Argentina just went through one of Latin America’s more interesting political exercises. Two months before each legislative election, the country holds what it calls Simultaneous and Obligatory Open Primaries (known by their Spanish acronym PASO). Candidates from all parties run against each other in districts with open legislative seats (half of the Chamber of Deputies and one-third of the Senate comes up for reelection every two years). The only practical purpose is to remove from the ballot any minor or fringe parties that fail to gain more than 1.5 percent support. However, these primaries have proved to be a reasonably good predictor for parliamentary elections, and thus may provide a useful guide for what we can expect from the actual vote on October 22, 2017.
When President Mauricio Macri came to power at the beginning of 2016, he was convinced that his government would be “transformational,” that Argentina was about to enter the finest 20 years of its history, and that a “rain of investment” would fall upon the country. None of that has come to pass. Mr. Macri, having discovered significant limits on his ability to govern, now refers to his strategy for curing Argentina’s ills as “gradualism” – as if he had any other option. Furthermore, the president has learned that his optimistic view of how globalization would lift the Argentine economy was seriously exaggerated.
Confronted with this reality, and with the economy stuck in slow motion, Mr. Macri shifted his rhetoric away from structural reform in early 2017 and started attacking the opposition instead. He placed nearly all his political chips on the August primaries, or PASO. His goal was to split the Peronist opposition and weaken his main rival, former President Cristina Fernandez de Kirchner (2007-2015), by exposing her as a corrupt populist whose message no longer resonated with the Argentine public.
Mr. Macri’s strategy contained three elements. The first was to focus on the Senate and on Buenos Aires Province, which contains 37 percent of the electorate, by campaigning personally and with the hugely popular governor of Buenos Aires, Maria Eugenia Vidal. The second was to accelerate public works projects, particularly near the federal capital, even though that would increase the fiscal deficit. The third element was to put the spotlight on coalition partners in Cambiemos, who are strongly represented throughout the country.
This strategy reaped rewards, as seen in the primary election results. In the federal capital, Buenos Aires City, President Macri picked a charismatic member of the Radical Party, Elisa Carrio, to head the ticket. She won in a landslide. Nationwide, Cambiemos was the only political force to win representation in all 24 of the country’s electoral districts – 23 provinces and the federal capital. It also won the popular vote by a clear plurality of 36 percent, 15 percentage points ahead of its closest competitor, the Peronist Justicialist Party (PJ), but still fell well short of an outright majority.
Cambiemos beat the Peronists in key districts such as Cordoba, Mendoza, and Entre Rios. In addition, political bosses who sided with the Peronists and had relied on their personal charisma to govern in San Luis and La Pampa were defeated. Given the complex federal system in Argentina, where the federal government provides financial subsidies to the provinces, winning these gubernatorial primaries bodes well for October and could also help President Macri pick up seats in the Chamber of Deputies and the Senate.
The senatorial primary in Buenos Aires Province ended up as a dead heat between Education Minister Estaban Bullrich and Mrs. Fernandez de Kirchner (35.4 percent vs. 35.6 percent). While a clear-cut victory for Cambiemos would have been welcome, the results were better than President Macri could have hoped for in the country’s largest electoral unit. The primary results showed that Mrs. Kirchner’s support is limited to a tiny, densely populated suburban belt between the capital city and outlying Buenos Aires province. This zone is where her populist message resonates best with the blue-collar, card-carrying labor constituency that benefited most from her two presidential terms.
Just as significantly, Mrs. Kirchner’s two principal rivals for leadership of the Peronists, Florencio Randazzo and Sergio Massa, fared poorly and were shown to have very little nationwide support. Split as they are, neither the Peronists nor Mrs. Kirchner’s followers will be able to organize a coherent opposition campaign to the government in the October elections. Moreover, we can anticipate many defections from the Peronist opposition in the two legislative chambers, even though the distribution of seats in the current National Congress does not yet favor the government.
With his political support buttressed in key districts and spread widely across the national territory, President Macri now can afford to persist in his gradual approach to economic reform. If the primary elections are any guide to the October results, he has won time to clean up the economic mess inherited after Mrs. Kirchner’s two terms as president. The government can thus press on with its unpopular effort to eliminate the subsidies and fixed prices that distorted the economy, as well as fight inflation, which remains just above 20 percent per year.
Interested foreign observers – the banks, international corporations, multilateral agencies and the financial press – have made it clear that the minimum they want from Argentina in the short run is responsibility and predictability. This makes institutional stability an important aspect of government policy. For the international market, President Macri’s political victory is very good news. Whether it is enough to bring the shower of investment that he promised in his presidential campaign is another matter entirely.
It is possible that Cambiemos’ success in the primaries helped President Macri engineer the removal of Eduardo Freiler, the most Kirchnerite judge on the Federal Court of Appeals and widely considered to be the most corrupt. The Council of Magistrate’s decision in mid-August to impeach Mr. Freiler came just months after the president failed to get Congress to remove another Kirchner associate, former Minister of Planning Julio De Vido, long regarded as Mrs. Kirchner’s “bag man.”
These allegations proved useful to Cambiemos during the primary campaigns in Buenos Aires and the federal capital, where Mr. Macri harped on the Peronists’ reluctance to turn on their former colleagues. The president also wielded his executive authority to fire two federal officials who were closely associated with the powerful labor unions.
In the short term, the challenges that the government faces at home are much more daunting than those abroad. There is a storm brewing with organized labor, which historically has enjoyed great privileges in Argentina. Breaking the stranglehold on the labor market that the unions have maintained for generations will not be easy. Yet, Mr. Macri understands that Argentina’s long-term development depends on increasing productivity. Reforming the labor market, together with a complete overhaul of the country’s infrastructure, tax system and regulatory framework, is the only way to put Argentina on the path to sustainable economic growth.
President Macri has bowed to reality in social policy as well. The safety-net programs introduced by Mrs. Kirchner’s husband and predecessor, President Nestor Kirchner (2003-2007), during the flush years of the commodity boom have been continued and even expanded. In a country where more than 30 percent of the population is below the poverty line and large, organized groups are ready to take to the streets, the president may have no choice. One of his central policies to stimulate development involves improving preschool and primary school education, which will benefit the groups that tend to be left behind in periods of rapid technological change – the same groups that tend to vote for Mrs. K