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Message: Game-changing election in Argentina
"Game-changing" election result in Argentina - election heads to
tie-break round
The surprise result of yesterday's national election in Argentina is that the opposition candidate was only a few percentage points behind the ruling party's candidate. Given the close result, Argentine voters will head to the polls for a 'tie-break" round on 22 November, in which only the two leading candidates will stand for election. U3O8 Corp's lead project, Laguna Salada, is located in Argentina.
With 97% of the vote counted, Mr. Daniel Scioli, the ruling party candidate, had won 36.9% of the vote, only slightly ahead of Mr. Mauricio Macri of the opposition, who won 34.3%. Mr. Massa, leader of another opposition party, won 21.3%. The opposition parties worked together to form a united block in various provinces to capture more votes than the governing party. Significantly, the opposition won the election for governor of Buenos Aires province, where almost 40% of Argentina's population lives, after 40 years of rule by the national ruling party.
Bloomberg reported that "Whoever wins, investors in Argentina are betting on a shift toward more market-friendly policies".
An analysis by JP Morgan was as follows: "The [election] result provides a clear message to politicians that the population favors change, following 12 years of Kirchner rule, and that the electorate is shifting to the right". And continues: "Even if Scioli becomes the new President these results are giving him a message that there is a significant portion of the population that want a change in the country, thus generating more incentives to go back to a more market friendly approach".
Both leading candidates are pro-business. Mr Macri is 56 years old and is a civil engineer by profession. He entered politics in 2005 and was elected mayor of Buenos Aires city in 2007, and was re-elected in 2011. The main components of his economic platform are:
- To settle the bond dispute that led Argentina into selective default that has isolated the country from many components of the international financial system;
- End currency controls;
- Control inflation;
- End import restrictions and export tariffs to boost foreign investment; and
Mr Scioli is 58 years old and served as vice-president to the late President Nestor Kirchner for four years. He was elected governor of Buenos Aires province in 2007 where, through careful economic stewardship, his provincial government achieved a balanced budget in 2013 and has maintained a budget surplus since then. His national economic platform is for more gradual change, and is focused on:
- Settling the dispute with the bond-holders that precipitated the selective sovereign default in 2014;
- Eliminating import restrictions and export taxes;
- Controlling inflation;
- Introducing legislation that would safeguard the repatriation of savings of Argentine citizens that have an estimated US$200 billion held outside of Argentina. Mr Scioli's approach is that it is not logical to focus on attracting foreign capital if one's own citizens don't trust the government sufficiently to keep their savings in Argentina. His attitude is that making the Argentine people sufficiently comfortable with their own government to the extent that they repatriate some of their savings, would send a very strong, positive signal to the foreign investment community; and
Sources: Bloomberg, JP Morgan, BBC and La Naci὚n
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