Kirchner Locks in Her Model in Argentina

One of the most controversial and radical moves implemented during the populist rule of Cristina Fernández de Kirchner in Argentina was the nationalization of private pension funds in 2008.

Not only did the government seize $29.3 billion in pension savings but, since the private pension funds owned stock in a multitude of companies, the government also seized that stock and used it to appoint cronies to their boards. This significantly increased the government’s control over the private sector.

Even though none of the opposition candidates has proposed peddling back the nationalization of the pension funds, the Kirchner administration is taking no chances. This week the government enacted a law that makes it extremely difficult for future administrations to sell the stock: from now on it will require a two-thirds majority vote in both chambers of Congress. Since kirchnerismo will likely remain a significant political force in Congress in the foreseeable future, it will enjoy a veto power over any future sale of the stock regardless of who wins the presidential election in late October.

Tellingly, the Argentine government has also drafted legislation that would limit the extraordinary executive powers that the presidency has accumulated since the Kirchner couple came to power in 2003 (Cristina was preceded by her husband Nestor). But don’t count on Cristina discovering her inner Montesquieu. The Kirchner administration has signaled that the bill would be approved only if an opposition candidate wins the election.

Thus, even though Cristina might have only few more months in power, much of her economic model will live on.