Argentina's leftwing government is led by two people named Fernández: President Alberto Fernández and his vice president, the almost equally powerful former President Cristina Fernández de Kirchner.
The two have always been odd bedfellows, and often clash over policy. But lately their disagreements have reached fever pitch, fueling rumors of a split that could hurt the president's reelection odds next year amid a worsening economic crisis: sky-high inflation, a plummeting peso, capital controls, and Argentina's usual piling debt.
Why don't the president and the VP get along, and what does that mean for Argentina's political future? We get some clarity from Eurasia Group's Daniel Kerner and Luciano Sigalov.
Why was the recent resignation of the economy minister such a big deal?
Fernández had no plan to replace now-former Economy Minister Martin Guzmán when he resigned on 2 July via Twitter, while Cristina — popularly known by her first name in Argentina — was delivering a speech.
Guzmán was one of the president's closest advisers and one of the few officials that still stood with him despite increasing pressures to resign from Cristina and her group. Fernández struggled to find a replacement because nobody wanted to take the post unless guaranteed a strong political backing to conduct needed adjustments, and this, of course, was absent.
Just a few weeks before, Economic Development Minister Matías Kulfas also left the cabinet due to infighting with the VP.
Why have tensions been mounting between the president and the VP?
Cristina has been very critical of the $44 billion debt restructuring deal with the IMF signed earlier this year, arguing that Guzman didn’t negotiate hard enough with the IMF as former President Mauricio Macri did in 2018.
In parallel, she resents Fernández and Guzmán for spending cuts mandated by the IMF that in her view led to the Peronistas losing big in last November's midterm elections. On top of this, Cristina thinks that the president and Guzmán have not been tough enough on the private sector to curb rising inflation and protect dwindling US dollar reserves.
Fernandez's attempts to rebut these criticisms have always resulted in more attacks from Cristina and her allies, generating a vicious cycle of ever-escalating attacks within the ruling coalition. Overall, the VP believes the government should borrow and spend more to boost support for the administration, which is risky given high inflation and lack of resources.
Who’s really calling the shots?
Nobody, and that's the problem. Cristina is by far the most influential figure in the ruling coalition, where she has de-facto veto power. A two-time president (2007-2015), she captained the creation of the Everybody’s Front, and it was her idea to field Fernández against Macri in the 2019 presidential election. But she avoids taking responsibility for policy, so we have a government with no plan and driven mostly by inertia.
Who do you think will prevail in the long run?
Tensions will remain high, and likely unresolved. Fernández is unlikely to resign, as he wants to finish his term, while Cristina doesn't want to cause an even deeper crisis if she becomes president. At this point, it's evident that Cristina is the most relevant stakeholder of the ruling coalition and always ultimately prevails. Therefore, she will become more active in the coming months as she tries to influence policy-making and shape who runs for president in 2023.
What is the outlook for the IMF program?
Guzman's replacement, Silvina Batakis, sent a signal of moderation by reaffirming the government's commitment to the IMF agreement, in an effort to play down the perception that she would cave to pressure from Cristina to drive policy into further interventionism. But this was not enough to calm foreign exchange and local debt markets. For the moment, a full renegotiation of the IMF program looks unlikely, though there might be talks to alter some points of the program (Batakis is meeting IMF officials for the first time on Monday). While Cristina is unlikely to push for a quick break, she will resist adjustments — especially as the presidential race approaches, increasing the likelihood that targets won’t be met. In this scenario of a heightened political crisis and weak economic leadership, going into arrears with the IMF will depend much more on the IMF’s flexibility than on how Argentina implements the deal.
How will the split affect next year's election?
Cristina wants to decide who the candidates will be — of course not Fernández, despite his intention to run for re-election. She will be more active in the coming months as she will attempt to shape the ticket, but there are no seriously competitive Peronista candidates. Also, the VP might think twice before settling on a candidate to avoid repeating her mistake of picking a “traitor” in Fernández.
If Macri, who is as polarizing a figure for the left as Cristina is for the right, decides to run, she could feel compelled to compete herself. Nonetheless, Macri’s candidacy could intensify divisions within the opposition coalition Together for Change.
Overall, the administration’s troubles will benefit the opposition. But the real wildcard is growing discontent with the political class as a whole.