The ebbing of the pink tide

FOR the past 18 months or so Cristina Fernández de Kirchner has ruthlessly subordinated Argentina’s economy and some of its institutions to a single aim: preserving her own popularity and thus securing the election of her chosen successor as the country’s president. She ran down the Central Bank’s reserves to next to nothing to maintain an overvalued official exchange rate. She ran up a fiscal deficit of 6% of GDP and spurned an inevitable deal with holdout creditors, raising its eventual cost.

Under her spell her hapless candidate, Daniel Scioli, an essentially moderate man, shrilly repeated that Mauricio Macri, his centre-right challenger in a run-off on November 22nd, was the puppet of evil global forces such as the IMF, foreign multinationals, “neoliberal adjustment” and so on. A similar strategy propelled Dilma Rousseff to a second term in Brazil’s presidential election a year ago. It is to the credit of Argentines that they saw through it. They chose Mr Macri, albeit by a margin of less than three percentage points.

Mr Macri’s victory, which only weeks ago seemed highly improbable, marks an important turning-point—for Argentina and the wider region (see article). At the head of a coalition of the centre-right, he has broken Peronism’s seemingly iron grip on political power. And after 15 years of domination by various shades of the left, his victory may herald a shift back to the centre for South American politics.

At home, the greatest gains will be economic. Mr Macri and his team represent a rejection of Ms Fernández’s autarkic brand of populism and offer the opportunity of saner economic policies. He has promised to lift exchange controls and reverse the punitive taxation of farmers and the harassment of private investors. He will restore autonomy to the statistics agency, ending Ms Fernández’s infantile attempts to cover up the inflation and poverty her policies generated. He has also promised to let the judiciary work unimpeded. This should include investigating the enrichment of senior officials in the Fernández government, including the president.

None of this will be easy, given Mr Macri’s narrow margin of victory and the Peronists’ control of the Senate. Many Argentines still associate Ms Fernández with subsidies, social programmes and an economic boom while commodity prices were high. They will resent Mr Macri for presenting them with the bill for her irresponsibility. Timing is of the essence: Mr Macri should speedily deal with the holdout creditors, to allow a return to international capital markets, and set a more realistic exchange rate. Then, as soon as prudently possible, exchange controls should be lifted. By using the powers of the presidency and negotiating with pragmatic Peronist governors, Mr Macri can get his way in Congress. In some respects Argentina is in less bad shape than in past political transitions. Farmers are poised to ramp up production (see article). Restore confidence, and flight capital should return.

The centre-right’s opportunity

Mr Macri’s victory will influence broader South American politics in two ways. First, he promises a change of foreign policy. He would “rebalance” relations away from Ms Fernández’s alliances with China, Venezuela, Russia and Iran and towards normality with the United States and Europe. He will ask Mercosur to invoke its democracy clause to suspend Venezuela from membership of the regional bloc, unless the parliamentary election there on December 6th is conducted fairly and opposition leaders are released from prison. No other Latin American president has been so outspoken in criticising Venezuelan autocracy. His victory leaves Venezuela and its allies, including Brazil, looking more isolated.

The deeper point is that other countries may follow with their own shift to the centre-right. Although Argentines have yet to be exposed to the full cost of the left’s economic mistakes, they have clearly tired of stagnation, corruption and divisive politics. In other words, the normal desire of voters in democracies for the alternation of power is now acting against the incumbent governments of the left that have dominated South America this century. The end of the commodity boom, plus anger at economic mismanagement and graft, will almost certainly enable the opposition to win Venezuela’s parliamentary election, too.

South America is not about to go back to the past. The left put inequality on the region’s agenda and it is there to stay. But other issues are now equally pressing: a return to economic growth, clean government and tackling violent crime. The centre-right has a chance to return to power by capitalising on the left’s failings in these matters. The hope for Latin America is that Mr Macri’s victory is the shape of things to come.