Another plot twist out of Argentina

The ruling, left-leaning Peronist coalition had a surprise win in Argentina’s first-round presidential election yesterday (Sunday). But since no candidate won enough votes, there’ll now be a final run-off election next month.

Why the surprise?

Argentina’s economy is a mess. Since 2012, it’s spent more time in recession than out. Inflation (138%) and poverty (40%) are both at recent record highs.

So few expected the ruling party to be asked back, and the president didn’t bother seeking re-election. Even his own vice president blamed him (🇦🇷).

In that context, 12 of the past 14 leading polls projected a victory for the outsider opposition candidate, Milei. Tapping into popular discontent, his brash style and unorthodox ideas captured voter attention:

His ideas include abolishing various ministries, and replacing the peso with the US dollar (like in Ecuador and El Salvador). The vibe was there in his campaign slogan: “I didn’t come to guide lambs, I came to wake up lions.

He had a surprise win in August’s primaries and was mobbed by crowds yesterday. But this momentum might’ve also propelled him to cross what many Argentinians consider red lines, like:

  • referring to Pope Francis (a fellow Argentinian) as “evil“, and
  • reopening wounds from Argentina’s bitter 1970s dictatorship.

Even the Pope himself felt compelled to throw some thinly veiled shade back at Milei last week. And getting into a public biff with the Pope is not generally considered a vote-winning strategy in Argentina.

So Massa seems to have benefited from voter hesitancy towards Milei, while doubling down on his own social spending (something Milei vows to cut) and leveraging his dominant party machine (something Milei lacks).

With the third (centre-right) candidate gone, voters now return to the polls on 19 November to choose between Massa and Milei as their next president.

Intrigue’s take: Elections love a good ‘momentum’ story, but it’d be a brave and breathless commentator to suggest the Peronists now have momentum. Despite winning this round, it’s still potentially the party’s worst ever result.

And if Milei (a one-man party) ends up winning next month, he’ll have a remarkable lack of party power behind him.

So both Massa and Milei struck a conciliatory tone at post-election rallies last night, seeking to woo third-party voters ahead of the final round.

But no matter who wins next month, they’ll be limping rather than roaring into the presidency. And the markets are already pricing in a 95% chance they’ll (again) have to default on Argentina’s debt.

Also worth noting:

  • To win in the first round, a candidate needed 45% of the vote, or 40% but with a winning margin of 10% or more.
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