Ex-Fernandez Ally Leads Rival Bloc in Argentine Primary

A primary election for Argentine congressional candidates this weekend will test the vote-getting strength of a former ally of President Cristina Fernandez de Kirchner who has now turned against her.

Former Cabinet Chief Sergio Massa, 41, is leading a group of dissident Peronist Party members who are contesting October’s mid-term congressional elections. Opinion polls show Massa, now mayor of a Buenos Aires suburb, attracting more votes in the Aug. 11 primary than Fernandez favorite, 43-year-old Martin Insaurralde.

Fernandez needs to secure two-thirds majorities in both houses of congress to push through constitutional changes that would allow her to seek a third term in 2015. Confirmation of Massa’s popularity would make him a potential presidential candidate, according to Mariel Fornoni, managing director of pollster Management & Fit.

“Massa is suddenly in all nationwide media and is positioned as a player in a bigger league” said Federico Thomsen, a Buenos Aires-based economic and political analyst with research company E.F. Thomsen. “Massa has higher aspirations than being just a lower house member.”

Massa was supported by 34 percent of those surveyed, while 28 percent backed Insaurralde, in a poll conducted July 23 to Aug. 1 by Fornoni’s M&F on the ballot to choose congressional candidates for Buenos Aires, the country’s most-populous province. The poll of 2,000 people had a margin of error of 2.3 percentage points.

Technical Tie

A poll by Poliarquia Consultores, published in La Nacion newspaper today, put the two in a technical tie. The poll of 1,000 people taken Aug. 2 to Aug. 5, gives Massa 32.8 percent of votes and Insaurralde 30.1 percent. The poll has a margin of error of 3.16 percentage points.

About 31 million Argentines are obliged by law to vote in the primaries to choose candidates for 127 seats in the lower house and 24 in the senate. Massa and Insaurralde are among those seeking to contest the 35 lower house vacancies for representatives from Buenos Aires province.

The government is failing to address inflation estimated at about 24 percent a year, needs to overhaul the tax system and combat crime, Massa said in an Aug. 7 speech to businessmen including billionaire airport magnate Eduardo Eurnekian and the heads of the local units of Fiat SpA and Citigroup Inc.

‘New Chapter’

“On Sunday a new chapter of Argentine politics begins that will be consolidated on October 27 but that has its sights not only on 2015, but also to build a long-term business culture for our country,” Massa said.

Claudio Ambrosini, Massa’s spokesman, declined to comment on his political aspirations beyond the congressional vote. Presidential spokesman Alfredo Scoccimarro didn’t return a phone call and e-mail seeking comment on the primaries and whether Fernandez, 60, would seek a third term.

Massa told the group of business leaders that he disagrees with the government’s isolation from international capital markets as Argentina has missed opportunities to secure cheap debt for development projects.

Argentina hasn’t sold debt abroad since defaulting on a record $95 billion of debt in 2001. The nation’s average borrowing costs of 13.17 percent, are the highest of 56 emerging market economies, according to JPMorgan Chase & Co.’s EMBI Global index.

Maintain Control

Artemio Lopez, director of Buenos Aires-based Consultora Equis, said in a report he expects Massa and Insaurralde will tie in the primaries. Fernandez’s Victory Front alliance will garner about 40 percent of votes nationwide and maintain its control of both houses of congress in the mid-term elections, he said.

A decline in unemployment to 7.2 percent and a 14 percent increase in retiree pensions will underpin support for Fernandez and her coalition, Lopez wrote on his website.

If the ruling party gets less than 40 percent of the vote, seeking a constitutional reform would be more difficult and the government would likely begin to focus more on “exit strategies and governability issues than a perpetuation of power or institutional reforms,” Barclays Plc analysts Sebastian Vargas and Alejandro Grisanti wrote in a note yesterday.

Massa was elected mayor of Tigre, a sprawling, riverside municipality on the northern outskirts of the capital, in 2007. The following year, Fernandez chose him to head her cabinet, sacking him in 2009 in the wake of the ruling coalition’s losses in mid-term elections.

Redrado, Lavagna

Massa effectively broke with Fernandez when he announced his candidacy in June. He said Aug. 7 that it’s time to unify the country and create a legal framework to rebuild confidence and attract investment.

Several other former senior officials who served under Fernandez or her late husband and predecessor Nestor Kirchner are supporting Massa.

They include Martin Redrado, whom Fernandez fired as president of the central bank in 2010 for opposing her plan to use international reserves to pay debt, former cabinet chief Alberto Fernandez, and Roberto Lavagna, who as Kirchner’s economy minister, was in charge of the 2005 restructuring of the country’s defaulted debt.

Fernandez, whose spending on education, highways and handouts for the poor helped her win re-election in October 2011 with 54 percent of votes, is banned by the constitution from seeking a third consecutive term.

Market Reaction

With the country effectively locked out of global credit markets since the 2001 default, Fernandez financed higher government spending by increasing taxes, expanding money supply by as much as 40 percent a year and borrowing money from the state pension agency.

“The market could respond positively if Massa is poised to present a strong challenge to the government candidate in 2015,” Casey Reckman, a Credit Suisse Group AG. economist wrote in an Aug. 6 report. “Argentina’s next president would need significant political capital and a strong mandate to make necessary reductions in subsidies and other painful adjustments to the economic model.”

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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