The EconomistAugust 17th 2019 The Americas 252 is small. On August 11th nobody actually
won or lost office: the vote was technically
a primary and the main candidates were
uncontested in their parties. But since all
Argentines over the age of 16 were legally
obliged to vote, it functioned as a full dress
rehearsal for the real election, which will
be held at the end of October. If the Fernán-
dezes win more than 45% of the vote again
in October, they will seize victory in the
first round.
Second, investors are rightly fearful of
the policies the pair may put in place. Ms
Fernández’s spendthrift reputation pre-
cedes her. Mr Fernández warned in the fi-
nal days of the campaign that devaluation
of the peso was coming. He also promised
to renegotiate the $57bn imfloan, and said
that he could in effect default on Argentine
bonds.
In the aftermath of the vote, Mr Fernán-
dez tried to strike a more moderate tone.
“We weren’t crazy in government before,”
he declared. Reducing expectations, one of
his advisers points out that if Mr Fernández
wins, a weak peso will make the job of be-
ing president “that much tougher”. But it
may already be too late. As The Economist
went to press, the peso had fallen by 25%
against the dollar since the election.
A weaker currency will push up the
prices of imported goods, causing inflation
to rise even further. It also has adverse im-
plications for the country’s bonds. Argenti-
na has defaulted on its sovereign debt eight
times since independence in 1816, most re-
cently in 2014 when Ms Fernández clashed
with hedge funds. Government debt in Ar-
gentina is currently worth 88% of gdp.
Three-quarters of it is denominated in for-
eign currency. A falling peso will push up
the burden of servicing it. Economists at
Bank of America now think the probability
of a restructuring next year is high, and
that the recovery value of Argentina’s debt
could be as low as 40%.
Could the markets’ collapse persuade
Argentines to change their minds by Octo-
ber? Some voters surely took the chance to
punish Mr Macri in the primary vote, and
will come back to him in the real thing. But
few think it will be enough. Eduardo
D’Alessio, of D’Alessio/Berensztein, a poll-
ing firm, says it would take “a huge, obvi-
ous mistake” by los Fernándezbefore Octo-
ber to keep Mr Macri in office. Inside the
president’s camp, the mood was doom-lad-
en. “This is a catastrophe,” said one of his
advisers. “It’s almost impossible to come
back from this.”
Mr Macri has vowed to fight back. On
August 14th he told voters: “I understand
the anger.” He has introduced a $740m
stimulus package of tax cuts, price freezes
and higher benefit payments. Maybe it will
help him claw back some votes. But who-
ever gets the job after the vote in October, it
has just become much harder. 7
“W
e have twovery bad options. You
have to choose the less bad one.” So
reckoned Heydee Berrascout, a physio-
therapist in designer sunglasses outside a
voting booth in a posh suburb of Guatema-
la City. “You have to pick someone. But I’m
not convinced by either of them,” said Osc-
ar Marroquín, a shoe-factory worker across
town in the poorer area of Bethania. Rich or
poor, many in the capital disliked the can-
didates in the run-off of Guatemala’s presi-
dential election, on August 11th. Both Hey-
dee and Oscar opted for Alejandro
Giammattei, as did 84% of the city.
Mr Giammattei, a conservative who was
on his fourth attempt at the presidency,
collected 58% of the vote. His opponent,
Sandra Torres, who served as first lady from
2008 to 2012, got 42%. Turnout, at 40%,
was the lowest this century. The country
must wait five months until the current
president, Jimmy Morales, finishes his
term in January. But the malaise that Mr
Giammattei will inherit is already clear. On
the trail the president-elect told voters he
does not want to be remembered as “one
more son of a bitch”. That would be a novel
achievement in a country where faith in
politicians long ago melted away.
Mr Morales, a former comedian, had
briefly inspired hope, raging against cor-
ruption. But he has spent much of his term
obsessed with destroying the International
Commission against Impunity (cicig), a
un-backed anti-graft agency which has in-
vestigated not just Mr Morales but both Mr
Giammattei and Ms Torres (who could yet
end up in jail once her immunity as a presi-dential candidate ends). The agency’s man-
date will expire next month, after Mr Mo-
rales refused to extend it.
His critics say Mr Giammattei repre-
sents the continuation of a shadowy co-
alition of businessmen, organised crime
bosses and military men who have long
ruled Guatemala. When campaigning, Mr
Giammattei travelled in a helicopter whose
licence-plate number is registered to a
company co-owned by Luis Francisco Orte-
ga Menaldo, a retired general.
His in-tray is unenviable. Malnutrition
and stunting are rife in the countryside. A
survey in 2011 of women in 54 poor coun-
tries found Guatemalans to be the shortest
of all. Some 200,000 people enter the
workforce annually, yet last year the priv-
ate sector added just 3,000 formal posi-
tions. In Latin America only the dictator-
ships of Nicaragua and Venezuela score
worse on Transparency International’s in-
dex for perceptions of government corrup-
tion. A quarter of a million Guatemalans
have been apprehended on the United
States’s southern border since October.
Gangs terrorise those who stay.
Fear not, says Mr Giammattei. His gov-
ernment will have “the sufficient level of
testosterone” to tackle organised crime.
His mano duraapproach extends to a ban
on conjugal visits for prisoners (they will
have to “settle among themselves”, he
says). To boost growth, Mr Giammattei
promises to summon up a “wall of invest-
ment”. He plans to build a high-speed train
across the country’s hinterlands to its cit-
ies and ports. He has promised more social
programmes for rural women, a pledge
once unthinkable from a Guatemalan
right-winger. Special economic zones and
tax reform are among the wheezes his
wonks propose.
Yet the most immediate problem Mr
Giammattei will face is how to manage the
safe-third-country deal reached by Mr Mo-
rales and Donald Trump last month, which
will force asylum-seekers passing through
Guatemala to take refuge there rather than
in the United States. It is unpopular and
possibly unconstitutional. Mr Giammattei
has hinted that he wants to tweak the deal.
To accept it, he may need political cover
from America in the form of renewed aid
(Mr Trump cut it off this year) or assurances
that Guatemalans will get more permits to
do farm work in the United States.
One less headache will be the departure
of cicig and its top-notch lawyers next
month, allowing Mr Giammattei to rest
easier. The president-elect insists that the
fight against corruption will continue. If
cicighas done its job equipping local insti-
tutions, says a future cabinet member,
then Guatemala should be well placed to
fight graft on its own. Whether it will de-
pends on whether Mr Giammattei has the
cojonesto do it. 7GUATEMALA CITY
A president-elect promises a ballsy
new politics. Can he deliver?Guatemala’s election“Sufficient
testosterone”
Point the way, boss