Argentine Mid-Terms: Kirchners Suffer a Major Setback

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SUBJECT: Argentine Mid-Terms: Kirchners Suffer a Major Setback

REF: BUENOS AIRES 0742


1. (SBU) Summary: Argentina's ruling party and allies suffered a
major setback in the June 28 congressional mid-term elections,
winning only about 30% of the vote nationwide and likely losing its
majority in both chambers of Congress. In the key race of Buenos
Aires province, the ticket headed by multimillionaire Peronist
dissident Francisco de Narvaez came in first place with 34.58% of
the vote, besting former president Nestor Kirchner's slate with
32.11% of the vote. In the federal capital, De Narvaez's allies --
Mayor Mauricio Macri's PRO party -- won 31.09% of the vote with a
ticket headed by Macri's former deputy mayor, Gabriela Michetti.
The surprise in the capital was the strong second-place showing by
leftist filmmaker Pino Solanas, who nosed out the Civic Coalition's
Alfonso Prat-Gay (backed by Elisa Carrio). For Peronists searching
for someone to lead their party in the wake of Kirchner's defeat,
the Senate race in Santa Fe province was all-important. Media
report that Peronist presidential hopeful Carlos Reutemann narrowly
defeated Socialist Ruben Giustiniani (backed by the Socialist
presidential hopeful, Governor Hermes Binner),but that race may yet
be decided in the official count. Vice President Julio Cobos's
candidates in Mendoza seem to have won handily over a
Kirchner-supported candidate, which keeps Cobos alive in the
presidential race for 2011. In the major province of Cordoba, the
opposition's Luis Juez prevailed in a fractious field. As a result
of the disappointing electoral results, Nestor Kirchner announced
June 29 his resignation as president of the Peronist Party (PJ).
End summary.

STUNNING SETBACK FOR THE KIRCHNERS
--------------


2. (SBU) According to the unofficial vote tally provided by the
Interior Ministry June 28-29, government-aligned forces won only 30%
of votes nationwide. The government appears to have lost control of
both legislative chambers. The numbers released so far are from the
Interior Ministry's "provisional," or unofficial, vote count. The
official vote count will be conducted by the National Electoral
tribunal, starting July 1. Because the GOA uses the "D'Hont
formula" to allocate congressional seats, it will not have firm
tallies for congressional seats until the official count is
completed, but it appears that the government lost as many as 22
seats in the Chamber of Deputies and four Senate seats.


3. (SBU) Media are projecting that the Kirchners' Victory Front
(FpV) will maintain its plurality in both chambers of Congress when
it convenes December 10. The media also project that the Radical
Party (UCR) will be the largest opposition party in the Senate, and
the Social and Civic Accord (an alliance between the Civic Coalition
and Radical Parties) will be the largest opposition party in the
Chamber of Deputies. The projected breakdown in the Senate is as
follows: 36 Senators for the FPV; 17 for the Radical Party; 9 for
the Peronist dissidents; and 10 from provincial and other parties.
The projected breakdown in the Chamber of Deputies is: 96 Deputies
for the FPV; 80 for the Social and Civic Accord; 47 for Union-PRO;
16 aligned with leftist parties; and 19 Deputies from smaller
parties.


4. (SBU) It had been clear for some time that the June 28 elections
would be a nationwide setback for the Kirchners, but former
president Nestor Kirchner had hoped to preserve the first couple's
political future by coming in first place in the key race of Buenos
Aires province, a long-time Peronist stronghold with 38% of
Argentina's votes. Kirchner lost this must-win district. The
ticket headed by multimillionaire Peronist dissident Francisco de
Narvaez came in first place with 34.58% of the vote, besting
Kirchner's slate with 32.11% of the vote.


5. (SBU) Early in the campaign, Kirchner had posited the race as a
plebiscite on the government's administration. Although he
subsequently dropped that argument, this race largely hinged on
voters' feelings about the Kirchners and was therefore viewed as
decisive for the Kirchners' political prospects. Kirchner, who won
the presidency in 2003 with only 22% of the vote, may have hoped to
come close to the 45% of the vote that his wife won in 2005 and
2007, but in the end came in close to the 30% minimum that is
considered to be reliably in the pocket of Peronists. The
59-year-old Kirchner had never before lost an election; this was his
first, and it can largely be attributed to the sharp drop in
approval ratings incurred by the Kirchners' protracted conflict in
2008 with farmers over agricultural export duties. Kirchner and his
allies did not win in any of the five biggest electoral
battlegrounds, and his party even lost in his home province of Santa
Cruz. The conventional wisdom is that Kirchner's erstwhile allies,
particularly the Peronist governors and mayors throughout the
country, will desert him in droves now that he is no longer
invincible. As a result of the disappointing electoral results,
Nestor Kirchner announced June 29 his resignation as president of
the Peronist Party (PJ).


6. (SBU) Nestor Kirchner gave a concession speech at 2:15 in the

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morning June 29. He was calm, congratulating the winners and
insisting that "we've lost by just a little." He said that the
results show that concerns about fraud were misplaced. He urged his
supporters to accept the results with equanimity, and said he would
be "studying the results" over the next few days with his wife,
President Cristina Fernandez de Kirchner (CFK),who is reportedly
holed up at the presidential residence.

IN THE OTHER MAJOR DISTRICTS:
--------------


7. (SBU) In the federal capital, De Narvaez's allies -- Mayor
Mauricio Macri's center-right PRO party -- won 31.09% of the vote
with a ticket headed by Macri's former deputy mayor, Gabriela
Michetti. The surprise in the capital was the strong second-place
showing by leftist filmmaker Pino Solanas, who nosed out the Civic
Coalition's Alfonso Prat-Gay (backed by Elisa Carrio) to win
second-place 24.2% to 19.05%. Kirchner-backed candidate Carlos
Heller placed a distant fourth, capturing only 11.6% of the vote.
The showing by Marci's slate was inferior to his 45% vote in the
2007 mayoral election, but he was also the only incumbent in
Argentina's top five electoral districts to prevail in the June 28
election.


8. (SBU) For Peronists searching for someone to lead their party in
the wake of Kirchner's defeat, the Senate race in Santa Fe province
was critical. Media report that Peronist presidential hopeful
Carlos Reutemann narrowly defeated Socialist Ruben Giustiniani
(backed by the Socialist presidential hopeful, Governor Hermes
Binner),42.26% to 40.59%.


9. (SBU) Vice President Julio Cobos's candidates won convincingly in
his home province of Mendoza. With 96.7% of votes tallied, the
Cobos-backed Civic Front-UCR-CONFE alliance won 48.4% of the vote.
The FPV slate came in second, with 27% and the center-right
Democratic party (allied with the PRO) came in third with 14.4%.
This race was a must-win for Cobos, and keeps Cobos's presidential
ambitions alive for 2011.


10. (SBU) In the Senate race for the major province of Cordoba, the
opposition's Luis Juez (backed by Carrio) prevailed in a fractious
field, capturing 30.63% of the vote. The Radical party had a strong
showing, coming in second in the Senate race, with 26.70%, and first
in the race for Deputies with 29.04%. The dissident Peronist slate
supported by current Governor Schiaretti, came in third in both the
Deputies and Senate race. The Kirchner ticket came in fourth.

COMMENT: WINNERS AND LOSERS
--------------


11. (SBU) The big winners in this election appear to be several
presidential hopefuls for 2011, including: Buenos Aires Mayor
Mauricio Macri, whose slate won in the federal capital and whose
ally Francisco de Narvaez gets the glory for knocking out Nestor
Kirchner; Carlos Reutemann, who showed enough strength in Santa Fe
province to keep alive his prospects as the Peronist replacement for
Nestor Kirchner; and Vice President Cobos, whose ticket won handily
in Mendoza. The big losers in this race were the Kirchners and the
governor of Buenos Aires, Daniel Scioli, who ran on Kirchner's
ticket and may have, with his loyalty to the Kirchners, irreparably
harmed his chances for winning the presidency in 2011; and Elisa
Carrio, whose slates ran a distant third in both Buenos Aires city
(traditionally a bastion of support) and province.


12. (SBU) We expect ramifications from this election to unfold
throughout this week and beyond. The first, and very significant
one, is Nestor Kirchner's resignation as head of the Peronist Party.
Future reports will focus on the possible implications of this
election with respect to the bilateral relationship with the United
States, economic policy, and Argentina's political landscape.

KELLY