New game in town?

21/03/2006 |

Felisa Miceli was a surprise choice as Argentina’s new economy minister. What her views are remains anyone’s guess

In the last days of November when Felisa Miceli was named to replace Roberto Lavagna as economy minister, the appointment met with surprise and consternation. Not that Miceli, then president of the Banco de la Nacion, was a complete unknown. But her name would hardly have rolled off the tongue of anyone drawing up a list of people who might fill Lavagna’s shoes – he was, after all, the minister who oversaw a return to stability and an unprecedented economic boom.

What very, very few people knew was that Miceli had become an insider at “the igloo”, as local journalists call the Casa Rosada from which they have been frozen out, and into whose inner circle only “peguinos” – those who are from president Nestor Kirchner’s native southern province of Santa Cruz – need apply. In weekly private conversations with the president, the 54-year-old economist won his confidence and projected the total loyalty that the president demands from his collaborators.

shared experiences

Like the president, Miceli is a former member of left-wing Peronist student organizations that flourished in the years before the 1976 coup and suffered the loss of friends during the repression that followed. Like him, she grew up in the provinces, in her case a small town in western Buenos Aires Province. And like him she rejects the neo-liberal economic policies associated with the 1990s.

A divorced mother of three grown children, Miceli has been adept during a career, mainly in the public sector, at developing mentors such as former ministers Aldo Ferrer and Roberto Lavagna, both associated with pro-industrial economic views.

the Dark horse

Little or nothing was known about her own ideas on national economic policy. Now, after four months in the job, it seems obvious that if Argentina’s first female economy minister has a mind of her own, its contents are likely to remain a state secret. “Until,” as one ex-official said, “by revealing it, she moves closer to becoming the first woman to be an ex-economy minister.”

Miceli’s opacity has less to do with her possible economic beliefs or her abilities than it does with the style of her boss, Nestor Kirchner. The “K” style, as it is called, does not permit high-ranking officials to express ideas even remotely distinct from his, to engage in public dialogue or to have any independent source of political support. Hence the departures of former central bank president Alfonso Prat Gay and minister Lavagna, both of whom Kirchner inherited from his predecessor and godfather, Eduardo Duhalde.

Kirchner, says political analyst Rosendo Fraga, is rooted in the culture of Peronism, the economic precepts of the 1970s and the model of political control he exercised while governor of the small province of Santa Cruz. “It can only be called strange,” says Fraga, “ that in two years the president has not held one cabinet meeting or called one press conference. He is an authoritarian and proud of it.”

If, indeed, that is the case, he is one lucky authoritarian. Since his May 2002 fortuitous landing in the Casa Rosada – thanks to Duhalde’s support and Carlos Menem’s allergy to electoral defeat – he has presided over an economy that even the wildest optimists didn’t predict. Economist Mario Brodersohn, an economy ministry official during the government of former president Raul Alfonsin, points out that economic performance over the last three years was not only unexpected, but it has rapidly generated results that were inconceivable based on the last half century of Argentine history.

Moreover, as Fraga underscores, the political opposition has never in all of the country’s history been as divided as it is today. The near rigor mortis of the Radical Party and the insignificance of other more progressive political groups leave no contest on the left. The lack of national projection or will to unify means there is no fight from the right. And the population seems to like it this way: Kirchner’s public approval ratings are sky high, and all bets are on his re-election in 2007.

Not all of this good fortune can be attributed to luck or Kirchner’s astrological sign. Eduardo Amadeo, former ambassador to Washington under Duhalde, admits that the president is a very intelligent politician. He has, as Amadeo points out, turned a 23% vote in his favour when he ran for president into a virtual landslide and, in the process, eliminated all potential competition.

Immediate challenges

Still, he – and presumably Miceli – are looking at two significant hurdles. The first is inflation and the second is investment. They are connected to each other and, according to many economists, not unrelated to the economic measures currently being implemented. Committed to a high fiscal surplus, a high exchange rate and “administered” prices on a wide range of consumer goods and foodstuffs, the margins for manoeuvre are narrow.

Inflation topped 13% in 2005 and in the most cautious forecasts is expected to remain in double digits in 2006. Investment, at approximately 24% of GDP, is in line with Argentina’s historical high points. The problem is, as economist Miguel Kiguel explains, that the current high levels of growth cannot be sustained without inflation given this investment level.

The conundrum may go even deeper. Di Tella University economist Pablo Gerchunoff argues that, for reasons not entirely clear, Argentina requires high inflation to mitigate its traditionally fierce political confrontations over resource distribution. And the curtain is rising on that perennial drama. Kirchner and Miceli, who have both stated publicly that higher wages are non-inflationary, will meet in the on-going trade-union-led wage negotiations groups only too ready to take them at their word.

Related stories

  • SIR SUMA CHAKRABARTI: The EBRD — a bank that evolves ...

    The European Bank for Reconstruction and Development is staging its annual meeting in Warsaw in a year that marks a number of important anniversaries for Poland, Eastern Europe and for the EBRD itself

  • Russian loan market freezes up despite $500m Uralkali deal

    An imminent signing of a $500m loan by Uralkali, the world’s largest potash producer, has not convinced bankers that Russia’s frozen international loan markets is anywhere near thawing out

  • EXCLUSIVE: China rides to Russia's rescue with investment ...

    The decision by a joint venture between Russia and China to invest up to $2bn in key infrastructure projects will relieve the pressure on the Russian government to attract funds to offset the massive flight of capital

  • Georgia condemns Russia as CEE region fears fresh ...

    A leading politician in Georgia last night condemned Russia’s annexation of Crimea and intervention in Ukraine as fears mounted among other small CEE states, notably Lithuania and Estonia, that Moscow could take fresh steps to intervene in countries with large Russian speaking populations

  • FINANCIAL MARKETS: CEE financial hubs steel themselves ...

    Warsaw is home to the largest CEE-headquartered stock exchange, Bucharest is rapidly trying to replicate the structure, while Vienna dominates the Central and Eastern Europe Stock Exchange Group. Throw the Moscow Exchange into the mix and the battle for the CEE power exchange will prove a fascinating one


Editor's Picks


In Focus

  1. RUSSIA: Putin’s Crimea victory risks economic defeat

  2. BANKING SECTOR: Cautious optimism returns to CEE banks as recovery begins

The banking sector is not really intermediating resources. There is no lending going on.

Debora Revoltella, head of the EIB’s economic department