In Latin American politics, money beats merit.
Consider Mexico. President Enrique Peña Nieto is a product of the influential “Atlacomulco Group” of crony politicians and entrepreneurs, its membership interwoven through blood ties and close friendships. Within the quasi-authoritarian Mexican Institutional Revolutionary Party (PRI), this camarilla network has enforced the status quo for decades, rewarding its members with appointments, promotions or financial resources.
Camarillas are a key source of the widely observed state of flawed democracy that still ripples through Latin America. They are an incidental feature of conservatism, Roman Catholic entrenchment and other traditional values that place family and network loyalty right at the core of society.
But have they finally been shaken off in Argentina?
Since the time of Juan Domingo and Eva Perón, the infectious Peronist camarillas have weaved through Congress. Eight of the 10 presidents following the Peróns stayed loyal to the brand. Despite its tendency to defy political classification, the capacity of Peronism to influence is striking.
In November, the right-leaning Mauricio Macri spoiled the party. With his ruthless drive for economic shock therapy, a new era of free enterprise and closure with American “vulture-funds,” investors have been lining up to tango with Argentina once more.
“When Mr. Macri was elected in the final round of voting, I lifted a glass of Argentinian Malbec to him because I knew he would deliver,” DMS Funds CEO Peter Kohli told Frontera News recently. “And deliver he has.”
Yet in order to deliver, Macri too is spinning his own camarillas – an indispensable mechanism for exerting influence. It will be the key to fulfilling his political and economic agenda, and ultimately staying in power.
Macri is no dynasty politician. His power base was originally constructed on entrepreneurial foundations, primarily the Macri Group (or Grupo Sociedad Macri, SOCMA), which continues to have multi-industrial operations in Argentina, Brazil, Uruguay and China.
Mauricio’s father, Franco Macri, catapulted the group to success in the late 1970s, using construction as his staple. Franco always wanted his son to inherit full command of the business, but the young Mauricio’s desire to find his own way spawned a contentious relationship.
After briefly gaining some managerial experience at SOCMA, Mauricio found his own stardom as President of the Boca Juniors Football Club from 1995-2008. After that, he transcended the family further by entering politics. Under his own Republican Proposal (PRO) party, Macri governed for eight years as Mayor of Buenos Aires, and captured the imagination of young voters and the middle class.
CEO of the Republic
With his election to the presidency last year, the stars of Macri’s city administration were duly rewarded with places in the frontline cabinet.
Macri’s former Deputy Mayor, Gabriella Michetti, became Vice-President; Marcos Peña, his Secretary General in Buenos Aires, was made Cabinet Chief; and Rogelio Frigerio, formerly President of the City Bank – BancoCiudad – became Interior Minister. This trio was crucial to the meteoric rise of ‘Macrismo’ under the PRO banner.
But in order to deepen his economic shock policies, Macri also needed a broader team of bold, proven decision-makers with a mindset he could relate to. Enter Alfonso Prat-Gay as Economy and Public Credit Minister. The former JP Morgan executive served as the central bank’s President after Argentina’s debt default 15 years ago.
The vital role of Energy and Mining Minister, key to developing the economy, went to another experienced hand – Juán José Aranguren, a former CEO of Shell Argentina. The Agriculture Minister is Ricardo Buryaile, a former Vice-President of the Argentine Rural Confederations (CRA).
The big surprise was Macri’s decision to keep the encumbent Science and Technology Minister, Lino Baranao. Elevated by Cristina Fernández de Kirchner back in 2007, Baranao noted a dramatic change in the government’s operating style.
It’s clear that Macri is running his government in the way he knows best – like a company executive board. His openness to horizontal interaction slaps Peronism in the face.
But the President is already in rough seas. His embarrassing inclusion in the Panama Papers revelations in May is still being investigated, while pressure has begun to mount from PRO allies to remove Energy Minister Aranguren after he was found to retain $1 million of shares in Royal Dutch Shell.
On the streets, the nation’s powerful trade union federations are getting ever more combative over mass lay-offs. The church – a formerly dominant institution – has issued very public warnings against tight austerity measures.
The arrest of influential community activist and Kirchner ally, Milagro Sala, on corruption charges in January awkwardly put Macri on the wrong side of one old school Peronist: Pope Francis.
Macri’s critics will not rest. When times get tough, the President must turn to his informal camarilla: a trusted network of stealthy associates that can oil the establishment from behind the scenes – his secret Cabinet.
Macri’s Secret Cabinet continues tomorrow on Frontera News
The author is Jack Nott-Bower, Latin America Analyst at West Sands Advisory Limited. A Spanish speaker, Jack has lived in Mexico and traveled through the Americas. His analysis focuses on political, criminal and governance dynamics throughout the region. West Sands Advisory Limited is a business intelligence, investigations and political advisory firm that has, since 2006, helped clients identify opportunities and reduce risk in emerging and frontier markets http://www.westsandsadvisory.com.