Fernández Faces Urgent Economic Concerns

by Richard Lapper & Jude Webber

Argentina's first elected woman president Cristina Fernández sometimes evoked the figure of the legendary Evita Perón, one of the founders of the country's populist Peronist political movement, during her campaign.

But in her acceptance speech on Sunday Ms Fernández – wife of outgoing Peronist president Néstor Kirchner – seemed to be doing her utmost to avoid the emotional language of social justice and class confrontation for which Evita was famous.

"Hate only destroys," said a subdued Ms Fernández. "I extend a hand to all Argentines. We have to stitch together the social and institutional fabric of the country."

At first glance this might seem surprising. Ms Fernández and Mr Kirchner head the now dominant leftwing faction of the Justicialist (or Peronist) party and have won a reputation for tub-thumping social rhetoric. In government since 2003 they have taken an uncompromising line with private sector and middle-class critics of their opaque government style.

The Kirchners have prioritised social redistribution by increasing minimum wages and pensions and keeping transport and utility prices down. Rising commodity prices and ample financial liquidity have provided a helpful context, and Mr Kirchner has acted to spread the benefits with policies designed to increase the spending power of the less well-off. The election result seems to have given Ms Fernández a powerful mandate to continue with this approach. She won a landslide victory, securing about 45 per cent of the votes, twice as many as her nearest rival, Elisa Carrió.

In the populous province of Buenos Aires, a district that includes the capital's vast poor urban periphery that has traditionally been a bastion of Peronist support, Ms Fernández won decisively. She swept the board too in the poor rural provinces of the north such as Jujuy, Salta and Santiago del Estero.

Indeed, in total Ms Fernández won in 21 of Argentina's 24 provinces. Back in 2003, when Argentina was only beginning its recovery from the catastrophic collapse of 2001 and 2002, her husband won in no more than eight provinces.

The election has also strengthened the hand of pro-Kirchner forces in Argentina's congress, with their majority in the lower house increasing by 13 to 153 of the 239 seats.

Yet closer examination of the electoral results reveals some potential difficulties ahead. For a start, fewer Argentines bothered to vote than in any election since the return to democracy in 1983, highlighting lingering anger, apathy and disillusionment after the crisis of 2002 when politicians were blamed for economic collapse.

And in Argentina's biggest cities, voters gave significant backing to fragmented opposition parties. In the city of Buenos Aires Ms Carrió, head of a newly assembled independent centre-left alliance that campaigned on an anti-corruption platform, won handsomely. In Córdoba, Roberto Lavagna, Mr Kirchner's former economy minister and a fierce critic of government financial management, triumphed.

Analysts say that middle-class opposition to the Kirchners has grown as a result of a number of pressing economic concerns. Inflation – in spite of price controls – is on the rise. Officially measured at 8.6 per cent, private economists say it could be twice that. Trade unions, whose leaders are close to the Kirchners, are pressing for wage increases, raising fears of the kind of "wage-price" spiral that plunged Argentina into trouble in the 1980s. The government's refusal to increase electricity prices has made investment in much-needed generating plant uneconomic, triggering shortages. More generally, better-off Argentines, many of whom lost their savings in the devaluation of six years ago, have lost faith in the ability of the government and public institutions to provide decent services and act honestly.

According to some analysts, this disillusionment has deep roots. Argentina's recent history of extraordinary volatility has led to uncertainty, with the country yo-yoing between prosperity and recession and swinging from rightwing pro-market policies to Mr Kirchner's brand of state-centred development.

"People want the economy to keep on growing but with clear rules," adds Carlos Germano, a political analyst. "They want more predictability in their lives to make plans for their families for the future."

But it could be a tough task for Ms Fernández to tackle these problems. "Peronism," says Mr Germano is "more comfortable in dissent than it is in consensus. It is happier when it is fighting."