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Leftists appear poised to retake Argentina government following Sunday primary election

By Richard Partington

Argentina President Mauricio Macri answers questions following the Sunday primary.

Argentina’s currency plunged on Monday after the country’s center-left opposition

leader won an election primary, raising the prospect of a return to power for the former president Cristina Fernández de Kirchner.

A stronger than expected victory for Alberto Fernández, whose running mate is the former populist leader, triggered a 30% fall in the value of the peso, which hit a fresh record low against the U.S. dollar on the global money markets.

Fernández dominated the poll against the center-right president, Mauricio Macri, who has struggled to revitalise the economy and curtail high inflation.

Fernández secured 47.4% of the vote, against Macri’s 32.3.

Although the primary is non-binding, intended to position the country’s political parties for the official October 27 election, it is a strong indicator of the eventual winners.

Financial analysts said the prospect of a populist left-leaning government taking over in Buenos Aires could raise the chances of the country defaulting on its debt, which caused markets to slump in response.

Shares in Argentinian companies also fell sharply on Monday, with the country’s Merval stock index tumbling by almost 30%. The cost of insuring government bonds from default spiked, and the price of a 10-year government bond denominated in US dollars fell by between 18 and 20 cents to trade around 60 cents on the dollar.

Edward Glossop, a Latin America economist at the consultancy Capital Economics, said: “The comprehensive victory for Alberto Fernández in Argentina’s primary election paves the way for the return to leftwing populism that many investors fear.”

Other emerging market currencies including the Turkish lira and South African rand fell on foreign exchanges as investors bet that an Argentine debt default might rattle global financial markets.

Argentina and several other developing nations have come under growing pressure over their high levels of foreign currency debt. The US dollar has appreciated in value as the U.S. Federal Reserve has lifted interest rates, which has made it more expensive for these countries to repay their dollar-denominated debts.

Macri, the son of a self-made construction tycoon, had made “zero inflation” a campaign pledge before he came to power in 2015. In reality it has soared to more than 50% as the peso has weakened.

Considered a market-friendly leader, Macri has used austerity measures in an effort to stem the country’s currency crisis, provoking an angry public response.

Argentina relies on support from the International Monetary Fund through a $57bn (£47.2bn) loan intended to shore up the country’s ailing finances.

Fernández has said he could rework the agreement with the IMF should he beat Macri in October, while the prospect of Fernández de Kirchner returning to power has also rattled investor confidence in owning Argentinian assets.

The former president imposed strict currency controls that hit investment during her 2007-2015 administration. She also feuded with the country’s key farming sector over export taxes and was leader during a multi-year standoff with Argentinian government bond holders.

Fernández said the market reactions were in response to Macri’s failure running the economy. “Markets react badly when they realise they were scammed. We are living a fictitious economy and the government is not giving answers,” Reuters reported him as saying.
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Credit: The Guardian, www.theguardian.com

16 thoughts on “Leftists appear poised to retake Argentina government following Sunday primary election

  1. The failed policies of economic neoliberalism are responsible for this huge surprise upset which was not predicted by any polling. President Mauricio Macri’s policies of austerity in government social programs, the sale of government assets, and mass government layoffs (the policies of neoliberalism demanded by the World Bank and the IMF) have failed to revive the Argentine economy or curtail inflation.

    The corporate news media has been trumpeting the end of Latin America’s “pink tide” of left and center-left governments being elected. Just another thing they’ve gotten wrong. Just another example of how divorced the corporate media is from the real lives and thinking of the people. Looks like the tide only receded and that the pink tide is coming back in.

    1. We all have seen the outcome of so called Austerity measures in Europe /// Greece // France /// Spain and on and on // it only helps the one that need the help in the Least and punishes the ones in need of most /// Its a failed effort and countries need to look at the histories / I am sad for Argentina //// to lose 30% of its money to the Dollar is terrible .

    2. Electorates don’t vote or understand political philosophies..no matter how many labels the media comes up with. They vote for their perceptions of the parties’ leaders and that perception is rarely real..merely crafted for electorate consumption, bot bad and good.

      It is all very much simpler..and more tragic. When the world is unhappy with their lot and their future, they vote out incumbents. When the other side turns out to be as bad or worse, they vote them as well..unless a scandal intervenes.

      Avoid labels and political results become much easier to understand.

      You would think it was time we all grew up.

      1. For the record, Macri has been supported by the media (both public and private) since he assumed office. They have been running flack for him nonstop while attacking everyone on the left relentlessly (sound familiar?) and yet all that BS crafted for electorate consumption wasn’t enough to save him.

        But at least Macri managed to double their debt in the process. Gonna be a
        lot harder for the next government now that they have that albatross
        around their neck. $54 billion dollars, the largest IMF bailout package
        in history and all they have to show for it is near 100% inflation,
        record unemployment, a massive rise in poverty and a crumbling
        infrastructure. Those political results are pretty easy for anyone to
        understand.

      2. There is much truth to what you wrote. At the same time, there are voters with other motivations. Some voters do respond to visionary leadership. Some voters have a definite agenda, including many who have environmental and social justice agendas. And some respond to charismatic leadership.

        In the U.S. most eligible voters don’t vote in most elections. Those people are not responding to what politicians have to offer.

        So yes, what you wrote is generally true from a macro perspective. Of course politics occurs at a much smaller yet more complex level. The macro level of analysis has only so much usefulness.

  2. Leftist populism: Scare away a country´s investors, run off its best professionals. Argentina is already long down that road.

    1. What good did all those investors do for Argentina? For that matter, when has international investment done any good for anyone other than international investors? Investors flooded into Argentina when Macri was elected and since then Argentina has suffered through inflation that has approached 100%, massive unemployment and the middle class has been decimated.

      For the record, I’m sure plenty of the best professionals left Argentina in recent years given the massive unemployment they’ve been suffering through. The best professionals never get run off. They’re enticed away by rich countries who offer better pay. Brain drain has been a problem for developing countries for over a century no matter what party is in power for the moment. Just look at all the doctors educated with Indian taxpayer money who end up in Europe and the US. The same can be said for Mexican scientists, Chilean engineers and I know of at least half a dozen Ecuadorian PhDs who are now working in the US, all trained on taxpayer funded scholarships and a public education.

      But call it what you want. It’s only populism when the other side wins.

  3. Post headlines: the peso has mostly returned its value. I’m seeing 50-51 pesos offered at the cambio exchange, up from 44-45 pre election.

  4. Weren’t all the experts just telling us last year that the left was dead in Latin America?

    They were still saying that after AMLO won in Mexico, but hey, if they repeat it often enough and with conviction it becomes the truth . . . at least to a lot of the rubes I read here.

    Macri used the same strategy Moreno is using here (and Bolsonaro is using in Brazil, for that matter); endless lawfare against his political opponents, massive borrowing from the IMF while at the same time slashing spending on social programs (where exactly did that $54 billion go?), privatization of public infrastructure and tax cuts for the rich, all the while the media ran flack for him, parroting all the unfounded accusations as if they were truth and refusing to report on his own corruption. It’s literally the same strategy they’re employing here, right down to the magic notebook that appeared weeks later on a subsequent search of the house of a suspect turned state’s witness for a plea deal, a notebook that just happened to spell out millions of dollars in bribes nobody can find any trace of, a notebook that wasn’t convincing enough to actually take to trial but made for endless headlines. Again, exactly what they’re doing here.

    And the people saw right through it. It’s a sign of things to come here in Ecuador.

    This is an international strategy financed by the monied class and run by the same political advisors across international borders. Macri’s chief campaign advisor went on to become the chief strategist for Mauricio Rodas, the now former mayor of Quito who, at the time, was being trumpeted by the national and international media as the man who would defeat Correa in 2017. The right has a lot of rhetoric and endless cash to sell their message, but once they actually have to govern it becomes painfully clear that their approach always impoverishes the people and enriches investors. You’d think after such consistent results the people would stop buying it, but it only shows how easy it is to get people to vote against their own best interests when you have complete control of the media.

    For the record, the peso has already recovered a good chunk of what it lost yesterday and in the end it will find it’s level because money is real. As far as stock values go … who cares? Real people don’t. All those traders should go find something productive to do for a living.

  5. The only reason Fernandez is running is to avoid going to jail…….She left Macri with no money because she screwed up the country…..Isn’t Christina’s finance minister still behing bars!

    1. Macri doubled Argentina’s debt in only 4 years. He received $54 billion dollars from the IMF, the largest bailout package in IMF history. Not that any government ever leaves any money (you can’t name one that has), but doubling a country’s debt and not having so much as a new hospital to show for it is sure stacking the deck against the next government.

      As for going to jail, they had 4 years to bring her to trial and they didn’t. Instead they just made one accusation after another in the press, just like they’re doing here. A trial would have forced them to present evidence they don’t have, just like here.

      It’s amazing that there are people who still fall for such blatantly corrupt tactics. The Argentinian voters sure saw right through it. Too bad you’re not clever enough to see the obvious. I guess someone has to be on the wrong side of history. Might as well be you.

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