This article was originally published in May 2024 for Revista Anfibia. It recounts economist Federico Sturzenegger’s long political trajectory, scrutinizing the crucial moments in Argentine history when he held office in two administrations that ended in deep economic crisis. Now, the economist is in charge of a new, tailor-made ministry.

Cover art by María Elzigaray Estrada

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Federico Sturzenegger was banging his fist on the monochrome monitor in his office at the Economy Ministry. What he saw was not what he expected. In May 2001, President Fernando De La Rúa launched the Megacanje, a financial operation to postpone debt maturities for three years. For a few months, it had seemed possible, but now, it was becoming clear that it wasn’t: the markets didn’t believe them.

“The country risk should be going down, but it’s going up,” said Sturzenegger, Secretary of Economic Policy at the time, staring at the number on the screen.

At the beginning of that August, the Emerging Markets Bonds Index, referred to as “country risk” in Argentina, started rising again. The indicator measures the chances of a country defaulting on payments. It appears constantly on television, accompanied by music conveying catastrophe.

Two years later, auditor Moisés Resnick Brenner proved that the Megacanje cost the country around US$55 million. It achieved little more than pushing back the debt’s due date. The judiciary also looked into whether or not the government forced Argentina to carry out the operation in “an abusive manner” to achieve an “undue profit” for the banks involved: Banco Francés, Banco Galicia, Credit Suisse First Boston, Grupo Santander Central Hispano, HSBC, J. P. Morgan and Salomon Smith Barney­.

Struzenegger was prosecuted in 2013 and acquitted in 2016.

But let’s go back to 2001. Sturzenegger was 35 and had a PhD in economics from MIT. In March 2001, then-Economy Minister Ricardo López Murphy called him to join De la Rúa’s government. Sturzenegger said he felt his role was like “being in the cockpit of an airplane whose engines start to fail”. And fail, they did. López Murphy resigned on March 20. Sturzenegger followed suit on November 20. The president resigned exactly one month later, after declaring a state of emergency and deploying security forces to put down nationwide protests. Thirty nine civilians were killed.

After resigning from De la Rúa’s government, he approached the PRO and held a string of positions: president of the Bank of the City of Buenos Aires (2008-2013), national deputy (2013-2015), and president of the Central Bank (2015-2018). When Milei became president, he joined as his star advisor. If the economy is the main driver of history, Sturzenegger is a leading figure in Argentina’s recent past — and its present.

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Federico Sturzenegger was born in 1966 in Rufino, an agricultural town of 20,000 in Santa Fe province. His father, Adolfo Sturzenegger, is a member of the National Academy of Economic Sciences with ties to the UCR party.

Federico is, above all, an academic. He is the second most cited economist in the country after Eduardo Levy Yeyati, with whom he has written several texts. At MIT, he was a disciple of Rudi Dornbusch, a German liberal economist who supported dollarization in emerging countries. However, a colleague said there is something the Argentine did not learn from Dornbusch: “Sturzenegger sees things in a very theoretical way, with a theory that descends very quickly to reality.” As a guide to analyze reality and propose policies, he takes “the most stylized theory, with assumptions as abstract as possible and far from practicalities, institutions and history,” the source continues. Throughout his political career, he has seen institutions — especially trade unions — as a hindrance, and theoretical models, as something to impose on reality.

Before 2001 and the collapse of convertibilidad, the system that pegged the peso to the U.S. dollar, he was convinced that what would bring stability to the country was a fixed exchange rate: a hard peg. Years after the convertibilidad model imploded and De la Rúa fled the presidential palace in a helicopter, Sturzenegger told anyone who would listen that he had completely changed his mind: he now believed in floating exchange rate regimes. He even wrote papers detailing the new empirical evidence he had found on the subject.

In one of his books, he defines himself as an “incorrigible optimist.” Those words are not so different from descriptors offered by interviewees: workaholic, Swiss discipline, fundamentalist, hard-headed, and naïve.

“In a sense, he is pretty dogmatic, with a dose of messianism,” said an economist who knows him pretty well. “He says: ‘I have the solution for Argentina’s crisis, I have it all thought out, I have the correct theoretical model’. As president of the Central Bank, he became the most incarnate version of that.”

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In 2002 he resumed his role as........

© Buenos Aires Herald