PRESIDENT Cristina Fernandez's decision to bring forward mid-term congressional elections has heightened uncertainty over Argentina's economic policies and the health of the ruling party. Some businesses are holding off on investments pending the June 28 vote, which will determine whether Fernandez keeps her majority in Congress as she confronts a sharply slowing economy and slumping approval ratings. The elections are seen as a referendum on her troubled 16-month presidency and polls show she could lose the majority, complicating her efforts to keep the economy moving. A Fernandez victory would give her a green light to continue policies that many business leaders criticize as erratic yet a defeat may set off infighting within her Peronist party, leaving her too weak to address economic problems. “Moving up the elections brought forward all of the uncertainty this year's vote already represented, and also generated some new doubts,” said Fausto Spotorno, chief economist at Orlando J. Ferreres & Asociados, an Argentine economic consulting group,. “Caution is the word of the day,” said one prominent business leader who spoke on condition of anonymity. “No one can predict what will happen on June 29,” he said, referring to the day after the elections. The mid-term vote will replace half of the lower house and a third of the Senate. Fernandez called last month for the elections to be held four months early so Argentina could focus on fighting the economic slowdown rather than campaigning. Critics say she wanted the vote to take place before the economy worsens and a fractured opposition could put together alliances against the government, which has been weakened by a lengthy standoff with farmers over taxes. The vote has also raised concerns about what role the new Congress will have. The current mandate for lawmakers ends in December, and the vote may effectively install two Congresses, with it being unclear which wields power. “If the government loses the elections, what happens with the new Congress? Will it have any power? What capacity will the government have to make economic decisions?” said Spotorno. Uncertainty Already facing a string of defections from her Peronist party bloc, Fernandez could see others abandon her if she loses and challenge her policies as attention shifts to the 2011 presidential race. The main focus of the elections will be Buenos Aires province, the country's largest, where 35 congressional seats will be in play under Argentina's proportional voting system. The government has yet to unveil its electoral line-up, but some Fernandez aides and allies have suggested her husband and predecessor, Nestor Kirchner, may run for Congress. Some polls show him holding a slim lead over a rival from a dissident faction with the Peronist party. A Kirchner candidacy would strengthen the pro-government list of candidates and could help Fernandez keep her majority. Some Fernandez backers caused a stir by suggesting the government should bolster its chances by having key allies like the current governor of Buenos Aires province and mayors from the region also stand as congressional candidates. The suggestion drew fierce criticism from the opposition since it could imply they would never actually assume their seats because they already occupy elective offices. The Argentine business leader said it appeared the government was “desperate” and that its “unpredictability only further undermines investor confidence.” Fernandez' credibility with investors has been hit by accusations that her government manipulates official economic data, a long standoff with farmers over export taxes and her decision last year to nationalize private pension funds. “Since the government has to campaign in adverse conditions in terms of popularity and its style is confrontational, that clearly is not good for the economy in this context,” said Federico Thomsen, an Argentine economist. “Now everything is read more negatively.”
