Prior to his inauguration, President Donald Trump set up adversarial relationships with many countries around the world.
But Argentina, where he has business dealings and some say perhaps too cosy a relationship with another rich businessman-turned-president, Mauricio Macri, is not a place that should be a problem.
During a breakfast hosted by Wasserman West, a Latin America-focused law firm in Atlanta, the country’s ambassador to the U.S., said the nations’ strategic interests have little reason to collide anytime soon.
Martin Lousteau conceded that Argentina’s below-the-radar status, it’s relative security to a Europe beset by periodic terrorist attacks and its contrast to Brazil’s woes work to its short-term advantage, but “regrettably so,” since his county would rather see a world that is prospering rather than retrenching.
But during the event with leaders from Atlanta giants like United Parcel Service Inc., Coca-Cola Co. and Equifax Inc., all of which have operations there, Mr. Lousteau said the world is facing a new wave of populism that politicians have to address.
“In my definition populism is the permanent subordination of the long term to the short term,” Mr. Lousteau said, noting that leaders make immediate concessions to appease supporters and consolidate power.
Building enough consensus to achieve big, long-term goals has become more difficult as states lose their hold on the means of communication. Citizens have become conditioned to expect results as quickly as the next tweet or cable broadcast.
“What’s more complicated is to get out of the way these policies affect your mind. You want short-term results, and I don’t think that this is a challenge only in Argentina. It’s a problem for the world,” Mr. Lousteau told Global Atlanta in an interview a week before he attended Mr. Trump’s inauguration.
— Embassy of Argentina (@ArgentineEmbaUS) January 20, 2017
Timing Is Everything
Argentina is in the midst of its own political experiment, for the better in the eyes of some investors on the outside.
The country’s Vaca Muerta natural gas deposit could generate $5 billion in foreign investment after labor reforms in the oil sector are implemented, and the country has returned to financial markets with a flourish. Businesses, including many from Atlanta, are deepening ties in the nation of more than 40 million people as the government opens its doors wider — especially as opportunities dry up elsewhere in the world.
But for those at home, the soaring promises of Mr. Macri’s Cambiemos coalition have yet to pay off.
In the wealthy businessman’s first year at the helm, inflation — a perennial problem in a country accustomed to financial crises — stood at 40 percent, a devalued currency sapped companies’ buying power and citizens’ incomes, and the reduction of subsidies on electricity hit consumers in their pocketbooks hard.
All that translates to an electorate that is feeling the pinch ahead of mid-term elections this year. Some worry that voters’ patience with the Macri regime will wear out before the full effect of his reform agenda can be realized.
But thanks to a divided opposition, that’s not likely, Mr. Lousteau said.
“This year we have mid-term elections, and it’s an election in which the process under which Argentina is undergoing has to be supported with votes. The fact that the Peronist party remains divided means almost surely — I would say surely — the (party in office) will win at the national level,” said Mr. Lousteau, who himself ran against Mr. Macri’s chosen candidate in the last Buenos Aires mayoral elections. (The position is seen as a stepping stone to the presidency.)
The traditionally strong Peronist party is splintered like never before, which paved the way for Mr. Macri’s election in the first place, igniting a political shift that was unprecedented in the country’s modern history.
For the first time since democracy returned in 1983, a third-party candidate was elected to the nation’s highest office, a reaction but the electorate against years of isolationism under the previous Kirchner regimes. Mr. Macri’s coalition doesn’t control either house of Congress, but he’s able to garner support for his agenda in part because governors see in him a chance for the country — and their provinces — to grow, Mr. Lousteau said.
“You have no current governors that have a chance or intention to become the next president, and this means that they are only concerned about their provinces doing well so that they can be re-elected governor, and for their provinces to do well Argentina needs to do well,” he said. Mid-terms should bring more gains for the Cambiemos coalition as Kirchner loyalists held over from 2011 lose out.
The big question for Mr. Macri is whether there emerges a Peronist candidate in the mid-term elections that can rally that fragmented section of Argentinian politics, and how well he can maintain the his coalition, which brings together his own PRO party and two others.
People are generally cutting Mr. Macri some slack, given that he inherited what Mr. Lousteau called a “Bermuda triangle” of economic problems: an informal exchange rate, high inflation and a huge fiscal deficit. Despite a recession and 40 percent inflation in a difficult 2016 his approval ratings hovered around 50 percent.
“What these show is that people understand how difficult the situation was even though they didn’t experience a crisis,” said Mr. Lousteau, an economist and former economy minister for the country. “People are very demanding, and it’s been very difficult year, but I think that the result of the election will be that from the perception point of view and from the representation point of view in Congress, the government is going to be strengthened.”
A crisis can be good for politicians, giving them the license to make tough changes, Mr. Lousteau said in a speech. But governing from one crisis to another is inefficient in the long run. Populists tend to sacrifice a country’s long-term well-being by promising short-term benefits that keep them in power. Defeating this mindset, which seems to be growing around the world, takes long-term thinking and persistence.
Foreign Investment and Atlanta Ties
Argentina for too long has been a victim of its own policies, Mr. Lousteau intimated in the interview with Global Atlanta.
In large part, its newfound attractiveness for foreign-direct investment is a result of a slowing global economy — fewer opportunities for growth elsewhere — but it’s also thanks to the decision to return the country to an open-market track.
That said, companies don’t weigh investment decisions based on the distance a country has traveled in the right direction.
“(Foreign investors) compare you to your own past to determine whether you are at the starting line, but then to start the race they compare you to the rest of the world,” he said.
Argentina has the human capital and the natural resources to be a magnet for investment, he said; it’s just a matter of removing the policy brakes that have been its unfortunate hallmark, he said.
In true economist form, he added that the government bureaucracy is competing against others around the world: The less efficient a government runs, the less competitive its economy is, noting the burden of taxes on an economy and its exports.
U.S. companies have been particularly strong investors in Argentina, one of the first Latin American player to industrialize, fueled by immigration and visionary leaders that looked to the U.S. as a model early in the country’s history — especially on education.
Argentina now has a highly educated population that competes globally in knowledge industries, especially software services. Perhaps because of its recent troubles, both its multinationals and its local startups have shared an outward-facing “global DNA,” he said.
“Because of the volatility of the domestic market for small and medium companies, they started thinking globally,” Mr. Lousteau added.
That mindset has contributed to the creation of four Argentine “unicorns” — private tech companies valued at more than a billion dollars: Despegar, Mercado Libre, OLX and Globant, which had an Atlanta office before moving to other parts of the U.S.
Atlanta, with its strong corporate, financial technology and film sectors, is well-positioned to partner with Argentina, a producer of films, apps and various tech solutions, Mr. Lousteau said. It also has what he doesn’t from Washington: A nonstop Delta Air Lines Inc. flight to his capital city, which he praised at the event.
Argentina’s tech prowess “is vastly overlooked, and I think that once you pay attention to that, you see that the opportunities for interaction,” he said.
While visiting Atlanta, he aimed to broaden the perception of his country beyond malbec, tango, beef, the pope and soccer, all of which are bridges for tourism but don’t tell the story of the country’s similarities to the United States.
During the meeting with business leaders, he used his background as an economist to explain in detail the way faulty economic policies led to inefficiencies.
In an interview with CNN during his visit, he confirmed that he would look to run for mayor of Buenos Aires again.
If his talk with Global Atlanta is any indication, he believes his time in the U.S. will better prepare him.
“I think all your experiences help you. I tend to see them as different pipes, but they all go to the same water tank.”
During a two-day visit, he also spoke at the Atlanta Council on International Relations and a seminar organized by Wasserman West with the help of the Georgia Tech CIBER.