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Business

As Argentines vote, outgoing president looms large

Satan or patron saint? As Argentines go to the polls, Cristina Fernandez de Kirchner leaves behind a nation deeply divided. But could her exit also be the beginning of the end of years of economic isolation?

Breaking up is hard to do. In the slums of Buenos Aires, this is especially true when it comes to Argentina's "Grande Dame," the outgoing President Cristina Kirchner. Here, supporters hand out brooches and buttons with the words "Cristina no se va" - "Cristina, don't go" - while images of the country's first directly elected female head of state look down from ramshackle walls like a patron saint.

But after two terms at the helm, Cristina Fernandez de Kirchner has come to the end of her reign. The constitution bars her from seeking a third term, and the 62-year-old has expressed no intention of seeking other political office.

Among the nation's poorest, Kirchner has earned a cult-like status for expanding social benefits and growing the minimum wage, while bringing down unemployment - if only ever so slightly.

Argentinien Anstecker Frente para la Victoria in Buenos Aires EINSCHRÄNKUNG

Kirchner's face can be seen on many campaign buttons, even though she's not even up for re-election

Out of the crisis

It was her husband, Nestor Kirchner, who laid the groundwork, when he was elected president in 2003. At the time, Argentina was living through its worst economic crisis in modern history.

His decision to devalue the national currency, the peso, marked a turning point. Once again, Argentine exports were able to compete on the global market, and demand at home began to blossom.

In 2005, after negotiating a deal with foreign creditors to restructure more than $80 billion in debt, he announced a controversial decision: To pay off the nearly $10 billion the government owed the International Monetary Fund (IMF) in one single payment by year's end.

Under the original repayment plan, the IMF would have received this money in regular installments over a three-year period, posing less of a drag on Argentina's coffers. But Kirchner's motivation was clear: To wean Buenos Aires off Washington as soon as possible and instead forge closer alliances with other populist leftist leaders in the region.

Saint or Satan?

In 2007, the then-58-year-old head of state announced he would not seek re-election later that year. Instead, he used his popularity to put his wife on a fast-track to the presidential palace. He died three years later.

Argentinien Slum La Cava in Buenos Aires EINSCHRÄNKUNG

Kirchner's image is painted on a wall in 'La Cava,' one of Buenos Aires' many slums

Under Cristina - most Argentines only call the President by her first name - the economy continued to flourish. In addition to expanding social programs, she increased funding for the arts. Today, few other cities offer as many free cultural events as Buenos Aires.

Mario Gomez, who heads a cultural center in one of the capital's working class neighborhoods, said he felt grateful to Cristina: "Her government's initiatives have broken down barriers and narrowed the gap between rich and poor. Cristina's charisma and her commitment to the poor are the reasons why we support her party."

But far from everyone shares his infatuation with the female leader, who likes to paint herself as equal parts Evita Peron and Hillary Clinton. Many blame her for the country's ills, and accuse her of corruption and attempting to censor the media and the judiciary. They also say her aggressive economic policies have largely cut off Argentina from the rest of the world.

There is some truth to the latter. During her eight years in office, Kirchner has beefed up trade restrictions, defending such measures as a way to protect domestic manufacturers. Imports are tightly regulated, and companies relying on them face the bureaucratic hassle of having to constantly apply for new licences.

On the export side, businesses are also weighed down by heavy tariffs, such as the 35-percent tax on soybeans. In contrast, electricity, fuel and social programs enjoy generous subsidies.

According to Luis Miguel Echevehere, head of the agricultural association "Sociedad Rural," the restrictions are posing an existential threat to farmers: "The government's policies have put us in a terrible situation. The restraints on exports and imports, coupled with the constraints on trade, have driven up production costs and are forcing all manufacturers in Argentina out of business."

The black market boom

Cries of "cambio dolares" - "exchange [US] dollars [here]" - ring out through Buenos Aires' main shopping street. The elegant Calle Florida - Florida Street - has become a haven for black market currency dealers trying to exchange pesos for dollars. Rates here are lower than at authorized dealers, and that's attracting a lot of tourists hoping to save some money.

This close to the election, a US dollar will buy you 15 pesos on Calle Florida, as opposed to the usual nine. The reason is simple: The economy is in tatters, the national currency unstable, and inflation is floating around 25 percent.

As a result, many Argentines are scrambling to get their hands on as many dollars as they can. But tight currency controls, implemented to curb capital outflows, have made foreign, more stable currencies hard to come by legally. And that, in turn, has fed a buoyant illegal street market.

But that's not even the beginning of the government's problems. The country has been all but cut off from global capital markets following two massive debt defaults in 2002 and 2014. This year's steep drop in global commodity prices has only added salt to the wound.

Argentinien Schwarzgeldhändler in Buenos Aires EINSCHRÄNKUNG

Tight currency controls have led to a big boom in black market exchanges, where $1 can buy as much as 15 pesos

Cristina's legacy

When Kirchner hands over the keys to her office end of the year, she will leave behind mountains of outstanding debt and an unresolved stand-off with Argentina's lenders over how - and when - to collect them.

Despite the challenges ahead, Barbara Konner, head of the German-Argentinian Chamber of Industry and Commerce in Buenos Aires, remains optimistic about the future.

"The next president would be well advised to not only take one, but to actually solve the debt issue as soon as possible - preferably in the first quarter of 2016, and no later than in the first half. This would send a strong signal to international companies that it's worth doing business in Argentina again. If this happens, I suspect the economy could pick up again by summer 2016 or 2017."

The person who will most likely have to clean up the economic mess is Daniel Scioli. The 58-year-old frontrunner served as vice president under Nestor Kirchner, from 2003 to 2007, and is a candidate for the ruling Front for Victory (FPV) party. But while Scioli, who is widely seen as more centrist than Kirchner, hasn't strayed from her policies in public, many observers expect him to slowly break with her isolationist course.

For better or for worse, and regardless of who succeeds her, Cristina's shadow is sure to hang over the presidential palace for years to come. "Cristina, don't go," her supporters plead. No matter her next step, Argentina's "Grande Dame" will leave behind a lasting legacy.

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