The Bibi-Cristina tango

Un PASitO pa’lante Cristina, diez pesitos p’atrás

I am writing this from the other city I could happily have made aliyah to, if Tel Aviv hadn’t come calling — Buenos Aires. Sunday’s absurd primary elections were nearly as unnecessary and wasteful on the public purse as Israel’s own two elections within six months.

Of course, the same could be argued for Argentina’s PASO (Primarias, Abiertas, Simultáneas y Obligatorias — open, simultaneous, compulsory primaries), which was instituted under Peronist Cristina Fernández de Kirchner (CfK)’s rule as a means to force out smaller parties and presidential candidates who might split her vote. In this case, they have acted as a bellwether for the main event, given that all parties had already nominated a single candidate. With voting being compulsory, one cannot assume that incumbent president, market-friendly centrist Mauricio Macri’s backers were simply staying at home, whilst the supporters of CfK and her running-mate Alberto Fernández got out the vote.

By way of context for Argentina newbies, Alberto is no relation of hers but a longstanding kirchnerista who worked for her and her late husband Néstor (he was president for one term, she for two, before Macri ousted her chosen successor in an upset in 2015, becoming the first democratically elected non-Peronist, non-Radical in a century). Alberto fell out with her, then made a useful front-man as CfK remains rather too toxic to be the President again just yet, so will play puppet-master from the VP’s office, much like Putin was “Prime Minister” to Medvedev in Russia. Together, Alberto and CfK are known as “FF” – double Fernández.

And only an eternal optimist would see a path to victory for Macri after being trounced 47%-32% – most of those other 21% of the votes will surely go to FF, having largely gone to Peronist moderate Roberto Lavagna and hard-line leftists this time. In other words, on this showing, Macri is unlikely to even make it to “ballotage” in the main election, a run-off between the top two candidates that happens if there is no clear winner (defined as having either more than 40% of the votes plus a 10% lead, or 45% of the vote). It seems likely that Lavagna and the others will clear the field for FF, rather than split their vote – in a direct head-to-head, especially with more time on his side, Macri could somehow claw it back.

The markets’ reaction to this likely change in government to one vastly less friendly to them, their liquidity and independence, was predictably brutal – 30% wiped off the stock exchange, 20% off the peso, within hours of opening. Bear in mind that it is a matter of FF policy to, in all likelihood, bring back the currency controls and rampant protectionism that CfK instituted. Macri’s only hope is that the country is so shocked by this staggering devaluation that they vote to try and avoid things getting worse – in fact I think it is reasonable to expect that if Macri pulled off an unlikely victory from here, the markets would more than rebound from this dip.

Bibi is going to fK Israel

My observation is that Netanyahu is likely to win the forthcoming Israeli elections for many of the same reasons as FF will win here. It sounds absurd to compare them – the Israeli economy is booming and the shekel is one of the world’s strongest currencies. Netanyahu is the incumbent; FF is the challenger.

But actually the methodology is remarkably similar, of looking away from liberal, democratic traditions, towards the populism of autocratic rulers, and to encourage conspiracy theories about how the press and the world are out to get the Dear Leader.

In both Argentina and Israel, many of my sensible, brilliant friends make fiercely impassioned arguments defending CfK/Bibi and showing evidence of a conspiracy motivated by a sinister alliance of external forces and local parties who want to sell the country down the river for power and material gain, whilst “sólo Cristina”/”rak Bibi” can stop them and save the country from certain doom.

I have come to understand, as was covered in the Times of Israel’s recent Horowitz/Friedman interview, that perhaps liberal democracy was never really Israel’s tradition, and that the years where it appeared to be so, arguably the early years of the state before the mizrahim found a political voice, and in recent years when Netanyahu was still playing the centrist, were merely an aberration. In much the same way, Macri is too, and FF would simply be returning Argentina to its normal position.

During my visit to Buenos Aires, I gave a lecture to a class at the University of Buenos Aires faculty of economic sciences, about Brexit. One of the core points the students could not fathom was about the nature of trust in the Establishment. Fundamentally, Brexit was about a distrust of the EU’s bureaucratic leadership, and a schism between many ordinary people and the UK’s own perceived political elites telling them to go along with it.

However, there is a wider faith in the British civil service and in the political structure, even if we have disdain for many or most of the actual politicians, to serve the will of the people, somehow or other. Although we may all be frustrated at the protracted Brexit process, with the government thrice being voted down, leading to May’s ousting, this was in the end what Parliament is supposed to do; to test robustly and openly the proposals of its government, and not to simply ram matters of great import through on party or ideological lines.

This could not be more alien as a concept for Argentineans, who have in successive generations lived through the ructions of Peronism, dictatorship, and total socio-economic collapse, whilst its politicians fiddled and held internecine battles. It is similarly alien to most Israelis, who see chronic waste, inefficiency, nepotism and politicisation of supposedly neutral departments and agencies across the public sector, and who have scant faith in their political class. I have heard frequently from voters that they support Bibi because of the charges against him, not despite them – they actually admire that he might be able to enrich and empower himself whilst running the country!

Clowns to the left of me, jokers to the right

At the same time, in all three societies, there is a high degree of skepticism about the role of capitalism, big business and free markets, all of which have become somewhat dirty words to many, with the idea of increased public sector spending and employment becoming more popular again as a countermeasure, in the hope that this somehow leads to a better, kinder, more equitable and efficient society (clue: if you’re not in Scandinavia, it probably won’t).

And yet the very people who are calling for these changes are often the more socially conservative parts of the population, and not the urban elites. Hence, in both elections, and in Brexit, it is difficult to pin this down as a particular problem of left vs right. It is more about those who identify themselves as having been left behind; they are the floating voters today, not the centrists of yore who could just as easily vote for Blair or Cameron, Barak or Bibi, Carlos Menem or Nestor Kirchner, knowing there was little fundamental policy difference.

The economic position for the poorest in each society is also oddly similar, and they are also being treated as fools by populist politicians, albeit with different hands to play. For Bibi, it is to point out how Israel has never had it so good, and to boast of the ties that have been formed with myriad global powers, for the benefit of the people. For FF, it is about blaming Macri for the horrendous figures of 1/3 of the country living in poverty, ignoring that the 12 years of kirchnerism was what set the tone for 4 years of macrista austerity.

In both cases, the poor have been played. Life was barely any better under CfK; they just subsisted on patronage-related handouts, and so were not defined as being below the poverty line, but they were hardly thriving. It is easy to manipulate such people by offering them even a crumb more than they have today, especially if today they have a crumb less than yesterday, when you fed them and didn’t admonish them, compared to that haughty capitalist who sold you as a slave to the IMF.

This was how the Kirchners came to replace Menem and the series of failed presidents that came after him, having left 40% of the population in poverty and an unsustainable debt to the IMF, leading to a surge in migration to Buenos Aires from unsustainable provincial towns and villages, as agriculture mechanised, old industries were unable to compete with China and Brazil, and creaking rural infrastructure ceased to be worth replacing with no critical mass of population – a classic vicious downward spiral that in turn has threatened to destabilise the capital and make it less desirable as a middle class European bubble – does this sound familiar, Tel Aviv?

Similarly, Bibi has presided over an era of staggering rises in GDP per capita, but also the enormous skewing of growth towards the upper echelons of society, and the worst poverty rate in the OECD. And yet, they flock to him, and they flock to Gush Dan, where they are trapped by the surge in real estate prices but the lack of public transportation infrastructure to allow them to live further away (and that by law it cannot run 20% of the time).

Argentineans are as upset as Israelis are about how there can be actual malnutrition and lack of basic services, in the 21^st century, in their enlightened countries. It would be fair to say that neither can point to a government of any stripe that has covered itself in glory trying to resolve this long-term.

Here is one area of clear difference in approach. Bibi has relied on a rising tide lifting all ships, and has slashed government spending as a percentage of GDP, despite the surge in the latter, excellent debt-to-GDP ratios, low cost of borrowing, and the prospect of enormous royalties from offshore gas discoveries, that would surely allow increased spending on public infrastructure and strengthening the safety net, without turning Israel back into the wholly inefficient pseudo-socialist state it once was. In other words, an austerity budget without the austerity, which has magically not cost him votes among the poor (“let them eat jachnun”?!), but has gained them among the wealthy, whose cigars and champagne he most definitely enjoys.

Meanwhile, the kirchnerista playbook was to refuse an austerity budget in the face of obvious austerity, and then to attack Macri for simultaneously accepting this reality and negotiating unprecedented terms for the refinancing of the Argentinean economy through a $55bn IMF loan. My main criticism of the latter is that, much like the European Central Bank’s bailout of the PIIGS, the main beneficiaries seem to have been the banks, who simply shored up their balance sheets and enjoyed the fees, when they were supposed to be acting as conduits providing fresh liquidity to ordinary people and businesses to kick-start the economy. But CfK’s previous policies, and those proposed by FF, are surely worse – to try and decouple from the international markets and economic order because it is not convenient, and create an artificial sense of wellbeing through manipulation of imports, exports, commodity and utility prices. This is demonstrably unsustainable.

That last point shows that in fact there is a fundamental parallel here, which is that both Bibi and FF have no real solutions for the people left behind by the modernisation of the economic system. In Israel, government and private monopolies continue to artificially suppress wellbeing through the exact same manipulation, instead of allowing a freer market. It is exactly taking money out of the pockets of everyone, and as a fairly direct tax affects the poor the most. Israel has the highest cost of living in proportion to median income in the OECD, and yet this is an issue that is simply swept under the rug by Bibi come election time.

Morals are a luxury item

Further parallels between CfK and Bibi are obvious. Both have been cosying up to some of the worst human rights abusers – in CfK’s case, Venezuela, providing diplomatic cover for a socio-economic crisis that ironically then precipitated tens of thousands of Venezuelans coming to the relatively wealthy and stable Argentina of Macri to take shelter, and of course Iran, with whom she struck a cynical deal to carry out a “joint investigation” into the AMIA bombings, whilst enjoying their largesse on oil supply. More on this later.

Meanwhile Bibi prefers to boast of his great relationships with Putin and Xi, and the progress with those bastions of openness and moderation, the Gulf states. Of course, there is always an element of realpolitik when it comes to international relations, especially in Israel’s delicate case, but turning these unsavoury, if necessary, connections into a source of pride and a reason for your re-election is distasteful, and a naked play for an audience that grew up in non-democratic societies, and should be guided away from that mentality by responsible democrats of all stripes.

Then of course there are the corruption allegations. In CfK’s case, she seems to have become remarkably rich for a former mid-level provincial lawyer, with some truly epic scandals awaiting their day in court (when she finally loses her immunity as a senator – sound familiar?!). We hardly need to go back over Bibi’s rap sheet, which in fairness does not include lining his pockets to the tune of the billions CfK is rumoured to have siphoned off, but we hold him and ourselves to higher standards.

Whilst the criminal charges must be brought and evaluated in court, by the British sense of fair play I was brought up on, and based on evidence in the public domain that even he is not denying, I cannot see how he is not guilty of a breach of the public trust. I stand by the presumption of innocence on criminal charges, but that requires a defendant to stop meddling with the actual fabric of the judiciary and to stop militating for immunity, so he can face his day in court. This behaviour hardly points, in any but his own and the conspiracy theorists’ minds, to the likelihood of complete innocence, given that civil matters are decided on the balance of probabilities.

At least Netanyahu does not have Jewish blood on his hands as CfK seems likely to have with the Nisman affair. A quick recap: Nisman conveniently committed suicide, using his IT manager’s pistol, the night before he was due to hand in his evidence of state collusion in covering up Iran’s role in Hizbollah’s bombing of the AMIA building, killing 85 people, which he had been working on since 2004, having sent home his 10-man security detail. Subsequently, when CfK lost power, a more thorough investigation was carried out, that conclusively announced he had been murdered, and that the previous investigation and autopsy were essentially fabricated to cover this up – a double conspiracy that may yet be traceable to CfK.

According to CfK’s acolytes, the conspiracy is that it was suicide, the investigation was politically motivated to try and stitch CfK up, and he killed himself precisely because he lacked any proper evidence. Lo yihye klum, ki ein klum.

Albiceleste, kahol lavan – the blue and white pill

So, these two campaigns are to my mind something of a mirror image of each other. I often think of The Matrix and its famous red pill/blue pill question. Most people prefer the blue pill – to live in a parallel universe to reality, where the patronage of politicians keeps them in sweet limbo, instead of taking the red pill, seeing the world for what it is but also what it could be, and understanding that it is worth the struggle now to achieve a real gain later.

In the end, Macri and Gantz are similar realists – rather dull, stolid men who are reluctant politicians, but see it as their duty. Bibi and CfK are bombastic populists who have come to believe in their own messianic qualities to redeem their nations. In the Trumpian era, it seems pretty clear who is going to win. And after all, that is all that matters these days.

Nobel Prize winner Simon Kuznets was famously quoted as saying, in terms of economic structures: “There are four kinds of countries in the world: developed countries, undeveloped countries, Japan and Argentina.” I think it is time to add Bibi’s Israel to that list.