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Home / World / Argentinian President Mauricio Macri hands over election to Peronist rival Alberto Fernández

Argentinian President Mauricio Macri hands over election to Peronist rival Alberto Fernández

BUENOS AIRES – Argentina's formerly embarrassed nationalist Peronist movement was re-elected to power on Sunday as voters grappled with an economic crisis and rejected the president

Mauricio Macris

Austerity policies that end the country's experiment with Wall Street-backed policies.

Alberto Fernández,

A Peronist veteran received 47.5% approval in a vote that has far-reaching implications for international creditors and the future of a South American trade agreement with the European Union. Mr. Macri has conceded the race and congratulated his successor. The president, a close ally of the Trump administration and popular with investors, received 41% support, with more than 80% of the vote counted.

Economic stagnation and high inflation have fueled poverty in Latin America's third-largest economy Here live about 44 million people.

"I've never seen a government so despised by humans," said Juan Pérez, a 27-year-old truck driver who voted for Mr. Fernández. "People do not have enough to eat, it's an embarrassment."

Mr. Macri's defeat is due to growing anger against ruling institutions across South America. Protests broke out in Ecuador, Chile and Bolivia. In Peru, the recent closure of the Congress, which was controlled by the legislatures of the country's main political parties, was widely supported.

For Mr. Fernández, the celebration here is short lived. He faces a mountain of obstacles to overcome economic turmoil that analysts say have their roots in the policies of past Peronist governments.

Mr. 60-year-old Fernández will inherit a government on the verge of defaulting on foreign currency bonds worth around $ 1

15 billion. In the face of bankruptcy, he must quickly renegotiate the conditions for a $ 57 billion rescue package from the International Monetary Fund and restructure debt to bondholders, economists say.

"The degree of freedom he will have is not very great. There are specific problems, short-term debt sustainability problems, "said Damián Zuzek, chief investment officer at SBS Fondos, a Buenos Aires-based investment fund.

The weeks leading up to Mr. Fernández's inauguration in December could be crucial, as investors look in his cabinet drafts for signs of political direction and for the role of his left vice-president

Cristina Kirchner,

will be involved in his administration.

Since August, the central bank has spent more than $ 22 billion on reserves or one third of the total amount for the defense of the peso.

Capital Economics, a London-based consulting firm, The recession will continue next year and GDP will contract by 2% in 2020. Inflation will remain high at around 50%, and the peso could weaken after it has already devalued more than 30% this past week to close at $ 60 per dollar this week, according to the Central Bank. But the black market on the streets of Buenos Aires fell almost 8% on Friday to about 75%, as the Argentines before the vote to the banks to withdraw money in the form of greenbacks.

Mr. Fernández has pledged to boost the economy by increasing consumption and wages, while at the same time curbing inflation with a broad pact with employers. The people here do not give him much time to show results.

"Argentines suffer economically and very impatiently from economic recovery or a massive increase in state support," said Benjamin Gedan, an Argentine expert at the Wilson Center. a Washington Policy Group. "If they discover that the cupboards are empty, it will be a rude awakening for opposition supporters. You will find out quickly. "

Mr. Fernández will have to reconcile the demands of the ideologically diverse Peronist factions, a populist movement founded by Juan Domingo Perón in the 1940s. During the election campaign, he brought together moderate Peronists and the leftist base of the party, loyal to Ms. Kirchner, who served as president from 2007 to 2015.

Mr. Moderate Fernández was once a sharp critic of Ms. Kirchner's interventionist policy, including nationalization of companies and currency and price controls. He resigned in 2008 from her post as Chief of Staff. The couple made up for it after a strong defeat of the Peronists in the 2017 congressional elections.

In May, Ms. Kirchner announced that Mr. Fernández was a little-known political actor and law professor, would run on top of the ticket instead of her. Critics say he'll be a former president's puppet while he says he'll be in charge.

"It is still very unclear what the balance of power between Alberto and Cristina will look like. There's a lot of conflict potential, "said Steven Levitsky, a Harvard political scientist who closely tracks Argentina. "I do not think one of them has stepped back in the back seat at the moment." an estimated 4% of GDP this year or a market-friendly policy. His leftist base will have little appetite for concessions to the International Monetary Fund or for efforts to open up Argentina to world trade.

Mr. Fernández has already voted against a free trade agreement between Argentina and three other South American countries that make up the Merocsur bloc in June with the European Union. According to Fernandez, the deal would relieve Argentina's manufacturing sector.

"Brussels will certainly be nervous. Sunday's election results signal that the future EU-Mercosur agreement is once again in danger, "said John Clancy, former EU spokesman and now an advisor to the Washington, DC-based global consulting firm FTI Consulting.

The EU has announced it is committed to the implementation of the trade agreement, and in Brussels there is a feeling that vigorous rhetoric against the pact could abate in one year if the agreement is ready for signature and ratification.

Mr. Macri championed the trade agreement as an example of how he transformed Argentina into a modern economy after decades of protectionism.

Mr. Macri's Conservative coalition also lost in the all-important province of Buenos Aires, in Mrs Kirchner's former finance minister

Axel Kicillof,

was elected governor against reigning Maria Eugenia Vidal. The Coalition of the President will continue to be strongly represented in Congress and provide Argentina with a strong pro-business opposition, analysts say. On Sunday, the Argentines also voted to renew half of the seats in the lower house of Congress and one-third of the seats in the Senate.

For the supporters of the president his defeat on Sunday was a missed opportunity to turn Argentina into a more open economy. His election in 2015 was celebrated by investors as he quickly removed the foreign exchange controls and cut export taxes that strangled the companies. He reached a deal with creditors from past default, which allowed Argentina to return to global markets.

However, his government slashed spending only slowly after having inherited a large budget deficit from Ms. Kirchner, who spent a lot of money on government subsidies, welfare programs and loans bloated public service. To offset the deficit, Mr. Macri took billions of dollars in debt and feared a social upheaval in the event of painful cuts. A currency crisis in 2018 forced the government to accelerate the cuts after the IMF provided a bailout package.

Marked by a crisis of confidence, Mr. Macri saw his support diminish as he struggled with the market turmoil. Recently, he resorted to measures he criticized, such as monetary and price controls, which are necessary to prevent a complete economic collapse.

Write to Ryan Dube at [email protected]

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