G.BREUER
DESDE 1869
G. BREUER's Newsletter
June 2007
Dear Clients & Friends,
We are sending to you the monthly edition of our Newsletter where you will find an update on:
Hoping that you find this issue as interesting as our previous ones, please do not hesitate to contact partners Jorge Otamendi (joo@gbreuer.com.ar) and Alberto Navarro (anavarro@gbreuer.com.ar) for any specific question you may have after reading it or for any other issue you may need advise on.
Best regards,
G. BREUER
25 de Mayo 460
Buenos Aires - Argentina
Tel: +54 114313 8100
Fax: +54-11-4313-8180
This month, the most relevant political news is related to the elections that took place in two Argentine jurisdictions: the mayoral election in the city of Buenos Aires and the election for governor in the province of Tierra del Fuego.
Considering the status of Buenos Aires as capital of the republic, all eyes were focused on the capital city’s mayoral election. The mayoral elections took two rounds, the first was on June 3, where Mauricio Macri (a leader of the centre right coalition PRO) -together with his running mate, Patricia Michetti- won with more than 45 % of the votes. Very far behind came the current administration’s candidate Daniel Filmus, who in a very tight race outdid Jorge Telerman, current mayor of the city of Buenos Aires.
The two main candidates conducted a very different campaign. The frontrunner, Mr. Macri, focused on municipal issues and did not engage in personal attacks to his opponents. Mr. Filmus, on the other side, engaged in a very aggressive campaign helped by the entire administration and the direction of his attacks to the incumbent mayor, with whom he was fighting to enter into the ballotage or second round.
The local electoral law states that an election is won in first round if the leader holds more than 50% of votes only. Otherwise, another election has to be held with the two candidates with higher number of votes. Based on this regulation, Mr. Macri and Mr. Filmus competed in the second round, which took place on June 24, where Mr. Macri obtained 61% of the votes.
The second round campaign by the official candidate was much less focused on attacks than his first round campaign, since polls showed that the more aggressive the attacks became, the more the electorate went in favor of the opposition. In another very interesting twist, polls suggested that the more Mr. Kirchner became involved in the campaign attacking Mr. Macri, the more the electorate favored Mr. Macri.
All of that said, and with the result of the elections already known, we have to say that the mayoral election of the city of Buenos Aires was a devastating defeat by the administration, which had been announced.
The importance of this defeat is marked by the fact that it created a clear leader in the opposition, Mr. Macri, and also because it is a worrisome signal to Mr. Kirchner’s intentions for the next presidential elections in October 2007.
Mr. Kirchner should have realized by now that there is a critical mass of voters ready to carefully scrutinize the movements of this administration and that cannot be rushed to conclusions with dirty campaigns and easy ideological divisions. Such electorate will focus on achievements and then decide who to vote for president, and this administration has plenty of areas in which it has seriously performed under the expectations of the general public of the city of Buenos Aires, like in the energy crisis -currently in its peak with massive power cuts throughout the industrial sector-, the allegations of corruption -as in the Skanska case- and of lack of respect for democratic institutions. And the negative evaluation of the public of the city in those areas may have had a clear influence on June 24 and such influence may appear again in October for the presidential elections.
To ratify the alert sign for the current administration, in Tierra del Fuego the opposition also won the governorship to Mr. Kirchner’s candidate. Besides the fact that for the first time a female governor was elected, it is worth pointing out that the elected governor comes from a center-left political party, which indicates that this administration also faces criticism from its own side of the political spectrum.
As a result of both elections, it may be said that the current administration faces now a reality that is different from the one it had prior to the elections. For the first time, the opposition seems to be creating serious alternatives to be in power. And also for the first time, a devastating amount of voters, 60% of the electorate of the city of Buenos Aires, have clearly indicated that a change is necessary and that dirty campaigns and aggressive speeches are not enough to win an election.
All of that, together with the real, actual and important substantive problems that Argentina faces, may cause changes in the always volatile Argentine political scenario.
Mr. Kirchner thought that he was having an easy ride towards his reelection, or for the election of his wife Cristina Fernandez. And that may not longer be the case, although it is still believed that the Kirchners’ chances are beyond dispute.
Because of the more uncertain political scenario pointed out before, the manner in which the current administration deals with the energy crisis, the allegations of corruption, the pressure on inflation and the result of coming elections in other provincial elections may be critical to see how easy the Kirchners’ ride will be, if it is.
The economy continues to expand, but there are still plenty of questions as to the continuity of the current expansion due to the overt -now- energy crisis and infrastructure deficit. Those matters together with inflation, the value of the dollar and price controls, will behave to be addressed sooner or later and most likely will be the subject of future G. BREUER's Newsletters.
Speaking about expansion, the economic activity in April increased 8.0% since April 2006, due to a boom in consumer spending. A poll made by 12 local and international analysts estimated a growth of between 7.5% and 9.3% in the government’s EMAE (Economic Activity Index), which measures most of the elements of the gross domestic product.
Analysts reported that the consumer spending boom spread due to the strong wage growth that took place to accompany the unrecognized inflation. Investment, on the other side, showed a minor expansion due to the less construction activity.
You may read the June edition of our Boletín Informativo, G. BREUER’s monthly publication focused on general legal information sent to our Argentine clients & friends.
- For more information on local legislation, you may see the June edition of our Boletín Informativo sent to our Argentine clients & friends.
G. BREUER
25 de Mayo 460
Buenos Aires - Argentina
Tel: +54 11 4313-8100
Fax: +54 11 4313-8180
Please note that the information given in this bulletin is for general purposes only and does not aim to provide comprehensive legal advice on any issue.
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© G. BREUER, 2007