Ex-Argentine President Kirchner Dies of Heart Attack

Ex-Argentina President Kirchner Dies of Heart Attack
Former Argentina President Nestor Kirchner, right, who handed power to his wife Cristina Fernandez de Kirchner in 2007, died of a heart attack on Oct. 27, 2010. Photographer: Diego Giudice/Bloomberg

Former Argentine President Nestor Kirchner, who antagonized investors in the aftermath of the country’s $95 billion debt default before handing power to his wife in 2007, died of a heart attack today. He was 60.

Kirchner, who underwent heart surgery twice this year, was rushed to the hospital this morning in the company of President Cristina Fernandez de Kirchner after falling ill at their home in the Patagonian town of El Calafate.

Kirchner’s death is likely to open a “free for all” as rivals within his Peronist party and opposition politicians seek to gain strength ahead of presidential elections next year, said Walter Molano, head of research at Greenwich, Connecticut-based BCP Securities. Argentine bonds and stocks gained on increased speculation the country’s debt management policies could be reversed amid the scramble for power.

“There are a lot of powerful people sitting on the sidelines and there’s no kingmaker who’ll decide the succession,” Molano, who carried out frequent research trips to Buenos Aires during the country’s 2001 financial crisis, said in a telephone interview. “Nestor was the kingmaker.”

Yields on dollar bonds due in 2033 dropped 15 basis points, or 0.15 percentage point, to 9.28 percent, according to JPMorgan Chase & Co. Argentine stocks trading in New York surged the most since 2008. Local markets are closed for a holiday.

Argentine dollar debt yields 520 basis points more than U.S. Treasuries, the most among emerging-market countries after Venezuela and Ecuador in JPMorgan’s benchmark EMBI+ index. The yield gap over Treasuries declined 61 basis points today, the biggest drop since Oct. 5, 2009.

“Long Live Peron”

The government declared three days of mourning as supporters laid flowers and chanted “Long Live Peron” outside the presidential palace in Buenos Aires. The former president will lie in state tomorrow at the government palace, Labor Minister Carlos Tomada said.

Fernandez’s policies are unlikely to change following the death of who was her closest ally and force behind her presidency, according to Daniel Volberg, an economist at Morgan Stanley.

“Unless you see a serious cabinet reshuffle it’s hard to see how they would switch direction,” Volberg said in an interview from New York. “There is little reason to tamper with what’s going on right now unless you are going to do something more structurally sound, which doesn’t seem to be the direction that administration has been willing to go.”

2011 Elections

Kirchner said in July that either he or his wife would run for president in October 2011 elections.

If Fernandez seeks a second term, she’ll face competition from fellow Peronists including Buenos Aires province Governor Daniel Scioli, who served as Kirchner’s vice president, and former President Eduardo Duhalde, according to Molano. Mauricio Macri, the capital’s mayor, and Radical party congressman Ricardo Alfonsin, the son of former president Raul Alfonsin, have said they are considering presidential bids.

“I don’t want to sound heartless, but it does enhance the chance of an opposition candidate winning,” said Edwin Gutierrez, who manages about $6 billion of emerging-market debt, including Argentine peso- and dollar-denominated securities, at Aberdeen Asset Management Plc in London. “He is seen as a big stumbling block” to more market-friendly policies.

Inflation Data Distortions

Kirchner took office in 2003, in the wake of Argentina’s default and a devaluation that forced his elected predecessor, Fernando de la Rua, to resign amid deadly protests that resulted in five presidents in two weeks.

While boosting economic growth to an average 8.8 percent during his term, he antagonized investors by offering creditors bonds at 30 cents on the dollar in exchange for $95 billion in defaulted debt, the harshest sovereign restructuring terms since World War II. In June, Fernandez settled with holders of $12.2 billion in bonds who rejected the 2005 offering.

In 2007, he sacked several top officials at the National Statistics Institute, a move that led investors and Fernandez’s own Vice President, Julio Cobos, to question the accuracy of the agency’s inflation data.

While the government says consumer prices rose 11.1 percent in September from a year ago, Buenos Aires-based Ecolatina research firm said prices rose 24.7 percent in the same period. That’s the second-highest rate in the world after Venezuela.

IMF ‘Dictatorship’

In 2007, he blamed loans and advice from the International Monetary Fund “dictatorship” for leading the country into failure during the 1990s. Since paying back $9.8 billion in debt to the IMF in 2006, the government has yet to allow the Washington-based lender to conduct a review of its finances as it does in other member countries.

“It’s pathetic to listen to them sometimes,” Kirchner said of the IMF in February 2005.

Last month, Kirchner had a stent implanted after doctors found one of his coronary arteries was blocked. In February, he had surgery to clear a blockage in his carotid artery.

Argentines gathered today and left flowers in front of the presidential palace, known as the Pink House, while leaders from around Latin America expressed their condolences.

U.S. President Barack Obama said in a statement that Kirchner “played a significant role in the political life of Argentina and had embarked upon an important new chapter” as president of the Union of South American Nations, or UNASUR.

The Penguin

A father of two and former lawyer, Kirchner in 2009 was elected to Congress representing Buenos Aires province. He earned the nickname “the Penguin” when he burst onto the national scene during the financial crisis after serving three terms as Governor of oil-rich Santa Cruz, Argentina’s southernmost mainland province.

In addition to restoring economic growth, he gained popularity for overturning amnesty laws for former military and police officers involved in torture and killing of as many as 30,000 Argentines during the country’s 1976-83 dictatorship.

Kirchner will be “remembered both as having helped get Argentina out of a very bad recession, but also for trying to restructure the political system in such a way that he and his wife could continue endlessly,” said Susan Purcell, director of the center for Hemispheric Policy at the University of Miami in a telephone interview.

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