Argentine leader's welfare programs help her party in election

Reuters News
Posted: Oct 22, 2015 12:07 PM

By Hugh Bronstein

ESCOBAR, Argentina (Reuters) - Argentina's inflation rate is soaring, state controls shackle the economy and its international bonds are in default, but the ruling party's candidate is still favored to win the presidential election on Sunday.

President Cristina Fernandez, a divisive figure loved by many for strengthening the social safety net and vilified by others for her interventionist economic policies, remains Argentina's most popular politician.

Her support for Buenos Aires state governor Daniel Scioli has helped put him well ahead in opinion polls and he could win the election outright on Sunday without having to face a runoff vote next month.

Scioli favors more orthodox economic policies than those implemented by Fernandez but he also supports her generous welfare policies and says reforms under him will be "gradual".

"I want there to be certainty that we will create an ideal business climate, with clear rules," Scioli said in a recent speech. "This has to be planned. It cannot be improvised."

He has, however, given very few details, deliberately keeping his platform vague as he tries to lock in Fernandez's base while convincing swing voters he will have enough autonomy from her to shape his own policies.

In an appearance with Scioli on Tuesday, Fernandez made it clear she wants him to keep her policies. "The only thing that matters to me is that what we've done is not lost," she said.

Barred by law from seeking a third consecutive term in Sunday's election, the combative Fernandez could return as a candidate in 2019.

Her presence on Scioli's campaign and rumors that she might seek a comeback have opponents claiming that Scioli is little more than a puppet or a placeholder for the president.

"The campaign is showing us a Scioli in chains," said political analyst Ignacio Labaqui. "The question that all of us have is whether we will see a 'Scioli unchained' after the Dec. 10 inauguration, if he gets elected."

Scioli would win the presidency on Sunday if he clinches 40 percent of the vote with a lead of 10 percentage points over his nearest challenger. Anything less and he will be forced into a Nov. 22 run-off and could be vulnerable if the opposition unites against him.

Running second in opinion polls is Buenos Aires' business-friendly mayor, Mauricio Macri, who says he would negotiate a deal with bondholders whose court case against Argentina for non-payment of debt in 2002 caused another default last year.

Fernandez has refused to negotiate with the holders, prolonging Argentina's default and battering its credit rating.

The son of a construction magnate, Macri has struggled to connect with average voters outside the capital. His support is at 28 to 29 percent, according to opinion polls, with Scioli's around the key 40-percent mark.

In third place is Sergio Massa, a moderate lawmaker who served as Fernandez's cabinet chief before breaking with her in 2013.

Both Macri and Massa say they would move faster than Scioli to free the economy from excessive state regulation.

They have pledged to bring down inflation - currently clocked by private analysts at about 25 percent - and improve the credibility of government economic data.

"Investors could respond favorably if a second round election is forced as Scioli would likely face a tougher challenge from opposition candidates presumed to be more market friendly," Credit Suisse wrote in a briefing note.

Walter Molano of BCP Securities in Connecticut said investors, tired of election-related uncertainty, may at first welcome an outright win by Scioli on Sunday.

"But he would need to quickly announce what he intends to do with some of the more pressing issues, like reducing subsidies. Otherwise, investors will run for the door," Molano said.

For some, the sooner Fernandez's legacy is lost the better.

"The government has to stop spending!" said Juan Alen, a 50-year-old feed shop owner and Macri supporter in a downtrodden part of Buenos Aires's northern Escobar suburb. He said high taxes are crippling small businesses like his.

Alen is in a minority in tough neighborhoods like this one, where Fernandez's welfare policies such as her Per-Child Allocation program, which increases benefits to poor mothers with each new child, are popular.

On the other side of the street from Alen, 20-year-old Fatima Conta looks at handbags in a store owned by Omar Zarate, 58. Both said they would vote for Scioli as the only hope for keeping Fernandez's ideas alive.

"Macri would supposedly throw out the social plans that we have now," Conta said.

Zarate said Fernandez's policies of limiting imports to help domestic firms compete have helped keep Argentines working and spending.

"I hope Scioli continues what Cristina has done," Zarate said. "But there is only one Cristina. I want her back in four years, if not before."

(Editing by Richard Lough and Kieran Murray)