Argentine Mid-Term Elections: 22 October 2017: Results
Argentina’s mid-term elections were widely seen as a test of President Macri’s popularity. He will have been pleased with the outcome. His coalition group – ‘Cambiemos’ (or ‘Let’s Change’) – gained the most votes of any party overall and won in the ‘Big Five’ Provinces – the first time that this has been done in mid-term elections since 1985. Whilst Macri still does not have a working majority, the results do allow him to prevent any attempt by his opponents in Congress to overturn a Presidential veto. He benefited hugely from divisions within the opposition. Peronist supporters would have the majority if there was a single Peronist leader who could command their respect. But Cristina de Kirchner, although she gained a seat in the Senate, created further divisions within Peronism by setting up her own party which did not do that well. Whilst some of Macri’s economic reforms will have had a negative effect on the poorer sections of society, his supporters will have been buoyed by recent signs of the beginning of an economic turnaround. The election results will give Macri a solid base on which to intensify his reform programme – and he may well stand for re-election in 2019.
President Macri's "Cambimos' coalition gained an extra 19 seats in the Chamber of Deputies bringing his total up from 90 seats in the 2015 elections to 109 (out of 257); in the Senate, he won an extra 9 seats bringing his total up from 17 seats to a total of 26 (out of 72)1 .
The most interesting race was for the Senate’s three seats in the Province of Buenos Aires, where ‘Cambiemos’ candidate, Esteban Bullrich, stood against Cristina de Kirchner and her former Foreign Minister, Jorge Taiana, backed by her new political party ‘Unidad Ciudadana (Citizens United). Traditionally, a Peronist stronghold, Cristina de Kirchner had only just managed to pip Bullrich in the August primaries by a few percentage points. This time, Bullrich won 41.38% of the vote against Cristina’s 37.25%, a significant swing. Cristina de Kirchner will be guaranteed a seat in the Senate, where she will be immune from arrest over her various corruption allegations, but otherwise her failure even in Sta. Cruz, her home base and where her sister is Governor, will be seen as a negative judgment of her future prospects. Also in Buenos Aires City, ‘Cambiemos’ gained over half the popular vote.
The biggest loser in these elections was Sergei Massa, who ran in the 2015 elections as an anti-Cristina Peronist. His party lost some 20 seats in the Chamber of Deputies and is reduced to a rump. Yet overall, if the Peronist parties had united, they would have had a majority. There is no single charismatic leader capable of doing so yet. Cristina de Kirchner’s decision to form her own party will not have helped – and she carries considerable baggage from her time in the Presidency even though she can still command some loyalty from the poorer section of society because of her social welfare programmes.
Macri was undoubtedly helped by some more encouraging signals of an economic upturn. An IMF report in October 2017 revised Argentina’s GDP growth upwards to 2.5% - and the Argentine national statistics agency reported a rise of 2.7% in the second quarter of 2017, the highest quarterly growth rate since Macri took office. Inflation and unemployment rates are also falling. But the economy is still fragile. Argentina has the second highest inflation in Latin America after Venezuela – 44% in July 2016 but expected to go down to 22% by the end of the year and the IMF projects it to fall to 18% in 2018. Argentina’s public debt is the third highest in Latin America as a proportion of GDP, after Brazil and Belize. It is expected to reach US$317bn by the end of the year (60% of GDP, the highest ratio in a decade). Unemployment has, however, fallen from 9.3% in the second quarter of 2016 to 8.7% in the same period in 2017 and the poverty rate has declined by 1.7% to 28.6% in the first half of 2017 (still a high margin). The Argentine peso has jumped several points following the mid-term election results and investors are still keen on buying Argentine bonds. But real inward investment remains slow to grow and exports, though increasing, still suffer from Brazil’s sluggish economy. Hopes of an EU-Mercosur free trade deal any time soon are also declining.
Macri, therefore, still has much to do. His first task will be to push through his budget for 2018, when he will present four bills to reform Argentina’s fiscal and tax systems, amend the capital markets regulatory structure and offer an amnesty to employers who do not register their employees. His aim is to reduce income tax, customs duties and tax at city and provincial levels counter-balanced by increased productivity and reduced tax evasion. All this requires the economic growth that will create the jobs necessary for success.
As for the Falkland Islands, there is now an opportunity to persuade the Argentine Government to begin the implementation of their December 2016 commitments on the removal of trade constraints, on fisheries conservation and on flights. The expected report on the DNA identification of Argentine remains in the Darwin cemetery should be a step in the right direction but progress is likely to be slow. At least, the rhetoric of the Kirchner era will be diminished.
1 Chamber of Deputies: elected by proportional representation in 24 multi-member constituencies comprising the 23 Provinces plus the City of Buenos Aires. Each Deputy is elected for a 4 year term. In these mid-term elections, 127 seats were available for election in every Province (and Buenos Aires City) out of the 257 seats in the Chamber of Deputies. Senate: In these mid-term elections, 24 seats were available for election out of the 72 seats in the Senate. Elections were held in 8 Provinces (Buenos Aires, Formosa, Jujuy, La Rioja, Misiones, San Juan, San Luis and Santa Cruz), electing 3 Senators in each. The party receiving the most votes in each constituency gains 2 seats in the Senate with the other seat going to the runner up. The Presidency , Provincial Governorships and the office of Mayor of Buenos Aires City were not affected. Turnout: was about 78% of the 33.1million registered voters.
2 Big Five Constituences: the Province of Buenos Aires has 70 representatives in the Chamber of Deputies, the City of Buenos Aires 25, and the provinces of Cordoba (18), Mendoza (10) and Sta Fe (19).
3 Tierra del Fuego: the Peronist Governor there claims to be Governor of the Falkland Islands. In the August primaries, Cambiemos came in second place but won the majority of votes in these mid-term elections. Provincial Governors in Argentina have to rely on their central government for funds and investment.
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