Argentina’s President Alberto Fernández found himself in a strange position this week: facing one of his party’s worst electoral defeats in decades, he called a rally in Plaza de Mayo in central Buenos Aires to celebrate what he described as an electoral “triumph”.
President Fernández has been trying to ‘spin’ perceptions of what happened in the mid-term congressional elections held on 14 November, where 24 seats in the 72-member senate and 127 seats in the 257-member chamber of deputies were up for grabs. Undisputedly, the ruling centre-left Frente de Todos (FdT) coalition, whose driving force is the Partido Justicialista (PJ, Peronists), lost the elections and the opposition centre-right Juntos por el Cambio (JxC) won them. A key defeat was in the senate where the Peronists lost its majority for the first time in almost four decades, with the FdT’s presence looking to drop from 41 seats to 35, two votes shy of the 37 needed to form a majority.
However, President Fernández’s narrative was that the defeat could have been much worse. In his rather unusual logic, avoiding that terrible outcome was, therefore, a “triumph” in itself. To back up this claim he highlighted the fact that the pro-government vote in the key electoral district of Buenos Aires province was better than had been suggested by September congressional primaries (Paso) which had also delivered a major electoral defeat to the FdT [WR-21-37]. In the end the FdT still lost in the province, but by just over one percentage point - 39.81% for the JxC versus 38.53% for the FdT. The FdT narrowed the gap from 4.3 percentage points in September. This partial recovery of floating voters in the province was one crumb of comfort for the government, as was the fact that it managed to remain the largest bloc in the chamber of deputies, although it did so narrowly and still lacks a majority there.
Despite Fernández’s narrative, the reality is that the opposition won an undeniable victory. In the nationwide vote for the chamber of deputies, JxC took 41.89% of the vote, to 33.03% for the FdT. This was broadly in line with the Paso results. The opposition won in 12 provinces against nine for the FdT, and it won in all the major electoral districts, including Buenos Aires province, Buenos Aires city, Córdoba, and Santa Fé. Electoral maps show the FdT retreating to a belt of poorer and less densely populated provinces in the northwest of the country. In the senate race the opposition won by an even bigger margin (46.85% against 27.54%). Without a majority in either house of congress, President Fernández now has no option other than striking cross-party deals, if he wants to avoid legislative deadlock in the second two years of his four-year term in office.
One way of understanding the president’s electoral triumphalism is to consider it from the perspective of the internal divisions within the FdT, which remains split between his broadly moderate centre-left policies and the more radical line taken by Vice President Cristina Fernández (who was president in 2007-2015 and remains a powerful figure). The Kirchneristas, who are loyal to the VP, bitterly blamed the Albertistas, the president’s supporters, for the FdT’s defeat in September, saying that International Monetary Fund (IMF)-influenced attempts at austerity accounted for the government’s loss in popularity. Vice President Fernández forced through a cabinet reshuffle in which her boss had to accept a number of her appointees. This team then pushed through increased social spending (known as the plan platita) to try and regain some of the lost voters. Now, Kirchneristas believe the small improvement achieved since September vindicates them. The partial recovery in Buenos Aires province is being claimed as a victory by Axel Kiciloff, the governor, who is a leading Kirchnerista.
In short, President Fernández is caught between the rebellious Kirchneristas on the one hand, and the demands of the centre-right opposition on the other. His actions since the first election results began to come in can be seen as an attempt to zigzag and balance these competing requirements. In his first speech after the results, he acknowledged that errors had been committed and there were “lessons to be learnt”. But this stopped well short of any formal admission of defeat, of the kind the opposition parties wanted to hear. Not to be outflanked by the Kirchneristas, the president also spoke of the FdT’s alleged “triumph” and called a rally to celebrate it on 17 November. He also made it clear that any cross party talks with the opposition would be on his terms. He said the time had come to reach “national agreements” and he would submit a multi-year economic plan to congress in December, which was interpreted as the basis of an agreement with the IMF. Amid continuing silence from his vice-president, Fernández endorsed key members of his economic team (led by economy minister Martín Guzmán) who have often been the target of her criticism.
Opposition leaders were unimpressed. They wanted President Fernández to publicly concede defeat in the elections. They also say they need to know whether the economic plan that he is proposing will be supported by his vice-president. (He has said it has the support of all main internal factions in the governing coalition, but doubts persist). Alfredo Cornejo, a member of the Unión Cívica Radical (UCR) within the JxC coalition, described the call to talks as “pretty ambiguous” saying it was not clear what type of agreement the government was seeking and how it related to negotiations with the IMF. He added “they are calling on the opposition, but first they need an agreement between Cristina and Alberto”.
One positive for the government, at least for the moment, is that the financial markets have been broadly stable. There were some price drops on the Buenos Aires stock exchange, and the big gap between official and free market dollar exchange rates – a sign of concern over the country’s financial health – has continued. But by and large the markets and foreign investors seem to have taken the view that, while it may take time, the election results will force through some kind of consensus over the need to renegotiate Argentina’s US$44bn debt to the IMF and apply a multi-year economic stabilisation programme. Typical of that view was a comment from Shila Vilker, of consultancy Trespuntozero, who said the political cost of defeat had in some ways already been paid, back in September, when the ministerial team was reshuffled. Now, she added: “I’d say it’s a dignified defeat for the government, and a dignified and non-catastrophic defeat gives it some oxygen to continue.”
A harsher assessment came from Mariel Fornoni of pollsters Management & Fit. “The government has serious problems” she said. “It is a president who is totally drained of power. The coalition is broken.” For Alberto Ramos, an analyst at investment bank Goldman Sachs, internal dissent might grow, overshadowing more moderate voices like those of Guzmán. “Losing control of congress implies that the government would have to negotiate with a stronger and re-energised opposition that could lead to a noisy and volatile policy-making process”, he warned.
Looking forward
President Fernández now has a limited window of opportunity to negotiate a three-way deal: first with the vice-president and her supporters within the government; second with the centre right opposition; and third with the IMF itself. Negotiating such a deal will take weeks and possibly months and success is not guaranteed. The process will need to be completed by March next year when major IMF loan repayments fall due, likely triggering a default if a rescheduling is not agreed.