wk 3 - democracy course

Group:  Derek, Divya, Vicky

In 1983, Argentina returned to a democracy after eight years of a military dictatorship.  The free and fair elections that took place at the end of Raul Ricardo Alfonsin’s presidency, in 1989, to the outset of Carlos Menem’s presidency marked the beginning of Argentina’s federal, presidential, representative, democratic republic, and it was the first time that Argentina held a fair election with a peaceful transfer of power from one party to another. 

Five years later, an election was held to create a Constituent Assembly which modified the nation’s 1853 Constitution.  While many Constitutional provisions remained the same, some were modified.  Among these changes include new provisions for Presidential reelections and the abolition of the electoral college system in Argentina. 

With the exception of the immediate chaos following the 2001 economic crisis, during which time Fernando de la Rua fled the country and Eduardo Duhalde became interim President, Argentina’s political system has remained relatively stable during the last twelve years.  However, improvements can still be made to ensure future stability and legitimacy of the nation’s political institutions and electoral system.  

Presently, the President acts as the Head of Government  and Head of State.  In this capacity, he acts as the chief public representative, who embodies the values of Argentina, and leader of the Cabinet.  The Presidential term is four years with one successive reelection, and there is no electoral system.  The President is directly elected; however, if the majority candidate does not receive at least 45% of the vote, a second round of voting is required.  The President has no formal relationship with the legislature, but he does have veto powers.  Additionally, he has the ability to announce pardons. 

In addition to the Office of the President, Argentina has a bicameral Congress, the Congreso de la Nacion, composed of the Senate and Chamber of Deputies.  The Senate consists of 72 seats which are directly elected from each province and the city of Buenos Aires.  The members of the Senate are elected for six year terms with one-third renewed every two years.  Members of the Chamber of Deputies are directly elected via a closed-list, proportional representative system.  There are 257 members, half of whom are reelected every two years (Inter-American Dialogue).

While this system is effective, our group has a few particular modifications, and they are as follows:

1.  Extension of the President and Vice-President’s terms from four to six years. 

The first modification would be an extension of the Executive term from four to six years, which was the law before the Constituent Assembly altered this provision in 1994.  Also, we suggest abolishing the provision for a consecutive reelection; however, we suggest reelection after at least one term.  Four years is too brief of a time for a single term, and it does not allow for effective policy-making and implementation.  Campaigns are lengthy and expensive processes, the party’s primary concern during the first four years is a reelection.  Hence, during the first term, the President´s policies tend to be designed to gain popular support for reelection than for effective decision-making.  If the President was given the Office for six years, he has ample time to consider and implement effective policies, and without the possibility of a consecutive term, he will not be focused on reelection.  Thus, he will spend more time representing and less time campaigning, and with the possibility of reelection after the following term, he has an incentive to leave a positive legacy of effective policies.  Hence, the term increase and the elimination of consecutive terms would promote more efficient policy-making and
exercise of Presidential powers.  However, with the possibility of future
reelection, the President has the desire to maintain a positive legacy without
spending too much time campaining.  

2.  A second round of voting should be required if the President does not obtain a 51% minimum. 

This proposed modification is presented based on an analysis of Argentina’s tumultous political past.  Over the last century, there have been numerous, sporadic shifts from democracy to authoritarian rule.  Much of this instability was the result of military interventions which ousted Presidents in 1930, 1943, 1955, and 1976.  Thus, the notions of legitimacy and stability in Argentina are vital because of its history of political insecurity.  With a history of military coups, the people of Argentina need to feel secure in their leader, and this legitimacy would be strengthened if the President was elected by a majority of the people (Lambert).  Hence, we propose that if a candidate does not obtain 51% of the votes, there must be a second round of voting. 

3.  Abolish the closed-list system and enact a preferential system with a single-transferable vote (STV) ballot.

Argentina’s lower house, the Chamber of Deputies, is directly elected via a closed-list proportional-representation system.  Our group feels that because the voter is only selecting a party and not an individual candidate, this system creates strong party affiliations, and within Argentina, a single political group, the Peronists, dominate politics.  The Peronist movement is an extremely broad and largely undefined political group, which acts as an umbrella for various factions of different names, including the Frente para la Victoria (Front for Victory or FV) and the Partido Judicialista (Judicialist Party or JP) and their allies. 

For example, the Peronist Party’s domination was evident in last year’s elections.  In October of 2005, the FV obtained 69 of the 127 seats in the Chamber of Deputies.  The remainder of the Judicialist Party received 11 seats, and the Union Civica Radical (Radical Civic Union or UCR) received only 19 seats.  Clearly, we see the dominant influence of Peronism with a win of 80 out of 127 seats, or approximately 63% of the seats (Ministry of Interior).  

Also, the closed-list system fuels power to the political leaders who determine the order of the closed-lists.  This poses a dilemma in a nation riddled with a history of political corruption because it encourages misrepresentation and a lack of transparency within the electoral process. 

In order to remedy the inaccurate representation, strong Peronist influence, and lack of adequate opposition to the dominant Peronist party, the closed-list system needs to be abolished, and the electoral system should be replaced by a preferential system with a single-transferable vote ballot.  A STV system would ensure that votes are for individual candidates and not for an entire party because it would allow the voters to rank their candidate choices, which places less emphasis on the party and more significance on the individual candidate.  This method requires a candidate to achieve a minimum number of votes, or a quota, to be elected. 

Also, this system would eliminate the notion of the “wasted vote”.  The notion of the “wasted vote” means that all the votes that did not go to the winning candidate were lost, or wasted, because there is usually only one seat to fill.  Hence, the voters feel that if they vote for the opposition of the dominant or favorite candidate, their vote is essentially wasted (Public International Law & Policy Group). 

If this system were set up in a multi-member district, coalitions would begin to form between the smaller parties.  In addition, since the voters are asked to rank their preferences, a stronger distinction between candidates will be necessary.  Thus, the preferential system will encourage those groups falling under the Peronist umbrella to become more defined and independent, while enabling smaller groups to have greater representation.  Hence, the transferred vote creates a more accurate representation of parties and prevents single-party domination. 

Hence, we feel that the presidential system in Argentina better serves the populace than a parliamentary system.  However, Argentina’s electoral system will become more efficient by increasing the President’s term in office, by mandating a 51% minimum vote, and by creating a single-transferable vote ballot.

 
Works Cited

Lambert, Maria.  “Prospects for Political Stability in Argentina.”  08 June 2006  <http://www.smu.edu/ecenter/discourse/MariaLambert.htm>.

 
“Establishing a Stable Democratic Constitutional Structure in Iraq: Some Basic Considerations.”  Public International Law & Policy Group.  2003.  07 June, 2006  <http://gtel.gatech.edu:2259/wps/pilpg01/pilpg01.pdf>.

Ministry of Interior.  07 June 2006  <htt://www.mininterior.gov.ar/elecciones/congreso_nac.asp>

“Overview of Latin American Electoral Systems.”  Inter-American Dialogue.  07 June 2006  <http://pdba.georgetown.edu/Elecdata/systems.html>.

Group:  Derek, Divya, Vicky

Argentina Business and Investment BREAKDOWN:  A report on the investor-friendliness of a selection of common industries.

Energy

The energy sector has much potential in Argentina with its large reserves of natural gas and even limited supplies of oil that could be used to make Argentina close to, if not all the way, energy-self sufficient. Unfortunately, as per Moffett and Davis in Booming Economy Leaves the IMF Groping for Mission of the Wall Street Journal, “Argentina [Kirchner] has kept natural gas and electricity prices artificially low; the result is that there's been a dearth of investment, raising fears of potentially disastrous energy shortages.”  Investment is low in the sector with good reason:  Kirchner’s decision to regulate prices makes would-be investors see lower and more risky returns, with severe limitations on profit-growth. 

Energy investment is high-risk in all of Latin America right now with the current sweep of Left Wing governments nationalizing foreign businesses, most notably oil and natural gas.  With this is mind, a left of centre president gives us pause in recommending natural gas, oil, and other energy investment.  Energy could be a good investment under a different administration, one without such a heavy hand in economic regulation, most importantly price controls.

Telecommunications

There are positive and negative sides to investing in Argentina’s telecom industry.  On the one hand, the industry is definitely on the rise as many telecom companies set up shop in Buenos Aires.  “A major San Diego telecom player, Qualcomm Inc., previously had invested in Digital Orchid ... [which] now has offices in Argentina” (Enrich, Lessons From a Lender, WSJ). 

Early last month, the WSJ painted a grim picture for investment in Latin America, reporting that “Telecom Argentina dropped 4.6% to 6.90 pesos” (Investors Flee Emerging Markets; Brazil, Mexico, Argentina Slump, WSJ 22/5/06).  This temporary slump should not be taken too seriously, as it was felt in all the sectors of Argentina, not just telecom. 

Our prediction:  as investors cautiously pull out of industries, specifically telecom, around Latin America, they will move their money to Argentina’s telecom industry because it is currently booming and on the rise.  Thus, Argentina’s telecom industry would be a medium-risk, long-term investment that would pre-empt this trend, though it is not our number one recommendation.

Real Estate

Real Estate is not a good industry to invest in right now.  Buy Low, Sell High.  The economy is booming right now and prices on real estate and houses will be higher than during a recession, which, with Argentina’s economic history (and that of all LA) is just a matter of time away. 

Additionally, this market in Argentina is high-risk and very speculative for two reasons.  First, Argentina’s economy is hard to predict long-term due to its cyclic nature and history of political upheavals.  Second, much of Argentina is uninhabited, with a highly concentrated center in Buenos Aires; patterns of land-use and housing are much different from the United States. 

Do your research on select regions to find a promising one, then pursue small-scale investment during an economic recession.

Tourism and Service

These are very important industries in Argentina right now, with tourism ranking somewhere around number three.  Unfortunately, growth is limited.  According to our mutual friend and illustrious guide Gabriel, tourism will remain an important industry for at least three more years but without significant growth during that time, after which a long period of slow decline will begin.  One of the main draws for tourists is the friendly exchange rate.  With the dollar weakening and the Argentina Peso strengthening, that benefit is shrinking.

Commodities 

I enlisted the help of my friend Carlos, currently pursuing an MBA at UBA, from the residency to explore this important industry.  His unquestioning (and quite astute, as we shall see) recommendation was Arcor, an industrial group that specializes in all manner of treats, chocolates, wafers, and other alimentos.  Arcor remains a stable place for investors – relatively independent of market fluctuations compared to other commodities – due its varied export markets.  Besides being “muy establecido en Argentina y Latin America,” Arcor’s website maintains that “exportamos nuestras propias marcas a 120 paĂ­ses, entre los que se encuentran los más exigentes del mundo: Estados Unidos, la UniĂłn Europea, China, etc.”  This stable environment provides a place for long-term investment, meaning larger returns for investors. 

“What about soy?” I asked Carlos.  He didn’t say it was a bad idea, but was not as enthusiastic.  Most importantly, soy is extremely vulnerable to market fluctuations, which are bound to bring the price of soy crashing down sooner or later.  Secondly, soy robs the soil of all nutrients, leaving the soil barren and infertile for years after a harvest.  Though Argentina has vast amounts of arable land available, this fact still has an affect on the amount of investment possible and means that some property may become unprofitable after investing in it.  Arcor, on the other hand, is dedicated to sustainable development:  “hemos llevado a cabo una gestiĂłn con plena conciencia de la importancia de conservar los recursos naturales de las áreas donde actuamos” (sitio oficial). 

Arcor is our top recommendation for investment in Argentina.