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Argentina

What to expect from Sunday’s Argentine presidential primaries

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casarosada

On August 9, Argentine voters will take part in a compulsory open primary — the dress rehearsal for the general election set for late October.argentina

It’s the first presidential election since 1999 where a Kirchner won’t actually be on the ballot. Nevertheless, kirchnerismo is very much on the ballot, and its standard bearer, Daniel Scioli, the candidate of the ruling Frente para la Victoria (FpV, the Front for Victory), served as the late president Néstor Kirchner’s vice president between 2003 and 2007.

The country’s pre-game primary, however, is a relatively new feature to Argentine democracy. The outgoing incumbent, Cristina Fernández de Kirchner, introduced open primaries in time for the 2011 elections — mandatory for both parties and voters alike. Candidates must win at least 1.5% support in the primary to advance to the general election. In a country where polling is still more art than science, and where political parties and coalitions are still more personality-oriented than long-term ideological vehicles, the primary is the most reliable test of electoral support before the October 25 election.

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RELATED: Everything you need to know
about Argentina’s impending default

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If polls remain as tight as they are today, and no candidate wins (i) either 45% of the vote outright or (ii) at least 40% of the vote (and leads the nearest candidate by more than 10%), the country will choose between the top two finishers in a November 22 runoff.

So this Sunday’s primary could be the first of three showdowns for the Casa Rosada. Continue reading What to expect from Sunday’s Argentine presidential primaries →

Argentina, Buenos Aires

Tight Buenos Aires victory slightly complicates Macri’s presidential hopes

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macri

In one of the most important tests before Argentina’s general election, the hand-picked successor of outgoing Buenos Aires mayor Mauricio Macri, the chief center-right presidential candidate, only narrowly won a July 19 mayoral runoff.buenosairesargentina

Just three weeks out from Argentina’s crucial national presidential primary, the Buenos Aires mayoral results are being reported as a drag on Macri’s presidential campaign, and that’s true — to a degree. Macri’s long-serving chief of cabinet, Horacio Rodríguez Larreta (pictured above, left, with Macri, right), garnered just 51.6% of the vote in a two-way race he was once expected to win easily by a double-digit margin. So while Rodríguez Larreta’s victory extends a three-term governing streak for Macri’s conservative Propuesta Republicana (PRO, Republican Proposal), it fell too far short of expectations. After all, Buenos Aires is the PRO’s heartland — Macri’s reach barely extends beyond the city to the larger Buenos Aires province, let alone the rest of the country.

With an open presidential primary taking place on August 9, however, and the October 25 presidential and parliamentary elections following shortly thereafter, the city’s mayoral election was a key test for Macri, who is trying to succeed Cristina Fernández de Kirchner, herself term-limited from seeking reelection.

Macri essentially occupies the conservative side of the presidential campaign — he hopes to win by picking up support from Argentine moderates and disenchanted kirchneristas without seeming too neoliberal. The winner of the 2015 election will be the first president in 12 years not to be a member of the Kirchner family, and Argentine voters may be ready for a modest change after the 21st century version of peronismo, as personified by the late Néstor Kirchner and his wife, Cristina Fernández de Kirchner, who hopes to guide the ruling Frente para la Victoria (FpV, the Front for Victory) to yet another term.

Macri, for his part, wants to contrast the strength of his eight-year stewardship of the relatively wealthier city against the record of the FpV’s 2015 presidential candidate, Daniel Scioli, since 2007 the governor of the surrounding (and more impoverished) Buenos Aires province, and of Tigre mayor Sergio Massa, another center-left peronista who broke in 2013 with kirchnerismo to form the Frente Renovador (FR, Renewal Front).

It’s no surprise, by the way, that three politicians from the Buenos Aires region are vying for the presidency — the city, an autonomous federal district, together with the Buenos Aires province, is home to nearly 50% of Argentina’s 41.5 million citizens.

Argentina’s Goldilocks election

All three candidates — Scioli, Massa and Macri — have indicated they would pursue a more investment-friendly administration, and Macri, in particular, benefits from heading the most business-friendly government during the Kirchner era.

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RELATED: Everything you need to know about
Argentina’s impending default

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Macri nevertheless emphasizes that he’ll introduce only gradual shifts in policy, lest voters worry he’ll return to the economic policies of the disastrous 1990s.

Presumably to win Fernández de Kirchner’s support, Scioli last month named as his running mate Carlos Zannini, a fierce Kirchner loyalist who has served as the president’s legal secretary since 2003. But Scioli has emphasized that he wants to remove, however slowly, the capital controls of the Kirchner era, and to govern in a less interventionist and inflammatory manner.

Massa has positioned himself in between Scioli and Macri and, though his poll numbers seem to have dipped, seemed like the wide frontrunner following his breakout performance throughout Buenos Aires province in the October 2013 midterm elections.

Why the Buenos Aires mayoral race probably
won’t be important to the October election

While there are a lot of reasons why Macri could still lose the presidential race, it’s not particularly clear that either Scioli and the governing FpV or the upstart Massa should take too much comfort from the Buenos Aires mayoral election.

Continue reading Tight Buenos Aires victory slightly complicates Macri’s presidential hopes →

Argentina

Everything you need to know about Argentina’s impending default

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CFK

It ultimately took an American hedge fund to unite the Argentine people behind the increasingly unpopular presidency of Cristina Fernández de Kirchner.argentina

Now, after a prolonged fight that has its roots in Argentina’s last debt default over a decade ago, a fight that has weaved its way through the corridors of power in Buenos Aires, via the banks of New York and London, into the highest court of the United States, and with consequences that will reverberate from Brasília to Caracas, Argentina is now defaulting, once again, on its debt obligations.

How did Argentina end up in this situation? And what will happen if Argentina, which technically entered default at midnight earlier today, doesn’t arrive at a deal with its creditors?

Here’s a primer on everything you need to know about the Argentine default — and why it’s such an odd, twisting and ultimately fascinating story about Latin American politics, global finance, US constitutional law and the ‘north-south’ dynamic of international relations. Continue reading Everything you need to know about Argentina’s impending default →

Argentina, Venezuela

Will Venezuela or Argentina be the first to crumble into economic crisis?

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kirchnermaduro

I write tomorrow for The National Interest about the dual economic crises in Venezuela and Argentina.argentinaVenezuela Flag Icon

The similarities between the two economic crises are uncanny — inflation, capital controls, dollar shortages, overvalued currencies, shortages, etc.

But the similarities don’t stop there.  Both countries currently fee political limitations to force policy changes to avert crisis — and that limit the political capital of the leaders of both countries, Venezuelan president Nicolás Maduro and Argentine president Cristina Fernández de Kirchner, to enact reforms:

Accordingly, normal political channels seem blocked through at least the end of 2015, despite the fact that both countries should be considering massive economic policy u-turns that will require significant amounts of political goodwill neither Maduro nor Fernández de Kirchner possess. But there’s an even greater inertia lurking beyond even the routine political impasse—a kind of political dead-hand control in both countries, on both a short-term and long-term basis.

First, both Venezuela and Argentina remain tethered to the political ideologies of chavismoand kirchnerismo, even though their proponents, Chávez and Néstor Kirchner, are now dead. Those policies may have worked over the last decade to achieve certain goals, including greater social welfare and poverty reduction in Venezuela and a rapid return to economic growth and competitive exports for Argentina. But it should be clear by now that chavismoand kirchnerismo are unable to provide answers to their respective countries’ economic woes today.

Even more broadly, I argue that beyond the shortcomings of chavismo and kirchnerismo, Venezuela faces a long-term resources curse and Argentina faces the long-term legacy of protectionism and statism of peronismo, which in each case underlie the current economic crises.  What’s more, the IMF-sponsored reforms in 1989 that led to the massive Caracazo riots in Venezuela and the IMF-approved lending tied to Argentina’s 1990s ‘convertibility’ crisis that led to the 1999-2001 peso crisis have undermined orthodox economic policymaking:

What’s more, ill-conceived attempts to rupture those dominant paradigms through orthodox ‘Washington consensus’ reform processes led to economic and political disaster. In both countries, leaders experimented with neoliberalism, facilitated by the misguided zeal of the International Monetary Fund, without enacting any corresponding safety nets or shock absorbers. The resulting crises led both countries to double down on their prevailing ideologies, thereby, ironically, making economic reform today even more difficult.

In both cases, the political, historical and economic legacies have prevented the broadly moderate, business-friendly, social democratic middle courses that much of the rest of South America has embraced to wide success, including Colombia, Peru, Chile, Brazil.

Argentina

Despite lame-duck challenges, CPK and kirchneristas win Argentine midterms

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(163) Plaza del Congreso

The big story from the Argentine midterm elections is the rise of Sergio Massa as the frontrunner for the 2015 presidential election and the likelihood that the era of kirchnerismo is coming to an end.  The fact that Argentine president Cristina Fernández de Kirchner has been absent from the campaign trail following emergency brain surgery earlier this month, which followed her party’s weak showing in August’s open primaries, only seemed to amplify the narrative that her presidency is entering its lame-duck phase.argentina

But amid the hype over Massa’s rise and the curtail calls for kirchnerismo, it may have escaped attention that Fernández de Kirchner’s ruling Frente para la Victoria (FpV, the Front for Victory) actually won Sunday’s midterm congressional elections.

Voters elected one-half of the 257-member Cámara de Diputados (Chamber of Deputies), the lower house of the Argentine National Congress.  Before the elections, Fernández de Kirchner and her allies control 132 seats — and that’s exactly the number they will control after the elections:

chamber2013

It helped that the Front for Victory was defending just 38 seats in the midterms, which certainly limited exposure and potentially greater losses for the kirchneristas.  But make no mistake — Fernández de Kirchner and her allies will continue to control Argentina’s legislative branch for the final two years of her presidency, even if it will become trickier to pass bills into law.

In absolute votes, the Front for Victory and its kirchnerista allies far outpaced any other broad coalition of parties at the national level, winning 11 of the country’s 23 provinces:

argentina2013

Two other blocs each won about a quarter of the vote. Continue reading Despite lame-duck challenges, CPK and kirchneristas win Argentine midterms →

Argentina

Kirchner health problems complicate midterm elections campaign

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cristina

Even before her latest health scare, Argentine president Cristina Fernández de Kirchner was appearing increasingly like a lame-duck president.argentina

Prevented from running for reelection under the two-term limit in the Argentine constitution, Kirchner’s ruling Frente para la Victoria (FpV, the Front for Victory) was already struggling in midterm elections that will determine nearly half of the Argentine legislature.

But Fernández de Kirchner was rushed to the hospital for emergency surgery to remove blood from the surface of her brain, which followed a previously undisclosed subdural hematoma suffered after the president fell in August.  She was instructed by doctors to rest for 30 days, all but guaranteeing that the leading figure in Argentine politics would be on the sidelines as the country votes.

That might actually be good for the FpV’s chances, given the unpopularity of kirchnerismo these days — a decade after her husband Néstor Kirchner first won election, Fernández de Kirchner leads a government that’s struggling to stop inflation, slow rising crime and turn around a weakening economy.  The Argentine government’s dysfunctional exchange rate policy has led to the emergence of a black market for US currency.  Moreover, Fernández de Kirchner is still battling some of the holdout creditors from Argentina’s 1999-2001 debt crisis even as Argentina remains shut out from capital global markets, which has left the Argentine treasury sometimes grasping for liquidity.

Meanwhile, her former ally Sergio Massa is leading the charge against her in the province of Buenos Aires, by far the largest province in Argentina (it’s home to 15.5 million of Argentina’s 41 million residents). Massa, also a center-left peronista, served as the chief of the cabinet of ministers from 2008 to 2009 before winning election as the mayor of Tigre.  But he’s broken with Fernández de Kirchner in the midterm elections, and he’s founded a rival entity, Frente Renovador (Renewal Front).  As Tigre mayor, he’s focused on crime prevention, and as he looks to the national stage, he’s also emphasized reducing crime and corruption.  As a peronista alternative to kirchnerismo, Massa has defined himself as a business-friendly, center-left candidate, who’s embraced the push for greater social and economic justice over the past decade, but who prefers a less unorthodox approach to economic policy.

Massa’s Renewal Front defeated the Front for Victory in August’s open primaries — a sort of dress rehearsal for the actual midterm elections — by a margin of 35.1% to 29.7%, a gap that could grow on Sunday as Massa’s popularity has grown.

Argentines will choose determine one-half of the composition of the 257-member Cámara de Diputados (Chamber of Deputies) of the lower house of the Argentine National Congress and one-third of the composition of the 72-member Senado (Senate), the upper house.  Due to the staggered nature of elections, and the fact that the Argentine opposition did much better in the 2009 midterm elections than in the 2011 general election (when Fernández de Kirchner easily won reelection), the FpV will only be defending 38 of its 116 seats in the Chamber of Deputies.  So there’s still a wide chance that the kirchneristas will still control the legislative branch of government — in any event, the FpV will almost certainly remain the largest party in the Congress, and because of the regional nature of Argentina’s many opposition parties, the FpV will still probably win the largest number of votes in the October 27 midterms, notwithstanding its unpopularity.

But the once-high hopes that the FpV would consolidate its 2011 gains and win a two-thirds majority — enough to amend the Argentine constitution to allow Fernández de Kirchner to run for a third consecutive term — were long ago shattered. Continue reading Kirchner health problems complicate midterm elections campaign →

Argentina, Buenos Aires

Peronist party, Fernández de Kirchner face insurrection even as opposition remains divided

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cristina

After primary elections earlier this week, Argentina’s president Cristina Fernández de Kirchner is in even more trouble than you might have thought, even though her peronista ruling party seems likely to win elections later this year.bsasargentina

That Argentina’s political opposition has been divided for over a decade is clear, but at a time when kirchnerismo is as unpopular as ever, there are no signs that the disparate forces opposed to the increasingly isolated Fernández de Kirchner administration are in a position to capitalize on the government’s unpopularity.  So while Tigre mayor Sergio Massa, a former Kirchner ally turned opposition peronista, made the largest headlines by defeating Kirchner’s candidate in Sunday’s high-profile primary in the province of Buenos Aires, home to 40% of Argentina’s population, there’s really no movement to unite his opposition movement with the more traditional center-right and other regional opposition fronts in advance of the October 27 midterms.  That’s still probably good news for Massa, though, who will have managed to distance himself from the Kirchners without abandoning the resilient peronista label, and winning a test run for the 2015 presidential race in the country’s dominant province.

The country will go to the polls on October 27 to determine one-half of the composition of the 257-member Cámara de Diputados (Chamber of Deputies) of the lower house of the Argentine National Congress and one-third of the composition of the 72-member Senado (Senate), the upper house.  The open primaries earlier this week, in essence, functioned as a massive poll indicating where the country might head in those elections — they are not primaries in the traditional U.S. sense whereby candidates from the same political party duel for their party’s nomination, but a gating mechanism to weed out smaller parties from the October midterms.

The good news for Fernández de Kirchner is that her base of support of around 30% of the vote nationwide should be enough to win those elections, especially considering that her party, the ruling Frente para la Victoria (FpV, the Front for Victory), is the only truly national political party in that it is fielding competitive candidates nationwide.  Ironically, the Front for Victory did better in the 2011 elections (when it won 78 seats), largely on the strength of Fernández de Kirchner’s reelection, than in the previous October 2009 midterm elections (when it won 38 seats), when the opposition actually outpolled the kirchneristas.  That means that, despite the party’s current unpopularity, the opposition will be defending nearly twice as many seats as the Front for Victory due to the staggered nature of Argentine congressional elections — remember that only one-half of the Chamber of Deputies are up for reelection in a given election cycle.

The bad news for Fernández de Kirchner is that former allies are now peeling away from the Front for Victory to run through separate peronista movements as a result of Argentina’s increasingly bizarre economic management and in anticipation of the October 2015 presidential election.  If the primary result is an indication of what will happen in 10 weeks’ time, Fernández de Kirchner will not win the two-thirds congressional majority that she would need to change the country’s constitution and allow her to run for a third consecutive term in 2015.  Kirchner’s party would have to hold onto every seat they currently have and pick up 55 more seats to command that kind of majority, a feat that would outperform the Front for Victory’s 2011 congressional performance.  The bottom line is that the 2013 midterms are an opportunity for potential candidates to break through in what could be the first opportunity in over a decade for an Argentine president not named Kirchner, despite a fiery speech Wednesday to relaunch her party’s campaign for October.

The really bad news is that the Front for Victory placed either second (or worse) not only in Buenos Aires province, but the next three-most populous provinces in Argentina, the federal district and 11 more provinces (in total, 14 out of 23 provinces), including the southern Santa Cruz province that had been her late husband Néstor Kirchner’s base.  See below an electoral map from Clarín: blue indicates victory for the Front for Victory; purple for opposition peronista fronts; and red for coalitions dominated by the Unión Cívica Radical (UCR, Radical Civil Union).

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That leaves Fernández de Kirchner as a lame-duck president who will preside over an economy that’s now stalled after years of growth — she risks  leaving office with few allies on the traditional left or the traditional right and the steward of a new potential Argentine economic crisis.  After her husband’s administration defaulted on Argentine debt from the previous decade’s peso crisis, thereby benefitting from nearly immediate economic growth, Fernández de Kirchner has struggled at times to find enough foreign exchange reserves with the country shut out of financial markets, and Argentina, according to at least financial adviser, has an 84.5% likelihood of defaulting in the next five years, and that doesn’t even count the legal embroligio between Argentina and U.S. hedge fund Elliott Associates, a holdout from the prior Argentine debt haircut, that may well go all the way to the U.S. Supreme Court (Felix Salmon at Reuters has made a hilarious video explaining this case here).

That has forced her government to seek out cash in creative ways.  Although Fernández de Kirchner backed down from a plan to raise taxes on agricultural products in summer 2008 after massive farmer protests, she instead nationalized around $30 billion worth of Argentina’s private pensions later that year.  More recently, she nationalized Yacimientos Petrolíferos Fiscales (YPF), Argentina’s largest energy company previously owned by a Spanish firm, in May 2012.  GDP growth slumped to just 2.6% in 2012 and Argentine economists still forecast 4% growth this year, but the country has long struggled with double-digit inflation that many argue is even higher than the government reports.  Continue reading Peronist party, Fernández de Kirchner face insurrection even as opposition remains divided →