For now, the hard questions have mostly been set aside: the reforms needed to reduce persistently high inflation, fix a fiscal deficit of 7.2 percent of gross domestic product—the largest in over 30 years, although Economy Minister Axel Kicillof has suggested that the deficit is smaller —and lure back investment dollars which have stayed away due to currency controls, a lack of regulatory predictability and a decade-long dispute with the “vulture” funds that are fighting the country in a New York court.

Sunday, November 22, 2015

Argentineans choose CFK's successor in historic presidential runoff

Daniel Scioli and Mauricio Macri greet each other during the November 15 presidential debate.

Over 32 million Argentineans will be deciding today the successor of Cristina Fernández de Kirchner, either Daniel Scioli of the ruling Victory Front (FpV) party or Mauricio Macri the candidate of the Let’s Change (Cambiemos) opposition coalition, in the first presidential runoff in the history of the country.

Starting at 8, citizens began to cast their ballots in different polling stations across the country. In the October 25 elections, Daniel Scioli and Carlos Zannini got almost a 3-point lead (37.08 percent) over Mauricio Macri and Gabriela Michetti (34.15 percent), a tighter-than-expected margin that led to today’s landmark voting.

Results are expected to be ready starting at 19.30 in the evening, with trends likely to be consolidated by 22.30, according to statements by national electoral director Alejandro Tullio.

After a year-long presidential campaign that reached fever pitch after last month’s general election, Argentines will finally head to the polls today.

For the first time in history voters will have only two ballots to choose from: Let’s Change (Cambiemos) candidate Mauricio Macri or ruling Victory Front (FpV) contender Daniel Scioli.

The choice that the country’s 32 million eligible voters will make is set to determine the government’s direction for the next four years after 12 years of Kirchnerite rule that began with Néstor Kirchner in 2003 and continued with President Cristina Fernández de Kirchner in 2007.

Regardless of whether voters pick Macri or Scioli today, one thing is clear — some type of change is coming to Argentina.

Both candidates are promising a shift, not only from the current administration’s policies but also in style.

In the month since Macri shocked the nation by obtaining a strong 34.15 percent, compared to Scioli’s 37.08 percent, both candidates have turned the word “change” into a mantra.

Before the October vote, many often complained that the two top candidates in the race seemed disturbingly similar despite each expressing a very different worldview. Since then, they have taken care to differentiate themselves as much as possible with Scioli promising slow, gradual change while maintaining the social progress of the past decade and Macri vowing a more wholesale overhaul of the country’s policies.

The candidates have put forth different images, with Scioli claiming the Peronist mantle. Campaigning on Thursday, he said the election is between Macri, whom he called “an arrogant guy from Barrio Parque,” referring to the upscale neighbourhood in Buenos Aires City, and him, the son of a worker who understands the needs of the people. In contrast, Macri has characterized Scioli as a disingenuous opportunist who can’t possibly represent change after being a key administration ally for years, not to mention late former president Néstor Kirchner’s vice-president.

A key factor to watch will be the blank vote. Leftist parties have called on supporters to cast a blank ballot to show their displeasure for the candidates.

Elephant in the room

After such a long campaign — and a debate to boot — it may seem that all has been said. That is far from the case.

“We are not the same as they are,” said Macri, who has a comfortable lead in the opinion polls. “We’re going to lower inflation, not lie about it.” The outgoing Buenos Aires City mayor has pledged to bring inflation to below 10 percent in two years and to restructure the statistics agency after the International Monetary Fund censured Argentina for misreporting economic data.

Scioli has not criticized the INDEC statistics bureau but has talked about the need to overhaul the country’s data. He has also promised to bring down inflation, but said it would take a full four-year term to tame the rise in consumer prices.

How would each candidate achieve his respective goal? It’s far from clear.

For now, the hard questions have mostly been set aside: the reforms needed to reduce persistently high inflation, fix a fiscal deficit of 7.2 percent of gross domestic product—the largest in over 30 years, although Economy Minister Axel Kicillof has suggested that the deficit is smaller —and lure back investment dollars which have stayed away due to currency controls, a lack of regulatory predictability and a decade-long dispute with the “vulture” funds that are fighting the country in a New York court.

Scioli has warned voters that the way Macri plans to deal with these issues is to dilute wages with an abrupt currency devaluation and abandon low-income families by ditching vital social and education programmes.

Macri dismisses such talk as nonsense and nothing more than fearmongering from a government that is scared about losing power. He has vowed to keep welfare programs for the truly needy, and insists that the poor would ultimately be helped by his policy mix of inflation targeting and abandoning currency controls.

For the most part, generalities has been the name of the game. Even the promises that seemed to be ironclad have been softened in recent days. Advisers have been busy trying to make clear that Macri’s promise to remove the “clamp” on the dollar does not mean all restrictions on foreign currency and repatriating dividends abroad would be lifted right away.

“There are at least six or seven ‘clamps’ on the dollar,” explained Macri campaign chief Marcos Peña earlier this month.

Scioli, while defending CFK’s legacy, is seeking to contrast himself to Macri by saying he will continue to protect Argentina’s industrial sector by sticking with the policy of a peso whose exchange rate is administered by the Central Bank.

The agricultural sector, meanwhile, is one that will clearly benefit, regardless of who wins today. Macri says he will eradicate export duties on grain exports and reduce the 35 percent tax on soybeans, Argentina’s largest source of export revenue, by five percent a year. Scioli has vowed to implement similar policies.

Discussions on foreign policy have been scant, but Macri did point out in last week’s debate that he would call for the Mercosur to implement the “democratic clause” to suspend Venezuela from the trade bloc.

Show me your friends...

If the old saying that someone’s friends are the best way to know a person is true, then we know much more about Scioli than Macri. The outgoing Buenos Aires governor outlined much of his potential Cabinet before the general election, when it seemed there was a chance he would win in the first round. From the names it is clear Scioli values loyalty and doesn’t want any surprises as he is transferring most of his provincial Cabinet to the national level, led by Cabinet Chief Alberto Pérez, long seen as one of his biggest allies.

For the key post of Economy minister, Scioli would name Silvina Batakis, giving her an upgrade from the same post in the province. A close ally of Scioli, Batakis is also a blank slate who could open the doors to negotiate with international creditors. Scioli would also take his BA Justice Minister Ricardo Casal to the national level as well as his Health minister, Alejandro Collia. Provincial Labour Minister Oscar Cuartango would also move to the national level and Alejandro “Topo” Rodríguez would become Agriculture minister.

Scioli also named some key Kirchnerite allies to lead an eventual Cabinet, pointing to current tough-on-crime Security Secretary Sergio Berni to become Security minister while current ANSES chief Diego Bossio would go over to the Planning Ministry to take on the powerful role now held by Julio De Vido.

In contrast, Macri has barely announced anyone who would be in his Cabinet and has refused time and again to name who would be his Economy minister, only characterizing former Central Bank chief Alfonso Prat-Gay and Buenos Aires City-owned Banco Ciudad head Rogelio Frigerio as his main economic advisers. Yesterday, state-run news agency Télam reported that Prat-Gay is set to be picked as Economy minster and that Frigerio will be Interior minister if Macri wins.

Esteban Bullrich is one of the few exceptions as he would take his position as BA City Education minister to the national level, and Radical Party (UCR) chairman and Senator Ernesto Sanz has been proposed for the Justice portfolio. For a while it seemed as though campaign chief Marcos Peña would become chief-of-staff, but reports on Friday claimed he would be the Cabinet chief.

The lack of specificity in Macri’s team led Scioli and some of his allies to say that the PRO leader was trying to “hide” his real advisers. At the same time though, a Macri victory would open up a period of negotiations with the UCR, a key member of Let’s Change that is going to demand important posts as a member of the Let’s Change alliance.

Down to the count

Before last month’s elections, the FpV and its allies were extremely confident. Now, the tables have turned and it is Macri and the Let’s Change alliance that are confident of a victory. Yet if October’s election taught Argentines anything it was that pre-election polling is unreliable in the country.

It’s not just that political consultancies use questionable methods and have little money to spend on serious studies. In this case, political scientists say, it is hard to predict how voters will react when they are alone at the voting booth, faced with only two ballots.

Only one can come out on top. It’s now up to the Argentine people to decide which one.