* Electoral defeat kills option of running for 3rd term
* Questions about Fernandez's health fan uncertainty
* Ruling coalition loses ground, maintains majorities
* Presidential posturing begins for 2015 election
By Anthony Esposito and Alejandro Lifschitz
BUENOS AIRES, Oct 28 President Cristina
Fernandez's government sought on Monday to downplay a sobering
defeat in Argentina's mid-term elections, asserting that its
ability to govern has not been diminished even though voters
shrank her majority in Congress and erased her chances of
seeking a third term in 2015.
The government's coalition took a beating in Sunday's
elections, leaving her with only a slim majority in both
Some legislators had said they wanted a constitutional
amendment to allow Fernandez to run for a third term. But the
poor showing by her branch of the Peronist party dashed those
hopes once and for all - effectively kicking off the contest to
succeed her in 2015.
"Peronism was able to maintain legislative control. ... It
can guarantee Argentines democratic continuity," said
congressman Carlos Kunkel, who supported allowing Fernandez to
run for a third term.
Retaining majorities in Congress "gives us important
legislative strength to conclude this four-year term that
President Cristina Fernandez de Kirchner has," Defense Minister
Agustin Rossi told a local radio program.
Argentina could face some political uncertainty following
the poor election showing by her allies and the questions
surrounding Fernandez's health since an Oct. 8 operation to
remove blood that pooled on her brain. She also suffers from a
Voters angry about high inflation in Latin America's No. 3
economy, currency controls and rising crime punished Fernandez's
allies in the country's main districts, including the key Buenos
Fernandez was unable to campaign for her congressional
candidates after the operation. She is expected to continue
convalescing for at least another week, according to her
With half the seats in the lower house of Congress and a
third of the Senate up for grabs, the government's coalition
garnered around 33 percent of the votes nationwide on Sunday, 20
percentage points lower than what Fernandez got when she was
re-elected in 2011.
Analysts say the government could start to lose allies and
legislators could defect to opposition parties, as is common in
Argentina when the incumbent has no chance of re-election.
"We think (the government's majority) is vulnerable to
erosion due to defections as politicians position themselves
ahead of the next presidential election in 2015,"
Credit-Suisse's Casey Reckman said in a research note.
In the absence of Fernandez, known for micro-managing her
cabinet and concentrating power in the president's office, vice
president Amado Boudou has temporarily taken over public duties.
But he wields little real power and cabinet members have started
to show the strains of an internal struggle over who is to make
decisions, especially on the economic front.
"Nobody knows where the power is today, who holds it. The
axis of governance in the short term has to do with knowing when
the president will come back and with where the axis of power is
now," political analyst Mariel Fornoni said.
A small number of ministers and high-ranking public servants
- running the gamut on economic schools of thought from
protectionism to neo-liberalism - advise Fernandez on how to
manage the economy.
ROAD TO 2015
Under Fernandez, who was first elected in 2007,
protectionist trade policies, currency controls and heavy
regulation of the country's key grains sector have helped put
Argentina at odds with international markets.
Her government has nationalized Argentina's private pension
fund system, and the country's main oil company YPF
erected import barriers and imposed heavy controls meant to stop
capital flight and to support the anemic peso.
Kirchnerism, the self-styled politics of Fernandez and her
late husband, former president Nestor Kirchner, "has been up
against the ropes for a while now," economist Nader Nazmi of BNP
Paribas bank said.
"The knockout blow came last night in the form of mid-term
election results," Nazmi said.
Opposition leader Sergio Massa, the mayor of the affluent
Buenos Aires town of Tigre, easily beat Fernandez's hand-picked
candidate in the Buenos Aires province, home to around 40
percent of Argentina's voters and most of the country's
He headed his own list of candidates for Congress and is
seen as a possible business-friendly presidential contender in
"Massa was very careful about not explicitly mentioning his
presidential intentions during his victory speech, but his
carefully drafted speech was probably the most presidential of
all," said analyst Mauro Roca of Goldman Sachs.
"With a conciliatory tone, he committed himself to work on
issues such as poverty and inflation which matter more to the
electorate, and to cross the boundaries of the province of
Fernandez put the issue of helping the poor at the top of
her agenda, but generous welfare programs and other state
subsidies, along with currency controls, have also fueled
runaway inflation, clocked by private economists at some 25
percent annually. Sharp rises in consumer prices take the
heaviest toll on lower-income households.
The ruling coalition also lost by wide margins in another
four of the country's most populous districts: Cordoba, Santa
Fe, Mendoza and the city of Buenos Aires.