Argentina Election Update - May 2023

The Peronists are clashing with the Supreme Court while doing better than expected in the provincial elections. The economy, however, continues to weaken. Also, we have a free weekly Argentina update

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The events in recent weeks deserve special attention because they are setting up a major institutional clash over elections and institutions that will reverberate through the rest of the campaign.

In a surprise move last week, Argentina’s Supreme Court suspended the gubernatorial elections of the provinces of Tucumán and San Juan just five days before voting, citing the “unconstitutionality” of the candidacies of Peronist Governors Juan Manzur of Tucumán and Sergio Uñac of San Juan. Manzur sought the vice-governorship after having served as governor twice. Uñac was running for a clearly unconstitutional third term as governor. The Court has not yet issued a final ruling on the subject, though Juan Manzur preemptively withdrew from the race. 

The decision of the Court sparked backlash from the ruling Frente de Todos (FdT) coalition, which claimed the Supreme Court is “aligning itself” with the opposition and seeking to prevent FdT electoral wins in the northern provinces. 

In the elections that were held, the Peronist coalition saw gubernatorial wins in Salta, Tierra del Fuego, and La Pampa last Sunday. Though the San Juan elections had been postponed by the Supreme Court, the province voted anyway, with a Peronist majority in 14 of the province’s 15 departments. Though these wins were mostly expected, they offer a sense of relief for the FdT coalition, as they have been falling behind in the polls and struggling to put a lid on the country’s economic crisis.

Peronists vs the Court

This is the latest in a series of political standoffs between the judicial branch and the Fernández administration since the latter took office in 2019, including disputes related to Covid-19 policies and objections in the disbursement of government funds to favor political allies. A few months ago, the Supreme Court found vice president and former president Cristina Fernández de Kirchner guilty of corruption in the “Vialidad” fraud case regarding public works, making her the first vice president ever to be found guilty of corruption while in office. The ruling resulted in significant backlash from the FdT coalition, who believe that the judicial branch is politically motivated in its decisions relating to CFK and Peronism in Argentine politics. 

Weeks after the ruling about Kirchner, President Alberto Fernández declared he would attempt to impeach Horacio Rosatti, the chief of Argentina’s Supreme Court, despite lacking the necessary two-thirds majority in Congress. This was a mostly symbolic and ideological move aimed at expressing discontent and garnering support from the base of FdT voters for his pressure against the Supreme Court. Critics argued that Fernández’s decision to begin impeachment proceedings against Rosatti signaled a significant overreach of power by the executive. 

The same sentiment of political overreach is now being expressed by the FdT coalition with regards to the Supreme Court’s latest decision to interfere with election timelines. Additionally, in another unusual move, Rosetti commented on the administration’s “uncontrolled money printing” during an AmCham summit, spurring increased discontent at a judge criticizing a government’s monetary policy. 

With just 3 months to go until Argentina’s PASO primary elections, and 5 months ahead of the presidential elections, Argentina is likely to continue seeing spats between the Supreme Court and the ruling administration. The FdT strategy seems to be going after the legitimacy of the Supreme Court itself, rather than the decisions taken by the court, accusing the judicial branch of “lawfare” and political persecution.

On the other hand, the JxC coalition welcomed the decision and took advantage of the opportunity to score some points against the ruling party. Former president Mauricio Macri posted on Facebook, saying that the government “not only criticize[d] the ruling but also the legitimacy of the [Supreme] Court…” Others in the JxC coalition are using the dispute to remind voters about the corruption that occurred under Kirchner. Whatever the Court ends up ruling on this particular case will serve as ammunition for both coalitions to rally their bases, though most Argentines will be voting on the economy and security, not on questions of institutional clashes. 

The Economy: Still Crashing

Argentina’s economy has predictably worsened since our last update three weeks ago, with the parallel blue dollar rate reaching 483 as of the publication of this newsletter. This week, it was reported that the Central Bank will announce it would be raising interest rates to 97% to try to curb inflation, which reached 109% in April. 

The country’s $44 billion deal with the IMF reached in March 2022 has been seemingly put on hold as a record drought is affecting agricultural production and exports, a main component of Argentina’s GDP. Re-negotiations with the monetary fund are “progressing constructively,” according to the Casa Rosada. The IMF, for its part, has given little indication as to what is being discussed, though the results of the negotiation are expected to be announced in the coming days. 

Bloomberg has reported that the majority of Argentina’s foreign reserves - estimated at less than $34 billion - are not liquid. This gives the government fewer tools to halt the downward slide of the peso. Various currency swaps including one Argentina has with China are being exercised to their limit to keep Argentina’s economy operating.

The economy appears more likely to crash further than bounce back in the coming months, worsening the government’s electoral chances.