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ARGENTINA: Government in disarray after CFK post-primary tantrum

Table of Contents

  • Alberto Fernandez faces the most serious crisis of his presidency as Sunday's primary defeat continues to reverberate across the governing Front for All (FdT) coalition.
  • Government implosion and/or a shift to radicalism are possible scenarios ahead, though a politically cumbersome muddle-through path appears most likely.
  • Events of the last 24 hours increase the likelihood of an opposition victory in the November mid-terms, while raising optimism that a market-friendly pivot is possible in 2023.
  • The FdT's divisions inject new uncertainty into International Monetary Fund (IMF) talks that need to be settled before March.

Fernandez has been resisting calls from Vice-President Cristina Fernandez (CFK) to reshuffle the cabinet and sack his cabinet chief Santiago Cafiero. CFK wants a more politically streetwise figure in the post of cabinet chief and a new energy and direction from the government to reverse the poor results from the 12 September mid-term primaries. Finance Minister Martin Guzman, who Kirchneristas see as too orthodox, is another target. The goal is to improve the FdT's chances in the November mid- terms but also to keep alive the coalition's re-election chances in 2023.

Exasperated by Fernandez's refusal to consider a reshuffle before November, CFK ordered Interior Minister Wado De Pedro, a CFK loyalist and leading member of La Campora , the group led by CFK's son Maximo Kirchner, to submit his resignation, which he duly did yesterday, 15 September. A clutch of other ministers and officials who answer to CFK followed suit yesterday afternoon. Fernandez in turn rallied his loyalists and obtained signals of support from unions and some provincial governors.

What now?

The question now is not just whether Fernandez yields or resists but how far CFK is prepared to push things. There are tentative signs that both sides can reach a deal to avoid a complete rupture. Fernandez cannot afford to be seen to buckle under pressure from his more powerful VP. Tellingly, he has yet to accept the resignations. Equally, CFK apparently telephoned Guzman last night to tell him that he was not a target – an untruth that suggests the VP is not entirely inflexible. Lower House President Sergio Massa, the third leg in the FdT's awkward structure, seems to be acting as a bridge within the coalition, which incidentally gives him new importance; his name is constantly in the frame for cabinet chief or at the helm of a new super-ministry of the economy.

These early signs suggest that the scenarios of a complete rupture in the FdT or total submission on the part of the president are too black and white, and that a solution in a shade of grey is more likely. Such a solution could, for example, see Guzman's remit pared back to focus on securing an IMF deal before next March. After all, Fernandez and Guzman still have a hugely important role in CFK's strategy: to secure a deal with the Fund and then take the political flak for the ensuing fiscal correction. CFK also needs to be in power to intimidate the judiciary into rolling back the investigations and legal suits she faces.

Nonetheless, it is worth examining the black and white scenarios because they a) shed light on aspects of the FdT's curious power dynamic and b) could still develop in the future (assuming a muddle-through settlement to the immediate crisis can be solidified in the coming days).

The rupture scenario

There are plenty of Kirchneristas who want to break with the president. According to their logic, Fernandez was brought on board to win centrist voters; the lesson from Sunday's primary is that he has lost them. Now Fernandez is defying CFK herself. Abandoning him is therefore the only option to preserve the political brand and retain a chance of keeping power beyond 2023; this would be an extreme version of the “bad bank/good bank” approach that CFK has operated since 2019. Note that CFK does not want Fernandez to resign the presidency because that would force her to step up and govern under very difficult circumstances. Some Albertistas also believe yesterday's events – which they liken to a “palace coup” – justify a rupture with Kirchnerismo , though Fernandez himself has been adamant that he will not quit the coalition.

Were this scenario to unfold, Fernandez would govern from extreme weakness. No doubt Fernandez would attempt to re-establish a moderate Peronist platform but this would likely be dwarfed by Kirchnerismo. Navigating the legislature would be complex, though the need to secure opposition support to pass legislation could have a moderating effect on policy.

The submission scenario

Under this scenario, Fernandez would accept CFK's demands and reshuffle the cabinet before November. Losing Cafiero would clearly be a blow to Fernandez's authority, though no more than the sucker punch of giving in to an ultimatum orchestrated by his own VP. The key question in this scenario centers on who would come into the cabinet and whether this would entail a shift to freer- spending populist policies and greater economic heterodoxy, which it probably would. Populist heterodoxy would risk blowing a hole in the 2022 budget, which Guzman has just unveiled, which would in turn complicate talks with the IMF; Guzman's budget assumes that an IMF agreement is reached.

Other implications

CFK's power play and vicious coalition in-fighting are hardly conducive to winning over disenchanted voters in the mid-terms. Events of the past 24 hours could actually increase support for the opposition Together for Change (JxC) coalition in November. Looking several steps ahead, opposition parties will also have to consider what to do if an agreement is eventually reached with the IMF given that the Fund wants cross-party support for any deal. For now, the opposition is largely happy to sit back and watch the spectacle of a Peronist implosion, knowing that the electoral horizon is always most promising when Peronism is divided.

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ARGENTINA: Government in disarray after CFK post-primary tantrum

Alberto Fernandez faces the most serious crisis of his presidency as Sunday’s primary defeat continues to reverberate across the governing Front for All (FdT)