Itaú BBA - A closer look at Argentina’s October mid-term election

Macro Vision

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A closer look at Argentina’s October mid-term election

mayo 31, 2017

On October 22, Argentines will vote to renew one-third of the Senate seats and one-half of the Lower Chamber’s.

On October 22, Argentines will vote to renew one-third of the Senate seats and one-half of the Lower Chamber’s. The lists for each coalition, for both chambers, will be defined in a mandatory open primary election[1] on August 13.By June 24 the lists of candidates participating in the primaries must be defined (and announced). 

The Peronists have more seats at stake than the ruling party, Cambiemos. Former President Kirchner’s participation remains uncertain. Recently Cristina Kirchner stated that she would run if necessary (probably for a Senate seat representing the Province of Buenos Aires), but made it clear that she does not want to face an opponent from her own party in the primaries. 

The mid-term elections could be a game-changer for Cristina Kirchner. While she remains a popular politician in the province of Buenos Aires, her high rejection rate caps the amount of votes she can gather. Running successfully in the election would likely allow her to maintain leadership of the Peronist party, with an eye on the 2019 presidential election, as well as provide her with a helpful legal umbrella. On the other hand, if her list is defeated or if she decides not to run, she will likely lose importance in the Argentine political landscape. Market sentiment would tend to be boosted by signs that the likelihood of a Kirchnerist revival has receded.

Regardless of Cristina’s decision whether to run or not, in our view the government coalition is well-positioned for the election, given Mauricio Macri’s popularity (which we expect to be maintained with the economic recovery) and that of María Eugenia Vidal’s (she is the governor of the Province of Buenos Aires, and also belongs to the government’s party). 

As so many seats will be at stake throughout the country, it is difficult to find a single metric to define the winning coalitionof the mid-term elections. The focus will likely be on the Province of Buenos Aires, especially if Cristina Kirchner decides to run.  

On October 22, Argentines will vote to renew one-third of the Senate seats and one-half of the Lower Chamber’s. A total of 127 seats are in dispute in the Lower House, 35 of them based in the Province of Buenos Aires and 13 in the City of Buenos Aires. The Senate has 24 seats at stake, including the three senators for the Province of Buenos Aires and three senators for each of another seven provinces.

Both Senators and Deputies in Argentina are chosen through a closed-list proportional system. Each coalition will present a list of three candidates for Senator (if applicable) and a list of candidates for the Lower House in each Province. Voters must pick one list for the Senate and another one for deputies. In the provinces renewing three senators, the winning party will fill two seats, while the second most-voted party will get the third seat.

The lists for each coalition, for both the Senate and Chamber, will be defined in a mandatory primary election on August 13. In the primaries, coalitions can present multiple lists of candidates for the Senate and multiple lists of candidates for Deputies. However, in each province, parties can also choose to present only one list for the Senate and one list for the Lower House. Actually, in the Province of Buenos Aires, it is very likely that the incumbent (Frente Cambiemos) and the dissident Peronist coalition (Frente Renovador) will not present contesting lists. This may not be the case for the Frente para la Victoria (traditional Peronists plus allied parties). By June 24 the lists of candidates participating in the primaries must be defined (and announced).

The Peronists have more seats at stake than the ruling party. Senators have a term of six years, while deputies have four-year terms. So, this year’s election will renew the deputies elected in 2013 (when Peronists and dissident Peronists did well) and Senators elected in 2011 (when Peronists also outperformed).

Former President Kirchner’s participation remains uncertain. If she decides to run, it will be for the Senate of Province of Buenos Aires, which is a key electoral district where she is still a popular politician. In fact, according to a poll conducted by the consulting firm Aresco, if Cristina decides to run for the Senate of the province of Buenos Aires, her list would receive 31.5% of the votes, slightly below the list of Esteban Bullrich (a potential candidate from the ruling party). However, we note that Cristina’s rejection rate is also high. A poll conducted by the Poliarquía consulting firm finds Kirchner’s negative image is 51% (contrasting with a positive image of 30%) at the national level, putting a strong ceiling on her voting intentions. Recently Cristina Kirchner stated that she will be candidate in the Province of Buenos Aires if it is necessary to ensure a win for the Frente para la Victoria. However, at the same time, she made it clear that she does not want to run against any other candidate from the Frente para la Victoria in the primary elections. Meanwhile, Florencio Randazzo, the former Minister of Transport under Kirchner’s presidency and also a Peronist, has stated that he is ready to participate in the primary for Senator of the Province of Buenos Aires. While the former president has the support of many major political players in Buenos Aires, she is rejected by important leaders of the Peronist party, who want to purge the Kirchnerist wing.

We note that this election could be game changer for Cristina Kirchner. To run successfully in the election will likely allow her to maintain leadership of the Peronist party, with an eye on the 2019 presidential election. In addition, it will provide her with a useful legal umbrella, considering the litigations she is facing. If Kirchner is defeated (or if she decides not to run), she risks losing importance in the Argentine political landscape. Not surprisingly, she wants to avoid a primary despite her popularity, as losing it would be the worst possible outcome for her political career. This risk is non-neglible, as anti-Kirchnerists in the Province of Buenos Aires may be tempted to vote for Randazzo in the (open) primary, even if they do not support Peronists (after all, Frente Cambiemos and Frente Renovador will offer a single list anyway, so not voting for their lists in the primaries wouldn’t make a difference for either of the two parties).

In our view, the government party is interested in facing Cristina Kirchner in the Province of Buenos Aires. We note that the government’s current electoral strategy is to encourage the polarization of the votes, making the election a plebiscite between Kirchnerism and anti-Kirchnerism. An alternative scenario, in which Randazzo decides to participate in the October election from outside the Frente para la Victoria, could be even better for the government, as it would further fragment the opposition.

In any case, the Frente Cambiemos coalition is well-positioned for the mid-term elections. Macri’s approval rating is at 52% according to Poliarquía’s latest survey. His positive image is 44%, while that for the current governor of the Province of Buenos Aires, María Eugenia Vidal (who is also part of the government coalition), is much higher: 60%. Although only 22% of the population considers the current economic conditions positive, 54% of Argentines believe that the situation will improve in the coming months and 30% think that they are now better off than one year ago.

And the winner is… As so many seats will be at stake throughout the country, it is difficult to find a single metric to define the winning coalition. The focus of political analysts ranges from the number of total votes or number of total seats won, to just winning the election in the Province of Buenos Aires. In our opinion, the latter is the best indicator, and will dominate the newspapers’ front pages the day after the election, especially if Cristina Kirchner runs. An incumbent victory in the Province of Buenos Aires will not only be important for a potential re-election of President Macri, but will also boost the consolidation of a moderate force in the Argentine political spectrum.


 

João Pedro Resende
Juan Carlos Barboza
Diego Ciongo



[1] In the primary election, participation of voters (regardless of whether they are part of a political party or not) is mandatory and coalitions must present at least one ticket for Senators and another for Representatives. For each chamber, each voter chooses only one of the tickets presented in the primaries. As we will explain in the text, if Cristina Kirchner participates in the primaries and the Peronists present more than one ticket, anti-Kirchnerists will have the incentive to vote for the Peronist ticket without former President Kirchner.


 

 



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