolling back subsidies for utility tariffs and public transport, which had reached nearly 4 percent of GDP, and streamlining the public sector. Macri declared a statistical emergency, replaced the leadership at Argentina’s statistics office, INDEC, and invited the International Monetary Fund to renew its annual review of the economy. And at the end of February, the government announced that it had reached an agreement with the holdout creditors to settle the 15-year debt conflict and regain access to international credit markets.

The main thrust of Macri’s plan—grounded, so far, in fairly textbook neoliberal thinking—is to open up Argentina to the global economy and encourage foreign investment. While his economic team cleared the playing field at home, the president was busy forming new diplomatic and commercial relationships abroad, returning to Western allies that the Kirchners had frequently criticized. In the month before Obama’s historic visit, Macri welcomed French President Francois Hollande and Italian Prime Minister Matteo Renzi to Buenos Aires. In January, despite suffering from a cracked rib, he traveled to Davos to become the first Argentine leader in 12 years to visit the World Economic Forum, holding meetings with several Western leaders and CEOs of multinationals such as Coca-Cola, Facebook and Total.

Macri’s charm offensive and the urgency of his reform charge have impressed many in international circles. “I can tell you President Macri is a man in a hurry,” said Obama after their bilateral meeting in Buenos Aires. “I’m impressed because he has moved rapidly on so many of the reforms that he promised, to create more sustainable and inclusive economic growth, to reconnect Argentina with the global economy and the world community.” IMF chief Christine Lagarde also heaped praise, saying, “Macri’s economic policies are very encouraging. We hope they will stabilize the Argentine economy.”

Macri is confident that his plan will work, claiming that inflows could reach $20 billion in 2016, more than 10 times the preliminary 2015 figure. “Opening up to the world will bring enormous investments,” he remarked after another series of bilateral meetings on the sidelines of the recent Nuclear Security Summit in Washington. The president has highlighted the massive potential that Argentina offers investors in the agricultural, mining, tourism and renewable energy sectors. And he says the settlement with the holdouts—full payment was completed through a successful international bond offering in mid-April—will send a powerful signal to potential investors.

Yet this 180-degree shift inevitably comes with short-term consequences, which in turn could undermine Macri’s ambitious economic plans. Headline indicators today do not make for pretty reading. The Argentine peso has lost more than 50 percent of its value since controls were lifted, and has suffered from wild daily swings. This stark devaluation has fed through to local consumer prices, which rose by an estimated 19.2 percent in the first four months of the year. Forecasts for annual inflation now oscillate around 35-40 percent, but could edge even higher. Higher input costs have squeezed local business margins, and unions registered over 140,000 jobs lost between January and April.

Macri’s charm offensive and the urgency of his reform charge have impressed many in international circles.

The government puts this down as the necessary cost of “normalizing” an economy in disarray, and says it expects the numbers to start improving in the second half of 2016. However, the lessons of prolonged austerity in Europe show that the recessionary effects of fiscal and monetary tightening can undermine efforts to redress economic imbalances. With consumer spending squeezed and the government committed to bringing down the budget deficit it inherited—estimated at 7.1 percent in 2015—the short-term outlook for domestic demand is not promising. The devaluation may have provided a boost to the trade balance, but the deep recession in Brazil and slowdown in China, Argentina’s two main trading partners, will weigh on export demand. That leaves the government’s plan dependent almost entirely on foreign investment to pull the economy quickly out of a recession that is expected to hit at least 1 percent in 2016.

In this climate there are reasons to be skeptical of the government’s claim that it will soon be “raining dollars” in Argentina. Macri’s reforms have been well-received by the investment community, but that doesn’t guarantee that businesses will get off the sidelines before the economy has passed through the worst of the turbulence. According to one recent survey, 60 percent of local directors said that they would hold back new investments until inflation was brought under control. Other demands include a more detailed plan from the Finance Ministry on exactly how it plans to balance the budget and cut inflation to single digits by 2019.

Though too soon to draw any conclusions, there have been signs that the results don’t match the initial enthusiasm for the government’s new economic agenda. Finance Minister Alfonso Prat-Gay promised an influx of $20 billion in the first four weeks after currency controls were lifted, including some $6 billion from soy exporters who had been hoarding grains precisely so as to benefit from lower taxes and a market-driven exchange rate. But the farmers delivered less than half that pledge, and discounting a $5 billion one-year loan from a group of international banks, the Central Bank’s reserves actually fell in the first three months of 2016. The bank was also forced to jack up interest rates to a punitive 38 percent to stabilize the peso, and had to divert 10.6 billion pesos, roughly $715 million, to finance the Treasury.

The government does have the advantage of a relatively low debt pile—a positive legacy of the Kirchner era. Now that the holdouts have been paid off, there will be considerable room to borrow to cover immediate financing needs and allow Macri to kickstart his pledge to launch “the largest infrastructure plan this country has ever seen.” But unless interest rates charged on new debt fall from the 7.1 percent average yield offered in the first bond issuance, this source of finance also has clear limitations.

This all leaves key questions that can only be answered with time: What will the government have to do to win the confidence of global investors? And what political and social costs will that have at home?

Resistance to Change

When asked in March if he had a plan B in case foreign investment is not forthcoming, Macri simply replied, “Why do we need one if plan A is working?”

The president may not want to talk about it, but if direct investment is slow to materialize, or if it does not translate into growth and jobs quickly enough, the government will be forced to make difficult political decisions, balancing the demands of foreign creditors with the tolerance levels of the local population.

There are reasons to be skeptical of the government’s claim that it will soon be “raining dollars” in Argentina.

Some market analysts are already saying the government needs to accelerate drastic reforms to convince investors still unsure about Finance Minister Prat-Gay’s gradualist approach to bringing down inflation and the budget deficit. It is a view shared by the more hawkish figures within the ruling party. But this may underestimate the challenge Macri faces in maintaining popular support for his transformation in a country that has painful memories of previous attempts at economic liberalization.

Argentina’s two periods of neoliberal reforms—the 1976-1983 military dictatorship and the 1990s under then-President Carlos Menem—both ended in debt and currency crises, and left a legacy of poverty and inequality. Times have changed since then, and Macri, whose family name is synonymous with the business elite that profited most in these periods, has rebranded himself in the mold of “compassionate conservatism.” But he will still face an uphill battle in convincing voters that this time will be different when the early policy mix has such a similar flavor; the public voted for change, not a return to those darker days.

Opinion polls show that Macri still enjoys support from a majority of the population, though his approval ratings have fallen since the start of his presidency. Even though people are increasingly worried about the country’s economic situation, they attribute most of the blame to the previous government and are prepared to give Macri’s government time to correct the situation. This fits into Macri’s official plan to front-load painful reforms while he has political capital to spare, and can still point to the “difficult inheritance” left by the previous government. That said, this strategy wasn’t helped by recent figures showing that the economy actually grew by a respectable 2.1 percent in 2015.

Workers protest skyrocketing consumer prices and job cuts,
Buenos Aires, Argentina, April 29, 2016 (AP photo by Natacha Pisarenko).

The question is how long society’s hunger for change will last once households really start to feel the pinch. The reaction to a 300 percent hike in gas and water tariffs and the doubling of public transport fares, delivered by a government oozing confidence following Obama’s visit and key victories in Congress, suggests appetite is on the wane. The move fueled criticism that Macri’s administration, led by a Cabinet loaded with former CEOs, is pandering to business interests while making ordinary households and workers shoulder the costs of austerity. While tax cuts were rushed through, measures to soften the impact on consumers have been minimal, and funding for a number of social programs has been slashed. The Catholic University of Argentina reported that 1.4 million people fell into poverty in the first quarter of 2016 alone, taking the national rate up to 32.5 percent. In this climate, even one of Macri’s political allies and a leader in the Cambiemos coalition balked at the latest utility hikes, taking to Twitter to say “you can’t suffocate the society that is supporting our change.”

Macri has now announced several measures to counterbalance the impact on consumers, including an increase in the threshold for income tax and the elimination of the value-added tax on basic food items. He also confirmed an expansion of the Universal Child/Pregnancy Allowance welfare program, which distributes a fixed income to unemployed or low-income families. “I work every day to find ways to make this re-ordering of the economy as painless as it can be,” said a defensive Macri in a recent TV interview.

He might have to try even harder if he wants to avoid more social unrest. Argentina’s powerful labor unions are becoming agitated as job losses mount and inflation erodes purchasing power. On April 29, five central labor unions came together in a massive march in protest at the recent wave of layoffs, estimated to be reaching nearly 150,000 across the public and private sectors. The Argentine Industrial Union warned that the sector would have to trim up to 200,000 jobs this year as higher utility costs exacerbate problems caused by the slump in neighboring Brazil. Hugo Moyano, the long-time head of the umbrella General Workers Confederation who appeared alongside Macri during the election campaign, said there would be actions if the government continued to implement “perverse policies.” His son Pablo, leader of the powerful truck-drivers union, recently warned the government that “the honeymoon period is over.”

The question is how long society’s hunger for change will last once households really start to feel the pinch.

The government, perhaps aware of the potential for disruption, has introduced a new protocol for public demonstrations, requiring prior notice and authorizing police to use force to disperse protesters blocking streets. That may not sound particularly draconian, but it has rung alarm bells over the potential criminalization of social protests. The United Nations and Amnesty International have expressed concern over the “arbitrary detention” of political and social leader Milagro Sala in the northwestern province of Jujuy, now governed by Macri ally Gerardo Morales. Sala, a polemic figure with close ties to Kirchnerismo, was arrested for staging a sit-in in the provincial capital. She was later charged with embezzling state funds and remains in custody, but some fear the questionable judicial process could set a dangerous precedent.

At least two rallies staged by dismissed workers have also been violently dispersed by police using tear gas and rubber bullets. In early January, photos circulated of a female protester in La Plata, her back riddled with bullet wounds after police fired on a demonstration organized by state workers that had been laid off. Security is another area in which Macri will have to tread carefully: Though there are calls from some sectors to take a tougher stance against those protesters who regularly cause traffic chaos by blocking streets in Buenos Aires, there is little tolerance for police repression in a country that has a long history of institutional violence. After all, it was the killing of two protesters by police at a rally in 2002 that forced then-President Eduardo Duhalde to call the early elections that ushered in the Kirchner years.

Hearts and Minds

Of course, the battle for hearts and minds extends beyond the economy, though here the government’s policy approach has been less clear and consistent so far. If Macri delivers on other plans that are backed by much of society—creating a more open and transparent state, weeding out corruption, and improving institutional quality—he could regain at least some of the political capital lost in the downturn.

This is especially true given Macri’s sophisticated public relations team, which has become adept at using social media to engage directly with the electorate and carefully sculpt the president’s image. The government has also backtracked on or modified some policy announcements that provoked a hostile reaction from the public, demonstrating that it is not oblivious to the national mood. With some shrewd diplomacy, it softened the domestic controversy over the timing of Obama’s visit with the announcement that the U.S. had agreed to declassify military and intelligence records from the dictatorship era, a long-held demand of human rights groups. It was a savvy political move with a key message to the skeptics: We can achieve much more by engaging with, rather than lambasting, the U.S.

Macri, who so far has received mostly favorable treatment from Argentina’s biggest private media outlets, will hope attention is focused on issues other than the economy. He will undoubtedly be pleased that corruption investigations against several high-ranking members of the previous government, including Cristina Fernandez herself, have started to advance quickly in the judiciary. The state, via its Anti-Corruption Office, has requested to be a plaintiff in multiple cases, and Macri is preparing to table a new Repentant Law to reduce or dismiss punishments for those who provide “precise, verifiable, and useful” information about a corruption investigation. Though Macri says the executive is not interfering in the judiciary, any convictions of ex-officials will inevitably provide him with a popularity boost among voters.

There is widespread support for combating the graft and abuse of power that has permeated the Argentine state for so long. However, an anti-corruption drive that is perceived as partisan will only exacerbate existing divisions. Macri’s own image has been tarnished globally after his name appeared in the Panama Papers leaks as director of an offshore company set up in the Bahamas in 1998. The president quickly denied any wrongdoing and explained that he had no active role or shares in the family company, which he said was set up legally; rather, he said, he was simply listed as an “occasional director.” He is now being investigated, but even if his explanation is valid, the revelation, coming as Macri crusades against corruption and tries to sell his vision of Argentina to the world, was damaging. The head of the Anti-Corruption Office, Pro member Laura Alonso, came to his swift defense, raising questions about her ability to impartially investigate her own party leader.

It was a savvy political move with a key message to the skeptics: We can achieve much more by engaging with, rather than lambasting, the United States.

Macri’s popular campaign promise to improve institutional quality in Argentina after the encroaching executive under Kirchnerismo is another area that will be closely scrutinized. In his first 100 days, the president issued 11 emergency decrees, including the controversial designation of two Supreme Court judges. The profiles of his two nominated candidates were widely praised, but the president could offer no real justification for bypassing the standard congressional route. Under pressure, Macri reversed his decision, later claiming that he was “over eager” to fix problems.

Another polemic decree changed the country’s Media Law, which had received cross-party approval when it was passed in 2009 and was later backed by the Supreme Court after a series of legal challenges. The law ostensibly sought to break down corporate monopolies and support alternative outlets in the broadcast-media sector. While there were widespread complaints over how the previous government implemented the law— primarily as a weapon in a drawn-out conflict with the country’s largest media group, Clarin—Macri’s unilateral decision to scrap the bill led to street protests and a hearing at the Inter-American Court of Human Rights. Critics say the president is cozying up to Argentina’s powerful private media groups, which in return shelter him from unfavorable coverage. Furthermore, some journalists say that the new government is gradually crowding out dissident voices in public-sector television and radio, undermining talk of pluralism and exposing Macri to accusations that his promise of change was really about substituting Kirchnerist sympathizers with his own allies.

Eyes on 2017

An area in which Macri has enjoyed considerable success so far is in fostering working relationships with opposition parties. On his first day in office, the president met with each of the five candidates he had defeated to discuss common areas of interest. The day after, he shared a lunch with all the provincial governors, and has maintained a fluid dialogue since, using the carrot of federal funds to negotiate with those from opposition parties. He also took the unusual step of inviting Sergio Massa, a Peronist opposition leader who broke away from Kirchnerism in 2013, to join him at Davos, drawing explicit praise from U.S. Vice President Joe Biden. So far, the strategy has paid dividends at home too, underscored by the government’s biggest political victory to date in securing broad cross-party approval in Congress for its plan to repay bond holdouts. As a bonus, the bill split votes within the Kirchnerist FpV party, the biggest opposition block in both houses.

Macri’s 2015 victory represented the biggest win yet for Latin America’s resurgent “new right.”

The government will aim to keep the Peronists divided and seek dissident support for its policy proposals. However, opposition legislators will want to distance themselves from the unpopular social consequences of Macri’s economic policies, and are just as capable of cobbling together a majority to block government bills or push through alternative legislation. As the unpopular utility hikes were being announced, opposition parties met with union leaders to discuss alternative proposals for raising the income-tax threshold, while a bill to prohibit further layoffs for at least 180 days was approved by the Senate. “I think the government is abusing the people’s hope and patience,” said Macri’s erstwhile ally Massa. “They went into the operating room with a chainsaw instead of a scalpel.”

Strategies are being formed with the 2017 mid-term congressional elections already on the horizon. The vote will have a significant impact on the political landscape, whatever the result. On the one hand, there is an opportunity for the Cambiemos alliance to consolidate the impressive political gains it made last year and, more importantly, move toward a majority in the lower house of Congress—it currently occupies 89 out of 257 seats. On the other, a poor performance would signal a rejection of Macri’s reforms to date and provide a springboard for opposition candidates with an eye on the presidency in 2019.

Regional Spillover

Whatever happens in Argentina in the next few years, the impact will likely be felt around Latin America. Macri’s 2015 victory represented the biggest win yet for Latin America’s resurgent “new right,” represented by the likes of Henrique Capriles in Venezuela, Aecio Neves in Brazil and Sebastian Pinera in Chile. Political scientist and journalist Jose Natanson says this “post-neoliberal” right is novel in the region in three key ways: It is democratic; it does not champion a return to the Washington Consensus-style policies of the 1990s; and it is clever enough to complement its economic policies with social sensibilities, promising macroeconomic reforms while preserving the welfare systems developed by leftist governments over the past decade.

This more-moderate conservatism is a product of the huge improvements in social equality and inclusion across South America during the so-called Pink Tide of leftist leaders, even though progress has stagnated in recent years as the region’s commodity-dependent economies slowed. In this period, countries like Argentina and Uruguay have also set global precedents for socially progressive policies in gender equality, abortion and the legalization of drugs.

As Venezuela and Brazil continue to navigate epic economic and political crises, and in the aftermath of a recent referendum defeat suffered by the seemingly invincible Bolivian President Evo Morales, opposition leaders across the region will be following Macri’s progress closely. Developing an innovative election and public relations campaign is one thing, but to become a lasting movement, the new right must build on recent social advances, rather than simply dismantle them and return power and wealth to a tiny elite. Macri has an opportunity to set the example and become a regional leader in the process. The world is watching to see if he’ll seize it.

Marc Rogers is a journalist and editor of The Argentina Independent, an English-language digital media outlet based in Buenos Aires. You can follow him on Twitter @marcdrogers.

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