Your new president, Argentina.

Photographer: Emiliano Lasalvia/AFP/Getty Images

Now Comes the Hard Part for Argentina's Next President

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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From grieving widow to sulfurous populist, Cristina Fernandez de Kirchner played many roles in her 8-year tenure as Argentina's president. Gracious loser was not one of them.

True, Fernandez had some yellow flowers planted in the presidential palace gardens, a nod to the party colors of incoming leader Mauricio Macri, who took office Thursday. But in her final days as president, Fernandez did about everything she could to hex the transition -- from taking public slaps at Macri and naming new ambassadors, to making last-minute maneuvers to divert a larger share of federal revenue to the provinces and pump up spending on pet social programs.

Most worrying for the incoming leader, and for Argentina as a whole, are not the parting shots themselves but rather what they might portend about challenges ahead.

Macri stunned his country's politicians and delighted its investors by coming from behind to beat Fernandez's chosen successor Daniel Scioli in a November run-off. But the 56-year-old businessman's thin margin of victory -- about 700,000 votes -- augurs ill for a divided nation facing its worst economic downturn since the massive debt default in 2001.

Macri ran as a political outsider. The scion of a wealthy industrial family, he made his name in the private sector before launching two successful runs for mayor of Buenos Aires. He built his presidential bid on the fact he wasn't a Peronist -- a disciple of Juan Domingo Peron and his wife Eva, whose legacy of authoritarian, them-against-us populism has dominated, and often poisoned, national politics for the past seven decades.

Indeed, an end to the belligerent nationalism practiced by Fernandez and her husband and predecessor, Nestor Kirchner (both Peronists), bodes well for Argentina's place in the world. And Macri's top cabinet picks -- former JP Morgan Chase & Co. executive Alfonso Prat-Gay for finance minister and Susana Malcorra, an adviser to United Nations Secretary General Ban Ki Moon, as foreign minister -- should be a promising sign for the country's investors and creditors. 

But the new administration will have to confront the daily battle of leading a country whose politics are driven by spite, vindictiveness and polarization. To close the largest public deficit in about three decades, contain the more than 20-percent inflation rate and devalue the over-priced peso without causing a collapse, Macri will need the cooperation of a largely hostile congress, where Peronism holds the upper hand.

Peronists have ruled the country for most of the three decades since Argentina returned to democracy, and in the rare intervals when they weren't in charge, they have made life hell for outliers. In 2001, failed economic reforms led to a currency collapse, a run on banks and street riots, and forced hapless president Fernando de la Rua to resign -- with a shove from the Peronist opposition. That debacle led Argentina to default on almost $100 billion in foreign debt, and set the stage for the rise of Nestor Kirchner.

"When a non-Peronist governs in Argentina, it's a sure thing that Peronists will band together and make the government suffer," former Uruguayan president Jose Mujica has said.

Macri arguably comes better prepared than his non-Peronist predecessors. A close ally will govern Buenos Aires province, long a Peronist stronghold. He also will get a vote of confidence from big farmers, to whom he has promised a rollback of Fernandez's steep export taxes. Another plus: Macri has pledged to seek an end to Argentina's long standoff with foreign creditors, including aggressive hedge fund lenders whom Fernandez called "vulture funds."

Still, Macri is certainly going to need a lot more than yellow flowers.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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