A Political Earthquake in the Making

ARGENTINA - Forecast 13 Nov 2015 by Domingo Cavallo

An unexpected political earthquake shook the country on October 25. First, Daniel Scioli beat Mauricio Macri by less than 3 percentage points when most opinion polls had anticipated a gap of nearly 10 percentage points between Scioli and Macri, the new frontrunner. Second but not least, María Eugenia Vidal defeated Aníbal Fernandez in the Province of Buenos Aires, the core of the Peronist electoral machinery.

The political shock did not stop there. According to the polls, Mauricio Macri could win the run-off in November 22 and become the first president in a century who is not from the Radical or the Peronist party.

The votes of opposition Peronist Sergio Massa (21%) will determine the next president. According to the polls, close to 60% would vote for Macri, and fewer than 30% for Scioli. Massa is reluctant to explicitly define his vote but he has said he doesn’t want Scioli to win. His plan is to be the leader of a rational Peronist opposition to Macri by weakening Kirchnerism. Massa needs Macri to win – and more importantly – to manage the political transition in an orderly manner. A political collapse by Mauricio Macri could create the room for a comeback by Cristina Kirchner in the future.

The political struggle within Peronism (Kirchnerism vs. non-Kirchnerism) is creating political room for a governability pact between Macri and Massa that could build a key majority in the Lower House. The majority in the Lower House is a necessary condition for governability: In Argentina, the president can rule by “need and urgency decree” (DNU), which can only be revoked with the rejection of both chambers, the Senate and the Lower House.

If this happens, it would be a turning point in the political scenario: the emergence of two moderate political forces with less proclivity to old-fashioned populism.

This quarterly report comes amid a presidential election that could dramatically change the political and economic scenario in Argentina. As the electoral outlook is uncertain (polls in Argentina have proven to be misguided) we present the two alternative scenarios: The first – and most likely – is the “change/good scenario” related to a victory by Mauricio Macri. The second – and less likely – is the “continuity/bad scenario” related to a victory by Daniel Scioli.

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