Argentina’s President Mauricio Macri suffered a crushing setback in a primary election on Sunday. The result suggests that he may lose re-election in October’s general elections and see his market overhauls unraveled by the opposition.
His opponent, Alberto Fernández, received 48% of the support in the nationwide primary, while Macri received 32%. Fernández is a member of the Peronist movement whose vice-presidential running mate is former President Cristina Kirchner.
Macri told supporters late Sunday, “We had a bad election. It hurts that we didn’t receive the support that we hoped for,” reports the Wall Street Journal (WSJ).
Pollsters expected Fernández to get more votes than Macri on Sunday, but the government hoped to keep the gap within five percentage points, close enough to overtake by October’s presidential election.
The primaries, known as the “open, simultaneous and obligatory primaries” (PASO), do not necessarily define who wins the elections but give an idea of the level of support for each candidate ahead of the presidential election. The PASO also serve to weed out weak candidates as those who don’t pass the threshold of 1.5 percent are excluded from October’s vote.
Many Argentines believe that Fernández is a puppet and Kirchner is at the helm of the opposition. During her eight-year term that ended in 2015, Kirchner nationalized businesses, implemented price controls, and neglected Argentina’s debt. Argentines remember her presidency for the substantial state intervention in the economy as well as the corruption scandals – which Kirchner now faces charges yet denies.
According to the WSJ, at a rally last week in Argentina’s second-largest city, Córdoba, Macri announced, “We can’t return to the past,” referring to Kirchner’s presidency, “Imagine for an instant everything that we can do in the next four years with a little bit of wind in our favour and the bases that we’ve built… we have to keep transforming Argentina.”
If Macri loses, this will be the end of a pro-business agenda to save Argentina’s economy that has been implemented since he came to power in 2015. However, over the past four years, despite the IMF loans, austerity measures, and the end of capital controls, Argentina is in recession and continues to suffer from inflation and poverty.
Fernández criticizes Macri’s economic stewardship as he points to Argentina’s growing debt and the surge in inflation and unemployment. According to the BCC, more than a third of the country’s population currently lives in poverty.
Macri announces he needs more time to turn around an economy that he claims was mismanaged for years by Cristina Kirchner and her late husband and predecessor Néstor Kirchner and has pledged to “reverse” Sunday’s election result. “We have much to do still. Every election is a message, and we understood it,” Macri asserted on Monday.
Not only did support for Macri’s government take a blow after Sunday’s elections, but Argentine stock markets and its currency both plunged. The BBC reports that the peso fell 15% against the dollar on Monday, and some of the country’s most traded stocks have also lost around half of their value in one day.
The drop suggests the market’s lack of confidence in an opposition government. According to BBC South America Business Correspondent, Daniel Gallas, investors are now scrambling to sell, as many believe it will be impossible for President Macri to win the upcoming election in October meaning a reversal to “Kirchnerismo” and the reversal of Argentina’s economic liberalization.
The PASO also comes weeks after Argentina celebrated the Mercosur-EU deal, a trade deal between the EU and the South American trading bloc. The negotiation seemed like another step toward the rebuilding of the Argentine Republic; however, doubts and fears concerning the opposition now produced volatility among investors and trading partners. If Argentina wants to continue growing on the world stage, it cannot revert to the poorly-run economic disgraces of the populist government. With two months left for the general elections, the future looks dim for Macri and even darker for Argentina.