Martín Redrado: ‘We believe shock policies are what's needed’

Once known in economic circles as the 'golden boy' ("chico de oro"), Martín Redrado headed the Argentine equivalent of the Securities and Exchange Commission (CNV, in its Spanish acronym) during the Carlos Menem Presidency and served as deputy foreign minister under Eduardo Duhalde. He took on the role of Central Bank governor during the Kirchner presidencies, heading the institution from 2004 to 2010 before a messy and controversial departure. Today, he works as Strategic Affairs Secretary for Buenos Aires City Mayor Horacio Rodríguez Larreta, one of the opposition’s leading presidential candidates.

Redrado, 61, defines himself as an economist “transcending the grieta chasm” and speaks of the plan he is preparing with the City mayor, on whom he places all his bets as the next president.

Does your new City Hall post with PRO [being different from your previous politics] surprise you and do you continue to be a member of Sergio Massa’s Frente Renovador, [which is] today part of the Frente de Todos [ruling coalition]?

I never was a card-carrying member. In the 2013 campaign there was convergence when we thought it essential to put an end to authoritarianism and avoid a third term [for Cristina Fernández de Kirchner]. We may recall that there was then talk of changing the Constitution to permit a third term with many people working together, including ourselves in the economic sphere, as we did in the 2013 campaign and 2014. We may also recall that at that time PRO and the Frente Renovador were together.

When Massa was with [Mauricio] Macri, to put it in those terms.

I don’t like name-tags but there was conceptual unity if you like. And we worked there with a great group of economists like Miguel Peirano, with whom I continue to have dialogue and a permanent exchange of ideas, but I was never a card-carrying member. In 1994 I was a constituent assembly delegate in this City where I chaired the monitoring committee and drafted clauses. At that time I was on the Justicialist list and joined that party so if I have any partisan connection, it is Justicialism, but in reality I’ve sought to be an economist transcending the grieta chasm and talking to all the sectors.

What does being strategic affairs secretary signify exactly?

Looking at the long-term strategic issues for the City. In the last 40 days I’ve been working, obviously with Horacio [Rodríguez Larreta], on defining four main lines of work. The first is the strategic projects which the City already has to leave them established, above all in an area where I can add value, which is financing from multilateral organisations.

There we have defined three central projects. The first is to digitalise all the clinical histories in City hospitals so that when we enter a public hospital, they know exactly what our illnesses have been and can give us the right medication in time. Correct. Secondly, we are working together with María Migliore, a great City minister, on urbanising the Barrio 1-11-14 shantytown, where the financing of multilateral organisations is up to me, the Bank of Inter-American Development [BID, in its Spanish acronym], the World Bank and the CAF [Corporación Andina de Fomento] regional bank. And the third is to renew all the wagons of the B-subway line running along Corrientes Avenue.

Around US$200 million, from what I’m seeing.

Approximately. The second axis is working on making people employable, linking up more with the private sector so that all the good City programmes like Empleo Joven or Prácticas Profesionales permit us to generate private-sector commitments to take on youngsters aged under 25. The third area, energy transition and electromobility, these are issues on which we are also working with Horacio. At national level that means working on the transition towards diminishing carbon dioxide for a better quality of life and a better environment for the next generations. And fourthly, backing up the increase of City exports.

I have, of course, joined up to work on Horacio’s national campaign. We’ve been talking about that for a long time now, perhaps that is not so widely known. We’ve known each other for many years with almost family ties via our daughters, who have been best friends since third grade. But the dialogue has intensified since December 29, 2020, as I remember very well. We were still in the midst of the pandemic, I remember him inviting me to lunch at Uspallata City Hall and we had a very good dialogue between the two of us. From there we met frequently until he came to offer me this job in the City but also, of course, working on his national campaign.

You were in the government of Menem, who had the particular virtue of knowing when he did not know and how to delegate – he delegated to [then-Economy Minister Domingo] Cavallo, who then chose you [for the CNV], an enormous power. Horacio Rodríguez Larreta, in contrast, is said to be obsessed with detail. Is it a problem for a president to be a stickler for detail, just as it may be an advantage for a big city mayor?

No, he is clearly a leader with a passion for detail but he also has that strategic outlook, which is precisely why he summoned me, and that passion for transformation, defining Argentina as being at a turning-point. The other day we were talking and he said: “Martín, either we transform or we’re out of here.” Argentina is at a point when we are without financing with all the Central Bank reserves gone, nobody lending us a dollar and all the pesos we’ve been able to scrape from the domestic market gone. The only thing left to us is a Central Bank from which we ask each time coloured paper money which nobody wants with 100 percent inflation so that there is no margin for getting anything wrong. So he is called upon to present a package of six, seven or eight laws from the first day of his government, permitting us to change the reality of Argentina. Of course, he has a passion for asking after detail but we have seen in the City, even if many may say that the City is not the nation, but in many issues ... What he has done in education, for example, our transformations really give a strategic vision. He obviously delegates to his ministers the capacity to carry out policies and he has the capacity to control his ministers, as a president should.

One handicap for a candidate like Rodríguez Larreta is the economic failure of the Macri government. There is that well-known phrase that if you want different results, don’t do things the same way and the fact is that most of the economists initially close to Horacio were the same who had been close to Macri, beginning with somebody who I believe began with you in Fundación Capital, Hernán Lacunza. Is there an electoral need to show a different team of economists from the Macri period?

You have to look ahead and if we’re going to start pointing fingers at those to blame for everything which has happened to us, we’re going to run through all our history. If that were the solution for Argentina, I can assure you that I would join that discussion but I believe that you have to look ahead. And the main thing proposed by Horacio which is different from beforehand is that passion to transform and the will to create laws, a plan and a team, which is also something, modestly speaking, we have often conversed face to face. I wrote Argentina primero, my latest book, precisely saying: Argentina comes out of this trap with plans, trained teams and laws which transform. Because you can have the best economy minister, the best foreign minister, the best interior minister – and those observing us surely have many names in their heads – and if you do not give them political support, as Cavallo had for a law which also made things more predictable or [Roberto] Lavagna with Duhalde, who supported his economic emergency legislation…

What I want to sum up here is that you cannot transform Argentina without translating agreements into laws and here I’m not thinking of pacts like Moncloa. Some say that you have to make a grand pact but I know the personalities of Argentine political leaders and they’re not up to it, nor for a pact along Mexican lines, but they are for Congress passing between December 10 and 30 with majority approval the laws necessary to transform Argentina which Horacio will be presenting to Congress and the people as from December 10.

Argentina has entered on a path where, whatever happens, those central lines will not change, granting predictability and the possibility of irreversibility. That is the great change which, in my judgement, Horacio proposes and we are all very enthusiastic with the passion for turning history around.

Why do you think a possible new government will be different in 2023 from 2015?

That is very difficult because we are proposing something which has never been done, hence the motivation of all of us working in this team. We’ve come here to make history.

In all sincerity I had a much calmer life six weeks ago than I have now. My time was my own and I gave the lectures I wanted so many friends are now asking me: “Martín, have you got mixed up in this again?” And I’m convinced that the train of history is again passing the platform of Argentina. And I tell you, this time it’s worth it. It is, of course, very difficult but I believe that it is the only opportunity Argentina has. Either we make agreements permanent in time which make things predictable or we continue with those ups and downs of Argentina which take away opportunities …

Returning to an earlier question, I believe that nobody in Juntos por el Cambio today is thinking of a fragmentation of the Economy Ministry.

One of the differences would be an Economy Ministry which is not fragmented but empowered.

I believe that has been learned with Horacio adding support for the most transcendent laws, which may come from the Economy or Foreign Ministry.

A second difference would be that there has to be consensus for laws.

Perhaps the word “consensus” has lost meaning, I would say agreements, the absence of conflict or, if not, proposing common denominators. Argentina has plenty. For example, I see one of the central mega-trends as energy security and the transition towards clean and green energy. First of all, energy security because the Russian invasion of Ukraine has faced us with the question of how we supply more natural gas. If you want, we can go more deeply into this but in energy we need laws giving guarantees to those who come to invest in order to be able to have the gas.

Why couldn’t those laws be passed in 2015?

A good question, perhaps there were none. I had said that when we ran out of reserves, I wrote a book and many businessmen from the PyMEs [small and medium-sized firms] told me: “Between 2011 and 2015 I lived better and sold more.” And I explained to them: “You were spending the savings.” It’s the same as if you lose your job and you continue going on holiday and the kids keep going out every night because the family does not realise that you’ve lost your job.

In 2010 I left Cristina Fernández de Kirchner because I was defending the dollars which belonged to the Argentines, not to me as Central Bank governor nor to her as president and I then said: “The dollars are to support the economy and production.” They started with the capital controls in 2011 and by 2015 we had run out of reserves. But it did not make much of an impression and the citizenry did not believe that we were doing so badly so it was difficult then to explain to them the gravity of the situation.

I’m convinced that today everybody realises that you cannot have 15 different dollar values, 100 percent inflation and interest rates already hiked by the Central Bank to 78 percent which the PyMEs cannot handle. There is a much greater capacity for reaction, I believe that the changes have to come from society…

To sum up, the differences with 2015 would be that you have learned the lesson that the Economy Ministry must not be fragmented and that society would be better predisposed. But within PRO there are two theses as to how to achieve that transformation, via agreements or via imposition by force, the former represented by Horacio Rodríguez Larreta and the latter by Patricia Bullrich. Are there differences as to diagnosis and therapy between the economists representing each candidate, as there is among the political operators?

I know all the economists, whom I greatly appreciate and respect, like Luciano Laspina. When we talk face to face, we are all aware that there must be a package of laws and that it must come fast. I see that also when it comes to international policy. We work a lot with somebody who has been doing and will continue doing excellent work in this field, Fernando Straface. We share the view that a confidence shock will be needed at the start of the government and that it should come in the form of legislation. Debate is, of course, welcome and Juntos por el Cambio has always been exemplary as a coalition which debates. There is also somebody representing the Radicals whom I know very well and who was an excellent Central Bank official, Eduardo Levy Yeyati.

Levy Yeyati has a very similar vision to Rodríguez Larreta.

We all believe, to put it very simply, that shock policies announced on December 10 are what is needed. And Horacio is convinced that on December 10 he will have to announce a series of laws. The economic team is working on that with Fernando [Straface], [former foreign minister Jorge] Faurie, Ricardo Lagorio and many young diplomats who are approaching us. We are working on those laws and giving concrete signals of change because Argentina has a crisis of confidence…

Word for word, your report speaks of “an international confidence shock.”

That’s right. And it’s an idea we share with Fernando Straface and, of course, Horacio, we’ve been talking it over a great deal, that Argentina needs a change of domestic expectations and also to give specific signals of productive integration.

Lastly, what should be done with the debt to the International Monetary Fund (IMF)?

I have conversed a lot about that with somebody whom I greatly respect and appreciate, Ilan Goldfajn, who was the IMF Western Hemisphere Director and is now the BID president.

It was said that you were the candidate to occupy that post instead of him.

No, I never was, at least not in this government, so I never made any effort in that regard. He’s an excellent candidate and Argentina did well to approve and back Brazil’s choice.

In one of your texts you say: “Mercosur is a priority.” Is it even more of a priority with [Brazil President Luiz Inácio] Lula [da Silva]?

The relationship with Brazil is a priority and, of course, also with Uruguay and Paraguay, and over concrete issues such as, I’m convinced, energy integration, which is something over which we have often conversed with Horacio, who has especially asked me to look at the processes of integration with the rest of the region. This will permit us to change Argentina’s current dollar equation.

As you know, a gas pipeline running from Vaca Muerta through Tratayén to Salliqueló is being completed. Argentina needs multilateral financing – this is something we are looking at in the City and, I think, also should be transferred to the national level, such as how to finance the second stage to San Jerónimo near Rosario. And here reality gives us good news and bad news: Bolivia will be running out of gas next year so we must reverse the Transportadora de Gas del Norte pipeline running from Bolivia to Argentina, which has been selling us gas in recent years but also runs to São Paulo. Argentina must reverse this construction, as well as adapt the turbo-compression gas plants, because the gas pipelines are broader at the point of exit and narrower at the point of entry and because the gas is now going to go from Argentina to Bolivia. Some very tough negotiations with Bolivia lie ahead but this will permit us to give energy security to Brazil and advance in concrete issues.

In my judgement, as proposed by Fernando Henrique Cardoso, it is basic that we can form a common market between Argentina and Brazil where merchandise can come and go. Having technical standards will permit us greater integration because regionalisation is one of the global mega-trends since globalisation as we know it has ended. There is a trend towards fragmentation and regionalisation, towards replanting international relations. In my judgement the key to the relationship with Brazil will lie in concrete issues rather than thinking of mega-projects: physical and energy integration, common standards for our industrial products for more and better trade. The relationship with other countries should be discussed in depth with Brazil, our relationship with China, for example, and having a very serious policy of integration with those countries with whom we share values and common interests. Revaluing the Asian Pacific and the relationship with India seem fundamental to me.

Will Horacio Rodríguez Larreta become president?

I’m convinced that he has the capacity, the teams and the vision and I’m very enthused about working on this project because for me he is the one with the capacity to transform Argentina. I believe that we face a historic opportunity. There will be a good debate and, as you pointed out a while ago, you get there via agreements or via conflicts. I’m convinced and so is Horacio, which is why he recruited me into this team, that Argentine society has already had plenty of conflicts and that it does not want leaders and politicians who squabble.

Of course, you have to fight for the things in which you believe, with discussion. I had a professor of Macroeconomics in UBA [University of Buenos Aires] called Adolfo Donadine, I always remember him telling us: “Lads, when you take up a position, cross the street and discuss it.” Two things can happen to you there, either you change your mind or you cross back with your position even stronger. That is what the agreements are about, agreements leading to laws in Congress.

Horacio has demonstrated the capacity and vision to do it so we are facing a historic opportunity.

Production: Melody Acosta Rizza & Sol Bacigalupo.