Argentina Free Fall
The Cost of Cristina Kirchner’s Endorsement

The 12-year reign of the Kirchner couple is coming to an end in Argentina, and that has investors and political watchers excited. They’ve pinned their hopes on getting a new regime that will open up the Argentine economy and introduce government transparency, making the country (and its struggling economy) much more attractive to foreign investment. But though President Cristina Kirchner is stepping down after elections, she still managed to throw a bucket of cold water on those anticipating her exit. Bloomberg reports:

Daniel Scioli, the favorite to win Argentina’s presidential election in October, chose a close aide to President Cristina Fernandez de Kirchner as his running mate, triggering a dive in bonds.

Scioli, the 58-year-old governor of Buenos Aires province, named Carlos Zannini as his vice president candidate, saying he represented continuity of the political project led by Fernandez and her predecessor and husband Nestor Kirchner, who have ruled Argentina since 2003. Zannini, a 60-year-old lawyer from Cordoba province, has been Legal Secretary for the government for 12 years.

“I consulted the president on this issue,” Scioli, a member of the ruling Victory Front alliance, said in an interview with the C5N television network. “Picking Zannini, a founding member of this movement with a history of proximity to Nestor and Cristina, gives certainty.” […]

“He [Zannini] has been the legal architect and brain behind many controversial measures and policies of CFK,” Daniel Chodos, a strategist at Credit Suisse Group AG, said in an e-mailed response to questions. “The market is taking this negatively because this appointment reduces the chances of a change of the current model under a new government.”

Just when the Argentinean people, and the international community, think they are free of President Kirchner and her ruinous handling of the country’s economy, Zannini, who the FT explains “is known in Buenos Aires as “el chino” because of his interest in Maoist philosophy”, gets thrust back on them.

President Kirchner’s tenure has been marred by corruption and, despite Argentina’s strong resource base, a sinking economy. Most recently, we’ve seen the bizarre and tragic story of Alberto Nisman, the prosecutor appointed in 2005 to investigate the unsolved 1994 AMIA bombing, unfold. The story ranges from secret Iranian oil deals to President Kirchner’s global conspiracy theory about international media, Jewish groups, and Mr. Nisman conspiring against her government. Though that is just a snapshot of the political dysfunction of Argentina, it is easy to understand why opposition polls have sixty-five percent of the population favoring political change. That’s to say nothing of the investors, who see Argentina as a wonderful opportunity for trade growth, but are being shut out.

Yet Kirchner still has pull, enough that Scioli reportedly choose Zannini in exchange for her endorsement. Argentina may be done with Kirchner, but Kirchner is not done with Argentina.

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