Market soars as Macri-Pichetto ticket broadens ruling coalition

por Federico Poore
The Essential, 13-06-2019

Mauricio Macri has chosen a veteran Peronist senator as his vice-presidential candidate. Miguel Ángel Pichetto, 68, could breathe new life into the worn-out president’s attempts to tame a growing crisis of governability amid questions over Argentina’s ability to repay a multibillion bailout to the International Monetary Fund. A low-profile deal-maker for Peronist governments of all ideologies, Pichetto was a key ally of former president Cristina Kirchner until the very end of her 2007-2015 administration.
In a week full of surprises, this was perhaps the greatest.
Macri described Pichetto as “a statesman” with a deep “commitment” to the country’s institutions. Pichetto, in turn, called on to “maintain a capitalist path,” arguing that voters this year will get to choose “between a capitalist model and a model of socialist intervention with a closed economy, currency restrictions and import controls” — his description of what Argentina would look like if the Fernández-Fernández ticket wins the race for the Casa Rosada.
Expanded coalition, market celebration
“The incorporation of Pichetto may not immediately add votes, but it significantly improves governability until and after the elections,” wrote Hernan Ladeuix of AR Partners in a note to investors. Market reactions were quick. Hours after the announcement, bonds rallied, stocks soared by 15 percent in just two days, the peso strengthened, and the Country Risk index fell below the 1,000-point psychological mark.
Including the Peronist senator for Río Negro was a bold move to counteract the much-publicized deal between Cristina Kirchner and centrist Peronist Sergio Massa that was hurting the ruling coalition’s chances in October.
The road to the deal began a month ago, when Pichetto was the first opposition figure agreeing to sign a 10-point document with the government calling for fiscal responsibility and payment of debts, while Massa’s flirting with Cristina Kirchner was growing stronger. From that point onward, the romance between Macri, Pichetto and investors only grew.
Pichetto’s nomination was also accompanied by a rebranding: the weary Cambiemos [Let’s Change] electoral trademark was replaced for “Juntos por el Cambio” [Together for Change] during yesterday’s registration deadline. The new brand, which suggests a broadening of the coalition, will be used by both Macri and Buenos Aires Province Governor María Eugenia Vidal in this year’s elections.
“The Macri-Pichetto ticket is likely to have an overall positive effect, especially among independent Radical voters who were disappointed with Macri. He’s seen as a leader that was becoming too self-absorbed,” political consultant Analía del Franco told The Essential.
Juan Manuel Pazos, chief economist at TPCG Valores, said Macri’s choice of vice-president is designed to expand Cambiemos beyond its base, to break the momentum that Cristina Kirchner had built over the past few weeks, and “to enhance the government’s ability to build majorities in Congress during the next term.” The last could be a game-changer: Macri never enjoyed a Senate majority.
“For Peronists seeking power, the decision has morphed from ‘CFK or the highway’ to ‘CFK or Pichetto.’ This will change the dynamics of the race,” Pazos said. “We expect the government to actively try to woe other non-Kirchnerite Peronists into the coalition.”

But who is Miguel Angel Pichetto?
The Washington Post characterized Pichetto as an “opposition figure” — but this is not exactly true.
As a lawyer and head of the Río Negro province chapter of the Justicialist Party (PJ, Peronist), Pichetto first backed the radical free-market reforms initiated by president Carlos Menem (1989-1999). At the turn of the century, he was elected senator and soon became a staunch defender of both caretaker president Eduardo Duhalde (2002-2003) and the left-leaning Kirchner administrations (2003-2015). Throughout his career, he showed impressive party discipline and it was not until Cristina Kirchner left the government that he voiced his negative opinion of her last years in power.
Over the last three years, he continued to build his “moderate” image, alternating criticism and praise for the Macri administration and even helping the president pass some of its most controversial measures in the Upper House, such as the 2017 pension reform and the payment of more than USD 9.3 billion to holdout creditors.
Last year, he became one of the founders of Alternativa Federal, a small political force comprised of “moderate” leaders from the Peronist opposition set up to capture voters disappointed with Macri’s government but also unwilling to support Cristina Kirchner’s return to power.
When Massa (arguably the most powerful leader of this third way) left the group to sign a deal with the Kirchnerite opposition, and with his Senate term expiring in December, Pichetto began to soften his early criticism to Macri’s economic policies. According to Pichetto, his decision to join forces with the center-right president “was a process of rapprochement after my trip to New York,” referring to two separate meetings he held on April 24 with representatives of Black Rock and VR Capital, and another one at Barclays, where he insisted that Argentina “will meet its obligations.” The gesture was of enormous help for the Macri administration, which at the time was struggling with a bond selloff and a run against its currency.

A question of identity
The solidification of Massa’s electoral deal with the left-leaning Peronist ticket of Alberto Fernández and Cristina Kirchner meant that maintaining Cambiemos’ “purist” identity was increasingly costly. Cabinet Chief Marcos Peña was the main proponent of repeating a “pure PRO party” candidacy such as the Macri-Michetti ticket that won the 2015 presidential elections, but lost to pressure from allies of the ruling coalition.
“Macri has put an end to a style of making politics he has been proposing since 2007. He no longer looks for women that ‘soften’ his image [such as former running mates María Eugenia Vidal and Gabriela Michetti] but to a man that can bring ‘virility’ to it. He’s stepping aside from his ‘new politics’ style, getting into a more traditional model instead,” political scientist Andrés Malamud said in a column.
On Sunday, the ruling Cambiemos administration scored its first gubernatorial victory of 2019 after incumbent Jujuy Governor Gerardo Morales obtained 43.7 percent of the votes and secured his re-election. Morales took the microphones and called on widening the coalition, saying the Macri government was betting too much on an all-or-nothing approach that could end up with them losing a runoff vote against Kirchnerism. And even if they won, the Jujuy leader continued, there’s the question of the “morning after.”
“No government will be able to rule the country (after 2019) if it doesn’t create a great political agreement,” Morales told La Nación.
Mendoza Governor Alfredo Cornejo, another UCR member and the big winner of last Sunday’s provincial primaries, also proposed a “big electoral front” including Radical party leaders and moderate Peronists. Many were expecting Macri to pick Ernesto Sanz, a former senator for Mendoza and key UCR figure, as his running mate. But Sanz said no and the other strong option, Radical lawmaker Martín Lousteau (who acted as Macri’s Ambassador to the United States) will almost certainly be running for a Senate seat in Buenos Aires City. So Pichetto it was. A veteran Peronist, a moderate, a serious man, a doer.

Fresh start for pollsters
“There lies the true purpose of this move. Maybe Pichetto ‘gets in the way’ of some of Massa’s potential voters and draws them towards the Macri-Pichetto ticket,” political consultant Ricardo Rouvier told The Essential.
Rouvier is preparing a new nationwide poll now that all the main presidential candidacies have been outlined. Del Franco agrees this is a completely new game.
“I’ve seen some polls that showed surprisingly high levels of support for a potential deal between Massa and Alberto Fernández. We’ll have to see what happens now with the Macri-Pichetto ticket on a table,” the consultant said.
Wednesday also came with the news that former economy minister Roberto Lavagna and Juan Manuel Urtubey, the conservative governor of Salta province that was part of the now-defunct Alternativa Federal, signed a last-minute deal to run for president and VP, respectively.
“It’s a modest coalition that will play a modest role in the elections,” Rouvier said. “But they’ll surely steal some votes from Macri.” So far in 2019, the ruling coalition has lost 427,000 votes compared to four years ago. Macri cannot afford to lose any more.

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