June 28, 2009 / 5:06 AM / 10 years ago

Mid-term elections seen weakening Argentine leader

BUENOS AIRES (Reuters) - Argentines cast ballots in congressional elections on Sunday and are expected to throw out allies of President Cristina Fernandez in a rejection of her interventionist economic policies and combative style.

Argentina's President Cristina Fernandez waves next to her husband candidate for Congress Nestor Kirchner (C) and Workers Union leader Hugo Moyano (L) during the closing campaign rally in the Greater Buenos Aires' district of La Matanza, June 25, 2009. REUTERS/Imagen 233/Handout

Fernandez, a center-leftist who in 2007 succeeded her husband ex-President Nestor Kirchner, has stagnated with a 30 percent approval rating as Latin America’s No. 3 economy hits turbulence after a six-year expansion.

Polls show Fernandez’s wing of the ruling Peronist party will lose its majority in the 257-seat lower house and barely maintain control of the 72-seat Senate in the mid-term vote.

The key race is in Buenos Aires province, home to 38 percent of Argentines, where dueling Peronist factions are scrambling for the largest share of the 35 lower house seats up for grabs in that district alone.

Kirchner, widely seen as co-governing the country with his wife, is running for Congress in the populous province to shore up her administration and possibly position himself for a presidential run to extend their hold on power through 2015.

The mid-terms are viewed as a springboard for the 2011 presidential race, and Kirchner’s chances will fade if he comes in second in a tight race with millionaire Peronist dissident Francisco de Narvaez.

Argentines’ biggest concerns are crime and inflation, according to opinion polls, and Fernandez’s failure to tame high prices is one reason her popularity has flagged.


But the Kirchners’ confrontational style — including frequent clashes with business leaders — over their six years in power has also worn thin on Argentines.

On the campaign trail, Kirchner warned the country will return to the chaos of the 2001-2002 economic and political meltdown if people don’t back him and his wife.

Argentina’s powerful agricultural sector rebelled last year against Fernandez’s plans for higher taxes on soy, the nation’s top crop. If she is weakened, farmers will push for less government intervention in farm exports and grain markets.

The presidents of neighboring Brazil and Chile have seen their popularity soar even as their economies go into recession because people in those countries approve of how they are handling the crisis.

But Fernandez’s measures to combat a dramatic economic slowdown and rising unemployment have not generated confidence even though she moved up the mid-term by four months to get them out of the way in case the crisis worsened.

The newly elected members of Congress will not take office until December, so uncertainty looms over how she will govern during the next five months.

Some business leaders and investors are bracing for shock announcements such as state bank takeovers. The Kirchners are known for surprise moves such as last year’s nationalizations of the country’s biggest airline the private pension system.

Others believe the government, which needs to raise billions of dollars for debt payments, will take market-friendly steps such as overhauling the discredited National Statistics Institute that economists say has underreported inflation and exaggerated growth for two years.

Even though the Central Bank is expected to maintain its policy of preventing sharp fluctuations in the currency, the peso weakened last week as Argentines, accustomed to periodic economic crises, bought dollars, worried the election might lead to political instability.

Reporting by Fiona Ortiz; Editing by Xavier Briand

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