Argentine Opposition Fractures as Talks Resume With Holdouts

  • At least 18 lawmakers leave Frente Para la Victoria alliance
  • Macri's alliance to become largest bloc in lower house

A group of 18 Argentine lawmakers is leaving the Peronist Victory Front alliance, fracturing the largest opposition block and easing the way to congressional approval for an accord between Argentina and creditors holding defaulted debt.

The breakaway lawmakers want to form a "responsible, constructive opposition" and return to a more traditional form of Peronism than practiced by former President Cristina Fernandez de Kirchner, the group’s leader, Oscar Romero, said in a phone interview. The decision leaves President Mauricio Macri’s Cambiemos alliance, which has 92 lawmakers in the lower house, with the largest minority in the 257-seat chamber. No party has a majority.

“So far, 18 lawmakers are leaving the FPV bloc and more will join us," Romero said from Buenos Aires. “We want to ensure governability for the country and the provinces. We want to be a responsible opposition.”

After using decree powers to pass most legislation in his first six weeks in office, Macri has stated any agreement to settle with holdout bondholders from the 2001 default would need congressional approval. Talks with the holdouts, who are demanding about $9 billion, resumed Feb. 1 and the government said it will present a proposal this week.

The decade-long dispute with holdouts caused Argentina to default for a second time in 2014 after Fernandez refused to abide by a court ruling ordering the government to pay in full the litigants led by Paul Singer’s Elliott Management.

Her Victory Front alliance holds a majority in the Senate and had the largest minority in the lower house before Wednesday. Hector Recalde, leader of the Victory Front alliance block in the lower house, said Tuesday that he would have no problem backing an accord with the holdouts as long as it is favorable and conditions established by Argentine law are met.

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