Argentina poll results show diffusion of power

Outlook

The August 13 simultaneous, obligatory open primaries (PASO) to define lists for the October congressional elections yielded no major triumph for either Macri or former President Cristina Fernandez de Kirchner, whose UC lost in the Kirchners’ home province, Santa Cruz.

In the key Buenos Aires province, both have claimed victory in a virtual tie now subject to a recount. Even a narrow win could help to swing votes in October, though both Fernandez de Kirchner and Macri’s candidate will enter the Senate.

The outcome suggests that Fernandez de Kirchner lacks the leverage to gain control of the divided Peronist party, opening competition to claim the party’s 2019 presidential nod. Of the likely contenders, Salta Governor Juan Manuel Urtubey was most favoured by the PASO results.

Impacts

• Investor fears of a Fernandez de Kirchner comeback were exaggerated -- as is investor relief following the PASO.
• Macri will gain congressional seats but will remain far from a majority, requiring him to negotiate support for legislative initiatives.
• Cambiemos’s vote, especially in Buenos Aires province, would need to rise for Macri to have any hope of re-election.
• Re-election hopes and the need for legislative backing will make significant spending cuts and austerity unlikely.