Peronists in Argentina are facing an identity crisis after a mid-term defeat

By Eliana Raszewski and Nicolás Misculin

BUENOS AIRES (Reuters) – Argentina’s ruling Peronist coalition is on the brink of a political crisis, with President Alberto Fernandez fighting for control and forcing voters to step down in the midterm elections, frustrating congressional power.

The party, a mix of center-left moderates who allied with the president and a strong faction of the hard left around vice-president Cristina Fernandez de Kirchner, now has a dilemma: give land to work with the opposition, shift to the left or split in half. .

“The government has serious problems. It is a president who is completely emptied of power,” said Mariel Fornoni of political consultancy Management & Fit. “The coalition is broken.”

In Sunday’s vote https://www.reuters.com/world/americas/argentines-vote-midterm-trial-by-fire-president-fernandez-2021-11-14 Peronists lost their majority in the Senate for the first time since 1983 in several provinces in 2019 he came to power significantly away from the Fernandez government.

The loss hinders his government’s ability to pass legislation in Congress, hitting judicial reform plans and adding complexity to talks on a new $ 45 billion deal with the International Monetary Fund that requires legislative approval.

Alberto Ramos of the Goldman Sachs (NYSE 🙂 said in a statement that failure could weaken the ruling party and “further increase internal dissent about the direction of politics,” which could cause moderate voices like Economy Minister Martin Guzman.

“Losing control of Congress means the government would have to negotiate with a stronger and revitalized opposition, which could lead to a noisy and volatile process of policy making,” he said.

In a message recorded after the defeat, President Fernandez struck a moderate tone, calling for dialogue with the opposition, redoubled efforts to resolve the NDF’s debt, put an economic plan in Congress and focus on inflation.

However, he rejected suggestions for reducing public spending, which many see as essential to tough economic conditions.

“It is necessary to put the state accounts in order, but never in exchange for an adjustment of spending. The adjustment was repeatedly tried in Argentina and it only deepened inequality and poverty,” he said.

A spokesman for the NDF said in a plan that it “continues to work” on a plan that addresses “Argentina’s most serious economic and social challenges, including high inflation, which is disproportionately damaging.”

POLITICAL COST

The government has a long list of crises to solve.

Inflation is over 50% a year, poverty is over 40%, and it is sold at a price of about 200 pesos per dollar in informal markets that have flourished among capital controls, double the official exchange rate of 100 pesos per dollar.

Some predict a faster devaluation of the currency to bring the two rates closer together and match the rise in prices.

“In December or a little earlier, the pace of official devaluation will be accelerated so that the dollar doesn’t fall too far behind inflation,” said Fundcorp economist Roberto Geretto.

Talks on a new deal with the NDF have also been extended, amid divisions in the government. Many Argentines blame the lender for worsening previous economic crises.

Political analyst Julio Burdman of the Election Observatory said, however, that the opposition would likely join the deal.

“In my opinion, the agreement with the NDF is not dependent on politics,” he said. “Argentina is not interested in not signing an agreement.”