Political Climate Report
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CONTACT INFORMATION POLITICAL & REGULATORY RISKS [email protected] Juan Cruz Díaz [email protected] www.cefeidas.com Megan Cook +54 (11) 5238 0991 (ARG) [email protected] +1 (646) 233 3204 (USA) Marina Martínez de Hoz Torre Bellini [email protected] Esmeralda 950 Sergio Espinosa Ciudad Autónoma de Buenos Aires [email protected] (C1007ABL) República Argentina Emilia Cerra [email protected] Rayan Akill [email protected] Political Climate Report - ARGENTINA POLITICAL CLIMATE REPORT April 17, 2019 IN THIS ISSUE Although the electoral year is underway and providing safe wins for Page 2 Disputes strain governing coalition as provincial incumbents, significant uncertainty continues to surround Macri announces measures to ease the main battle for the presidency. Macri’s Cambiemos coalition is economic pain struggling to contain grumbles from within and has announced a Page 3 What is going on with the opposition? series of measures aimed at shoring up support from allies and the middle class. On the side of the opposition, a candidacy by former Page 4 President Cristina Fernández de Kirchner seems increasingly likely. Government changes electoral rules The specter of elections is overshadowing the political arena more Who is Roberto Lavagna? broadly: in Congress, Cambiemos and the opposition are failing to Page 5 find common ground as each side attempts to push measures Argentina receives next installment of IMF agreement aligned with their electoral strategy. Meanwhile, a series of Supreme Page 6 Court decisions have put the government on the back foot, and A legislative battleground: sides hardline unions unappeased by a relatively docile recent mobilization fight for control of the agenda are pushing for stronger action. Page 7 A highly-politicized investigation sparks unrest Electoral year kicks into gear as contenders vie for the iron throne Page 8 Supreme Court rules against taxing retirement benefits After a slow start to the electoral year, campaigns have kicked into Page 9 gear in recent weeks. In late March, President Mauricio Macri gave Provincial elections show an unusual and high-profile television interview on program La resilience of governing parties Cornisa, and governing coalition Cambiemos released its first Page 10 campaign spot under the slogan “Just because it's difficult, doesn’t Unions announce spate of mean it's impossible.'' The government’s discourse thus far has mobilizations largely followed the tone set in Macri’s opening address to Congress (see March PCR for background). It attempts, on the one hand, to acknowledge the difficult situation that Argentina finds itself in, while on the other, to argue that it is better off than it was in 2015, when CFK left the presidency (for example, noting that while inflation might be high, at least the statistics are credible). However, this is a difficult argument to sell to a population that is increasingly pessimistic about the current and future economic situation. In tandem, the government is making efforts to demonstrate a tough-on-crime and corruption approach (see below) and has an ambitious calendar of public works inaugurations slated to take place in the coming weeks. Find more about our services Follow @CefeidasGroup Will the alliance hold?: Disputes strain working to protect the lower and governing coalition as Macri announces middle classes, boosting consumption (which fell 8.7% in March) and ARGENTINA measures to ease economic pain fighting inflation. – Tensions are deepening within PCR Cambiemos, both in the circles closest The measures announced include new to the president, and with the Unión credit lines and benefits, particularly Cívica Radical (Radical Civic Union, UCR), targeted at vulnerable groups such as which has long clamored for a more retirees and beneficiaries of social plans, significant role in the coalition and in and support for SMEs. Macri also economic policy decision-making (see announced an agreement with 16 March PCR for background). The UCR has companies to freeze prices on 60 essential been vocally critical of many of the goods for six months, and said the government’s least-popular economic government will act more stringently measures, such as public service tariff against anti-competitive practices. Further, increases, for most of Macri’s term, and there will be no fresh increases to recently have been calling for measures to residential gas, electricity and help protect against the effects of inflation. transportation tariffs for the rest of the On April 13, Mendoza Governor and year. The government will absorb the cost national UCR head Alfredo Cornejo went so of previously-announced electricity fare far as to say that the government’s increases. In a recorded video in which inflation measures “had failed.” Macri discusses the measures with a working-class family, the president says For that reason, in recent weeks, there that the structural changes his have been a series of conversations administration is undertaking are between the upper echelons of Macri’s PRO fundamental to resolve the issue of party and high-level UCR leaders to inflation in the long-term, but that now discuss these issues and define the that the currency had stabilized, “the continuity of the alliance. moment has arrived to bring some relief to Argentines.” Partially in response to the UCR’s concerns, on Wednesday morning (April Initial reports that such a package were in 17), President Macri announced that the the works emerged a week earlier after a government will implement a series of new meeting between the five Cambiemos measures aimed at showing that it is governors (including the three UCR Monthly Inflation National Inflation Figures January 2017 - March 2019 Year-on-year Inflation 10% 60% 8% 48% 6% 36% year inflation year 4% 24% - on 2% 12% - Monthly Inflation Monthly Year 0% 0% 2 governors) and other key decision makers. What is going on with the opposition? However, the formal announcement strategically occurred a day after the After a period of relative quiet, in mid- ARGENTINA release of March’s inflation figure, which – March, former President Cristina hit 4.7 percent. These measures are Fernández de Kirchner returned to the PCR especially relevant as recent polls center of the political scenario with a show also that the higher-than- widely-circulated video. The release of the expected inflation in January-March video coincided with a trip to Cuba to has undermined public confidence in accompany her daughter Florencia to the government’s ability to wrestle receive medical treatment. In it, CFK inflation under control. Further, on April alleges that her daughter is suffering from 16, Macri announced that he would cancel health problems due to the opposition’s a planned trip to Europe “to be in the persecution. The message of the video country during this moment,” a bid at is clear: the government’s judicial demonstrating austerity and solidarity. investigations into her daughter’s assets are unfair, politically motivated In addition to pushing for changes in attacks. Instead, CFK challenges the economic policy, the UCR has been government to focus on her, since she, advocating for more openness from the unlike her daughter, chose to enter PRO to other spaces in the Cambiemos politics. While not explicitly a campaign alliance, which many believe would video, it sets a tone for a possible improve governance. A series of campaign that would be encounters between National Deputy confrontational and would portray Martín Lousteau (UCR) and Macri have advancing corruption investigations fueled speculation that the government against her as political persecution. could offer the UCR the vice presidency as Responses to the video have largely a gesture of good will. However, there followed the expected partisan lines, and are few possible VP nominees from CFK’s opponents have alleged she is radicalismo that would appeal to the fleeing to Cuba because the country does government, and the nomination of a not extradite to Argentina (though she has non-PRO insider to the VP role would sought and received judicial permission for be a significant divergence for the visits to Cuba). party, which remains fairly insular. At the same time, this pressure from the Among the non-Kirchnerist opposition, UCR may also be aimed at generating former Economy Minister Roberto leverage in the discussion over the Lavagna’s candidacy is receiving significant lists of candidates for Congress. attention (see sidebar for more Overall, the government’s overtures are background on Lavagna). Indeed, while aimed at addressing the concerns of upset Macri has avoided referring to most of the UCR members ahead of the party’s other opposition candidates specifically, he national convention in mid-May, where has criticized Lavagna, saying that over members will define who they will support the decades he has contributed to the in the election. They could also silence structural economic issues that Macri’s calls for Macri to face a UCR candidate in administration is trying to resolve. After the primaries (see March PCR for CFK, Lavagna has the most voter intention background). among opposition candidates in most polls (though hovering at about 10 percent, significantly behind both Macri and CFK) and one of the most positive images amongst voters. 3 Despite his sound poll numbers, the decision was a maneuver aimed at Lavagna is a bit of an outsider who preventing the Peronist and Kirchernists in does not have the support of a party Buenos Aires Province from agreeing on ARGENTINA structure, which is often crucial to a one gubernatorial candidate that could – strong performance in national challenge Cambiemos’ hold on the PCR elections. He has opened conversations governorship, and said it will challenge the with some parts of the UCR about a measure in the judiciary. It noted that the possible alliance, but given the national government has used colectoras when it government’s efforts to appease the party, benefited them (for example, to assure the it seems unlikely the UCR structure will 2015 election of Jujuy Governor Gerardo support his candidacy.