Hug a Vulture: Macri Is Changing Argentina Faster Than Many Dared Dream 2
Macri Vultures

By Elizabeth Nicholas

IN A CABLE released by WikiLeaks, a U.S. Ambassador to Argentina said what he thought of the Kirchner administrations – and a lesser-known potential challenger, Mauricio Macri.

“The current administration’s blunders build support for someone who can define himself as the diametric opposite of the Kirchners,” Earl Anthony Wayne wrote of Macri in 2008.

And define himself, Macri has.

For all the warnings in the weeks since the election – cautioning Argentina-watchers to temper their expectations – the country is transforming with gusto.

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After 12 years of populist rule by Nestor and then his wife Cristina Fernández de Kirchner – with their panoply of neo-Keynesian policies driving inflation, anemic growth, currency depreciation and severely curtailed access to global credit markets – we are already witnessing the “diametric opposite.”

Less than a month after his election, Macri initiated a two-year state of emergency for the National Electricity System, allowing the government to cut energy subsidies, gradually raise electricity prices, and create new contracts with providers.

The declaration is critical in addressing serious “energy bottlenecks,” Federico Thomsen, an independent Buenos Aires-based economist, told Frontera. “It will take several years of significant investments to solve them, but the new administration has appointed a capable team to design the appropriate policies.”

In contrast to the Kirchners’ defensive foreign trade policy, Macri is busy opening relations for the entire continent by taking a leading role in the Mercosur bloc.

“Already the President has indicated that not only would he like to see Mercosur speed up its trade negotiations with the EU, which his predecessor was hindering, but also would want his bloc to develop a tighter relationship with the Trans-Pacific Partnership,” said Thomsen. “This could open up new opportunities for Argentina in the Pacific economies.”


But there is another looming event, for which the world is much more closely attuned.  Put simply, that is whether and when Macri will finally make peace with the vultures – the Peronists’ pet name for those hated American hedge funds that held out from accepting write-downs on over US$95 billion of defaulted debt from 15 years ago.

A New York court ruling in 2014 triggered fresh defaults as Argentina was prevented from paying its more compliant creditors before the ‘vultures’. In the eyes of many market-watchers, a deal with the holdouts is the only way that Argentina can rehabilitate itself.

If Macri’s current pace of action is any indicator, then this might be resolved very soon.  Unlike his predecessors, Macri will make the trek to the World Economic Forum in Davos this week. And while on the Swiss slopes, it’s not unrealistic to expect that he could meet the biggest vulture of them all – Elliott Management’s Paul Singer.

Who knows, we may even see Macri shake Singer’s claw.

18 January 2016

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