Bloomberg News

Fernandez Invokes Late Husband in Argentina Re-Election Bid

June 22, 2011

(Updates prices in fifth and sixth paragraphs.)

June 22 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner said she will honor her late husband’s legacy by running for re-election in October, ending weeks of speculation about whether she would enter a race she’s favored to win by a landslide in polls.

Fernandez, 58, said yesterday that while she waited until four days before a filing deadline to announce her candidacy, she knew she’d seek a second, four-year term the day after her husband, former President Nestor Kirchner, died of a heart attack last October.

“I always knew what I had to do and what I should do,” Fernandez, dressed in black, said in a nationally televised address from the presidential palace in Buenos Aires. “We will submit ourselves to this one more time. My decision is irrevocable.”

Since Fernandez succeeded her husband in 2007, Argentina nationalized its $24 billion pension fund industry, took over the flagship airline and fined analysts who criticized the government’s inflation index. While foreign investment has trailed its regional peers, a surge in prices for soybeans helped South America’s second-biggest economy recover from the global financial crisis and is expected to fuel growth of 7.7 percent this year, according to Goldman Sachs Group Inc.

Bond Yields

The yield on benchmark dollar Argentine bonds that mature in October 2015 rose 4 basis points to 8.21 percent, according to data compiled by Bloomberg. The extra yield investors demand to hold Argentine dollar bonds instead of U.S. Treasuries remained unchanged at 614, according to JPMorgan Chase & Co.

Argentina’s benchmark stock exchange rose 0.1 percent to 3,333.58. The peso was little changed at 4.0980 per dollar.

Polls show that Fernandez, a lawyer, may have enough support to win re-election in the first-round vote on Oct. 23 over lawmaker Ricardo Alfonsin of the Radical Civic Union party. Fernandez had 48 percent support, compared with 13 percent for Alfonsin, according to a June 3-11 survey of 1,500 people by Buenos Aires-based pollster CEOP Opinion Publica. About 8.4 percent of the people surveyed said they haven’t decided whom they will vote for or refused to answer, according to the poll, which has a 2.6 percentage point margin of error.

Avoid Runoff

Under Argentine law, a candidate can win the election and avoid a runoff by garnering more than 45 percent of the vote or 40 percent and a 10 percentage point lead over the nearest competitor. A second-round runoff, if needed, will take place Nov. 20.

Argentines will put their faith “in the hands of those who know how to take care of people’s pocketbooks and the only person for that is Cristina,” Cabinet Chief Anibal Fernandez, no relation to the president, said in comments posted to the government’s web page.

Fernandez didn’t say who she’d ask to be her running mate. She cut ties with Vice President Julio Cobos in 2008 after he voted against her proposal to raise agricultural export taxes. Some names mentioned by analysts and local press include Chaco province Governor Jorge Capitanich, Senator Nicolas Fernandez and Economy Minister Amado Boudou.

Fernandez or her successor will have to tackle problems ranging from accelerating inflation to a lack of foreign direct investment compared with regional peers.

Inflation, running anywhere between 25 percent and 30 percent according to private estimates, is accelerating toward the fastest in the world. The government says prices are rising at an annual rate of 9.7 percent and has fined researchers who say otherwise as much as 500,000 pesos ($120,000).

Lagging Investment

Foreign direct investment in Argentina totaled $6.2 billion last year, according to the Santiago-based United Nations Economic Commission for Latin America. That compares with investment of $48.5 billion in Brazil, $15.1 billion in Chile, $7.3 billion in Peru and $6.8 billion in Colombia.

Fernandez faced her biggest political setback in 2008, when her agricultural tax plan provoked four months of nationwide protests, road blockades and food shortages in Buenos Aires. Her proposal was defeated in Congress after Cobos cast the tie- breaking vote against the measure in the Senate.

A year after the dispute, the government’s ruling coalition lost control of Congress for the first time since 2005.

Still, a global commodities boom, which boosted prices for exports including soybeans and corn, has buoyed government spending that’s helped boost economic growth.

Gross domestic product expanded an average 5.6 percent per year from 2008-2010, following annual growth of 8.8 percent from 2003-2007 during Kirchner’s administration. Unemployment fell from a peak of 9.1 percent in the third quarter of 2009 to 7.4 percent this year.

‘Political Liability’

“Cristina has high popularity due to good economic conditions,” Boris Segura, a Latin America economist at Nomura Securities International, said in an interview from New York. “Inflation isn’t a lethal political liability.”

Fernandez has also taken steps to restore Argentina’s credit-worthiness. In 2010, she led a restructuring of $12.9 billion in defaulted debt remaining from the 2001 financial crisis. The restructuring helped Argentine dollar bonds soar 36 percent last year, the best performance among major emerging markets in JPMorgan Chase & Co.’s EMBI+ Index.

Segura said Fernandez is likely to win re-election in the first round. Her main opponent is the 59-year-old son of former President Raul Alfonsin, who led Argentina out of its military dictatorship in which an estimated 30,000 people were killed. Also running is fellow Peronist Eduardo Duhalde, named by Congress in 2002 to be Argentina’s fifth caretaker president in about two weeks following the country’s default on $95 billion on bonds.

Military Junta

Fernandez, a mother of two, graduated from the National University of La Plata, where she met her future husband while protesting against the military junta that toppled President Isabel Peron in 1976.

She began her political career in 1985 in Kirchner’s native province of Santa Cruz, holding several positions in the local legislature. From 1995 to 2007, she served as a congresswoman and senator, first from Santa Cruz and later Buenos Aires.

When her husband took office in May 2003, Fernandez championed his human rights prosecutions of dictatorship officials and helped shepherd his legislative priorities through the congress in the aftermath of the country’s financial crisis.

The president said yesterday one reason she is running is to serve as a “bridge between the new and old generations,” citing the “rebuilding of the country” she and her husband undertook following the debt default.

Kirchner died last October at the age of 60, leaving Fernandez to run her first political campaign in 26 years without her spouse and closest adviser. She never doubted she would run again, she said.

“I knew it when thousands and thousands passed before here to say goodbye to him and cried out ‘be strong Cristina,’” she said last night. “We will continue ahead.”

--Editors: Bill Faries, Richard Jarvie

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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