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2015 Elections in Argentina – Likely outcome and policy impact

2015 Elections in Argentina – Likely outcome and policy impact

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Before the New Year, the 2015 presidential election in Argentina was already being classified as the most important in a decade and was expected to be controversial, hotly contested and potentially volatile. However, the suspicious death of prosecutor Alberto Nisman on January 18th, 2015 has catapulted this election into a realm of polarization that far exceeds earlier predictions.

A recent poll that shows 82% of Argentines believe that Nisman?s charges that President Fernández was involved in secret deals with the accused Iranians are ?credible? highlights the feeling of disenfranchisement towards the current president and puts into focus the increased challenge the candidate seeking the Peronist vote will face.


The Electoral Process

At the moment, the primary candidates for the presidency are known informally but have not been officially chosen. The first step in the electoral process will be Open Primaries to be held in August. Much like the Republican and Democrat primaries in the US, in these elections each political party will select their candidate through a voting process.

Once this is complete, there will be three months of campaigning and the elections will be held in October. If no candidate receives at least 45% of the direct popular vote, a runoff election between the two top candidates is held with the new president being inaugurated in December.


The Likely Candidates

The political landscape in Argentina is dominated by three main parties: the FPV and Frente Renovador parties, which still hold Peronist principles, and the non-peronist, centre-right conservative party, the PRO.

There are three primary candidates that are all but certain to be the contenders for the presidency, below is a profile of each and our candid views on the policy impacts their election would bring to Argentina.


Daniel Scioli - FPV

Scioli was Vice President of Argentina from 2003 to 2007 and is the current Governor of Buenos Aires Province and the president of the Justicialist Party. He is a close ally of Kirchner and the most likely candidate to be endorsed by her and by his party.

Policy Impact: While Scioli?s policies will be the most aligned to Kirchners, he is often quoted as saying that he will continue with many of the policies put in place by President Cristina Fernández de Kirchner, his background as a businessman favors a path to reconcilliation with the IMF and seeking to recover investor confidence. We certainly believe that the rhetoric shown by Scioli in his decision to rarely critizise the current government is purely to apease the loyal support of Kirchnerism on which his election will largely be dependent on.

The Nisman/Kirchner scandal will cause Scioli to take steps to distance himself from Kirchner and the current government in a much greater way than previously anticipated and he will seek to reinvent and revitalize his party.


Sergio Massa ? Frente Renovador (Front for Renewal)

Massa served as Chief of the Cabinet of Ministers from July 2008 to July 2009. A long-time member of the ruling FpV party and former ally, Massa split with Kirchner and formed his own ?Frente Renovador? party and as such is seen as the face of Justicialist Party dissidents or as Massa puts it, ?a group that differs from what Argentina?s politics had long been.?

Policy Impact: Massa has made it clear that the country?s biggest problem is inflation and he has said that he would ensure the independence of the central bank and modify laws that have ramped up the role of the state in the country's stagnating economy whilst keeping some of the more popular welfare policies of the current government in place. In the aim of establishing a clear monetary policy that is tied to a certain programme, Massa will prioritize reducing the country?s energy deficit, Argentina has lost as much as 40% of its Central Bank reserves due to energy imports, and hopes to eliminate currency controls all within 100 days of taking office.

Following talks with agricultural organizations back in November, Massa stated that he had drafted a law aiming to improve the country?s trade balance by eliminating wheat export tariffs and reduce levies on other agricultural products.


Mauricio Macri ? Propuesta Republicana Party (PRO)

Macri is a businessman, politician and mayor of the city of Buenos Aires. Macri has no competition within his party, PRO, and is certain to stand as candidate for presidency. PRO is seen as the primary opposition party that often gains further support as crises, such as the default in 2014, hinders candidates with ties to the current government.

Macri, however, will have to overcome several obstacles to progress for his campaign to be success: his generous upbringing often invites accusations that his policies favour the affluent class and neglects the issue of inequality, whilst several scandals have further clouded his image and reputation. In 2011, the government pushed for the resignation of Macri as Mayor as two of his appointments in the metropolitan police force were arrested for their involvement in illegal surveillance. Further, in 2012 accusations that Macri had received electoral funds from an Argentinian criminal facing charges in Mexico began to surface but were stringently denied. He has also taken criticism for his views on social issues which culminated in the Mayor having to give a public apology in April 2014 for saying that women were lying when a survey found that 60% of women felt harassed by everyday cat-calling heard on the streets in the capital.

Policy Impact: As leader of a center-right party, Macri?s policies tend towards free-market and fiscal responsibility with a focus on a change in style of policy making. Much like his policies as the Mayor of Buenos Aires, Macri?s government will break away from the old style of control and favour a reduced role of the state in economic matters, more taxes on assets and less on small-medium sized businesses. Macri aims to create an autonomous institute to consolidate public statistics for public provision. Argentina has been widely critised for manipulating inflation statitics since 2007 and this new institute will be the first step in rebuilding relations with foreign investors and placating the IMF.

Macri will also provide relief to the agricultural sector by immediately eliminating export taxes on all products except soy, which will happen gradually, if he were to be elected.


Debt Repayment

All of the candidates have been cautious in critizing the government on this issue as many voters agree with President Fernandez in denigrating the ?vulture? funds for demanding repayment of debt in full and so any critisism of the government would be seen as political suicide. However we expect all candidates to negotiate payment of outstanding debt with creditors to allow Argentina to access international markets for investment and bond financing. Settling creditors is likely to be a priority for Macri as he sees it as the first step in his aim of re-inserting Argentina in a new worldwide place.


Recent Polls

According to recent polls, these three candidates are technically tied for likely votes. In a recent survey made by the consultancy Management & Fit in February, Macri led with 27.9 percent against 23.6 percent for Scioli and 18.8 percent for Massa.


In Conclusion

History has shown that Argentina passes through cycles of economic boom and bust. The economy has been through a period of significant economic mismanagement but whoever succeeds Cristina Fernandez de Kirchner will have the opportunity to enact the much needed reforms and policies to make the economy competitive again and break the country away from its pendulum cycle. With the Peronist vote likely to be split between Scioli and Massa and with the PRO, led by Mauricio Macri, receiving support from its elective base in Buenos Aires and other major cities, the likelihood of a first presidential runoff since they were brought into the Argentinean constitution in 1994 is strong.

The only certainty of the forthcoming elections will be the end of the ?Kirchnerist model? and certain change which cannot be understated. What is less certain is whether Cristina?s legacy and the events surrounding Nisman?s death will have a lasting effect on the Peronist movement as a whole. The coming months will prove to be a significant crossroads for Argentina and its future.


For additional information or to discuss a potential requirement for support, please contact:


Ian Herbison
Chief Executive Officer
ian.herbison@speysidecr.com
Phone: +55 11 96168 2301
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