Argentine Political Outlook (Ago-28-19)
Ago-28-19, by Rosendo Fraga

1. The Frente de Todos feels like the winner, seeks to moderate its speech and not take risk, reinforcing its electoral unit, but there are differences between the presidential candidate and the pro-K. Alberto Fernández, who has obtained 49% by discounting blank votes, aims to exceed 50% in the first round and increase the difference. In the province of Buenos Aires, the same happens. Kicillof, blank votes ruled out, surpasses 50% of the votes and tries to reach a record 55%. The candidate for President, meanwhile, tries to moderate his speech, move away from economic populism and avoid the "crack", that is, a speech that divides society into two. The governors of the PJ have aligned themselves with him and that of Córdoba (Schiaretti) is under pressure from his mayors to do so. In Chaco, at the request of the national leaders (Alberto and Cristina), the current governor (Peppo) resigned to his candidacy, leaving the former Cabinet chief of the former President (Capitanich) as the only candidate of Peronism. In La Rioja, also following national orders, the local PJ decided to support only one candidate (Quintela) and the Corrientes district was intervened. Although nothing is defined regarding the Cabinet - which Alberto will expand by creating new ministries such as Culture, Science and Technology, Health and Housing - Kirchnerism would ask for three ministries: Interior, Justice and Foreign Affairs and the intelligence service (AFI). A leader of La Cámpora (De Pedro) would be driven by Cristina to occupy the first or the second. 

2. Two months before the first round, Alberto Fernández defines his foreign policy, signaling what he will not do financially and seeking to cast away fears in justice. His first trip abroad would be in September to Mexico. The foreign policy of López Obrador, is the reference of the winner in the open primaries. The Mexican President maintains a national-populist speech, but avoids confrontation with Trump, as evidenced in the immigration policy. Fernández has said that with respect to Venezuela, he will have the same position as that country and Uruguay, that is to say, different from that of the United States and the Lima Group, considering that Maduro's regime "is authoritarian" but not "a dictatorship." The second trip would be to Spain, seeking to relate to the European Social Democracy. He has denied again that during an eventual government of his, the country will hit default. He has appointed two delegates for government relations and the IMF (Nielsen and Todesca) that have differences with Kirchnerism and meets businessmen and bankers who have criticized him during the campaign. In judicial matters, he has praised the Supreme Court, but questioned the federal justice for its action in the corruption cases against the Kirchners. Meanwhile, the federal justice begins to show a more favorable attitude towards Kirchnerism. Several federal rulings (Odebrecht, Post and public works of the City of Buenos Aires) favored Kirchnerism. At the beginning of this week, the decision will be made as to whether the trial in the case related to the national road administration will be suspended, and on September 4 the experts' reports on the public works of Santa Cruz. In both cases, the former President is accused. For her part, she resumes her role in the campaign with the presentation of her book in La Plata on Saturday, August 31. In addition, on September 1, municipal elections take place in Bariloche and in two Cordoba towns (Bell Ville and Río Tercero). 

3. The successful demonstration in favor of the ruling party on August 24, allows it to avoid dispersion, coalesce its voters and recreate the hopes for victory among them. It is a paradox that this successful demonstration has emerged from a sector that Macri did not have the best relations with, such as film-making, since it was summoned by an actor (Brandoni) and a director (Campanella). The President said that "the election can be shifted", enthusing his voters. The argument is that in the open primaries of 2015, Cambiemos got 30%, 34% in the first round and ended up with 51%. In other words, 21 points from what was obtained in the open primaries. But this forecast finds two objections: the first is that then the economy did not play negatively for Macri as now, and the second is that Peronism is united and not divided by Massa as happened then. It is likely that this successful demonstration will enthuse a demoralized ruling party, as happened two months ago with the election of Pichetto as a candidate for the Vice Presidency, who finally did not influence the electoral outcome too much. In addition, there are two months to go before the first round and until then many things can change, in one way or another. But the great electoral threat to the government is the August and September inflation, which the economy minister (Lacunza) has said will be high. Macri has ratified the Head of Cabinet (Peña) and the other ministers and meets with the Episcopate this week, which was visited by Fernández last week. A new national protest of social movements is scheduled for August 28 and two days later the Vital and Minimum Wage Council meets. But it is the governors' claim for compensation due to the VAT cut on food, the increase in the income tax floor and the freezing of the gasoline price, the most important political conflict of the government immediately. Nine governors appear this week in justice, claiming the "unconstitutionality" of the measures. 

4. The need for a political agreement between Macri and Fernández is evident both in the talks with the IMF, and in the relationship with the Trump Administration and for the markets. The mission of the IMF met with the Minister of Finance and with the economic delegates of the primaries' winner. The renewal of the agreement will surely require a tripartite agreement with both candidates. More than two weeks after that election, the Trump Administration -decisive for a renewal of the agreement with the IMF- continues without taking a position on Argentina. There has been no twit from the President (focused on the crisis of Asia and the G7 Summit) nor any signs from the State Department. The corresponding quota of 5.4 billion dollars is essential for the confidence of investors, both domestic and foreign. Seeking to boost the political agreement necessary to build trust, the Clarín group convened a conference on governance, where former Brazilian President Fernando Henrique Cardoso, Alberto Fernández and Mauricio Macri spoke successively. It was a boost to the successful model of that country in 2002, signed by the two main candidates (Lula and Serra) and sponsored by the then President. 

5. To conclude: 

a) The Frente para Todos avoids taking risks, moderates its speech, reinforces Peronism unity and the winning candidate meets with business people and bankers; nevertheless, differences with the K are apparent. 

b) Two months before the election, Fernandez rejects default, shows Mexico as his foreign policy model and praises the Supreme Court, when Federal justice gives favorable signs to Kirchnerism. 

c) The successful demonstration in support of Macri, heals his disappointment, but its electoral influence is unknown, as many things can change until October 27th including inflation. 

d) The meeting organized by Clarin Group with Cardoso, Fernandez and Macri sought to foster a political agreement for transition, required by the IMF, the Trump Administration and markets.