President Cristina Kirchner was re-elected for a second four-year term, her last under the Argentine constitution. The new government will be sworn in on December 10, 2011. By 01:00 New York time, with 79% of the votes counted, Cristina Kirchner had 53.8% of the votes, followed by Hermes Binner (16.9%), Ricardo Alfonsin (11.1%), Alberto Rodriguez Saa and (7.9%) and Eduardo Duhalde (6%). The Left Party got 2.3% of the votes, closely followed by Carrio, which received 1.8%.
Although President Kirchner signaled in last night’ victory speech that she is not planning to run for re-election in 2015, it is widely believed that succession issues will emerge immediately. In terms of votes in congress, it seems that it will be challenging for her to put together the two-thirds majority needed to reform the constitution in the Senate, although it seems more likely in the lower house. That said, possibility constitutional reform to switch to a parliamentary system will be essential to keep the Peronist members aligned behind Cristina Kirchner.
Many commentators point out that the political situation is unstable, and at some point, tensions could eventually build within the Peronists, as some Peronist governors may have sufficient chances to be elected in 2015 presidential election, and/or some might be facing their last term. People like Scioli, Capitanich, Urtubey and Rodriguez Saa, are some who are likely to be in an uncomfortable position.
In last night’ speech, Cristina Kirchner’ made little effort to share her victory with anyone other than her husband and former president Nestor Kirchner, who died last year. It did not seem that she will rely heavily on the Peronist Party to select the people to run the government, although due to the lack of alternative leadership in the party, Peronists may line up behind her (following Felipe Sola) in the first phase of her government. The president could choose to lead the Peronist Party, or to put someone she trusts in that position (both scenarios seem equally likely to us at this point).
In her speech last night, she did not hint at any change in policy. In contrast, she called for a deepening of the policies that have been so effective up to now. This could be interpreted as being in line with no reshuffling of the cabinet in December 2011. If she were to change policies, she would likely use the new government as an opportunity to make meaningful changes in the cabinet, signal change, and this is the opposite of what seems to be in the works. For now, it seems the cabinet will rotate, rather than change.
In terms of market reaction, it is widely expected that last night results will not have any significant impact. The election results seem to have been fully priced in. However, one should expect more headline risk going forward, as the presidential campaign is in the rear-view mirror, and the empowered administration rushes to address looming economic challenges with the same policies.