The Winds of Change are Blowing in Argentina – But in What Direction?

For the past ten years, Kirchnerism has ruled unchallenged in Argentina. Since the late president Néstor Kirchner came to power in 2003 – to be followed by his now-widowed wife Cristina Fernández in 2007 – no cohesive or organized opposition has been able to put forth a meaningful challenge to the Kirchners’ dominance of ” La Casa Rosada“.

This scenario may have begun to change this past Sunday, when this year’s midterm elections delivered the Kirchners’ brand of Peron-inspired populism the harshest blow of its ten-year history. Up for grabs were half the seats in both the Chamber of Deputies (the lower house) and the Senate. Though Kirchner’s Frente Para la Victoria party still amassed 32% of the popular vote, roughly 7 in 10 Argentines voted for opposition parties. The party suffered one of its most painful defeats in the province of Buenos Aires (different from the city), the most populous in the country, where the opposition candidate defeated the government’s pick by 11 points, with 43% of the vote. The government also suffered significant losses in the provinces of Santa Fé, Córdoba, Mendoza and the Federal Capital district, where Greater Buenos Aires is located.

Despite the significant setback for Kirchner, her party still commands a majority of elected representatives in both houses of Congress. In addition, the roughly 7 in 10 Argentines who voted against the Frente Para la Victoria were split between different types of opposition. The strongest showing was by the Frente Renovadora. The party, founded only a few months ago by the popular mayor of Tigre, is rooted in another, right-leaning branch of Peronism, which criticized what leader Sergio Massa considers “arrogance” on the part of Kirchner. Another strong showing came from the Propuesta Republicana, a centre-right party that is particularly strong in the Federal Capital as well as some of the other most important provinces in the country.

Despite the split opposition, this Sunday’s elections put a definite end to Kirchner’s dream of a third term in office, as she would require a supermajority in both houses to change the Constitution in order to remove the two-term limit she is constrained by. Despite the havoc that the two Kirchners have wrought on Argentine political institutions during their decade in power – placing the national judiciary under tight executive control, using government resources to attack opposition parties and curbing freedom of the press – the government is still unable to use Hugo Chávez’s favourite tool, a guise of direct democracy through successive referenda until the desired outcome is obtained, to alter the rules of the game in their favour.

Sunday’s legislative elections may also be a strong sign of things to come. In 2015, Kirchner will seek to place a yet to be designated successor in the Casa Rosada, but at no point before have things looked this bad for her political aspirations. Ever since her landslide reelection in 2011, her approval ratings have plunged to all-time lows, barely able to climb above the high 20s. Official figures place inflation at 9-10%, but the consensus amongst independent economists is that the number is probably closer to 25%; Kirchner has passed a law prohibiting independent firms from publishing their own inflation figures. Tight currency controls have caused the peso to devalue sharply vis-à-vis the dollar; the official exchange rate is roughly five pesos to one dollar, but black market rates are about double that value. In a country where the greenback has always been a haven for the middle-class against the prospect of hyperinflation, the strict control on Argentines’ ability to save in dollars has taken a particularly large dent in Kirchner’s popularity. Slower growth due to weaker demand for commodities on the part of China (which has affected the whole region) hasn’t helped Kirchner’s fate either.

Though Kirchner’s fortunes seem to be turning solidly against her, those longing for meaningful change in Argentina may still be in for a disappointment in 2015. The fact that the strongest challenge to her rule has come from another branch of Peronism shows just how influential and pervasive this ideology – a messy blend of authoritarian populism, corporatism and a heavy dose of Argentine nationalism – remains in federal politics. Given Peronism’s ambiguous and generally ill-defined ideology, it is hard to predict just what types of policies would be adopted if the Frente Renovadora were to topple Kirchner’s party to form a government in 2015. Populist policies such as price controls and nationalizations of foreign-owned companies may well continue, driving away much needed investment and contributing to mounting inflation. As the old saying goes, in Argentina, the more things change, the more they stay the same.