The 2019 Presidential And Petro-Province Elections In Argentina
The outcome of both the national and provincial elections will have a profound impact on energy related policy in Argentina, both in terms of who governs and their policies but also how politically in sync the president and petro-province governors are. With this piece, the Baker Institute’s Center for Energy Studies launches a series of previews and reports on the national and petro-province elections in Argentina. The series will offer previews of upcoming provincial elections along with post-election evaluations of the results and their policy consequences. It will also provide updates on the state of play in the presidential elections at key junctures in the presidential election process.
Petro-Province Election Previews and Post-Election Reports
Two Argentine provinces dominate Argentina’s natural gas and oil production: Neuquén and Chubut. Neuquén accounts for 52% of Argentina’s natural gas production and 24% of its petroleum production, followed by Chubut, which accounts for 7% and 30% respectively.
Four intermediate provincial actors in the production of natural gas and petroleum are: Santa Cruz (9% of natural gas, 18% of petroleum), Mendoza (3% and 15%), Tierra del Fuego (9% and 2%) and Río Negro (4% and 6%). Off shore production under national government jurisdiction accounts for 11% and 1% of the respective production, with four other provinces combined producing 5% and 4%.
Argentine governors have the power to set the provincial election date, most often strategically choosing the date that will provide them or their preferred successor with the best chance of victory. To that end, of the 22 gubernatorial elections in 2019, between 16 and 19 will be held prior to the October 27 presidential election.
Neuquén (Election Preview: March 4, Post-Election Report: March 11). The provincial election season kicks off with the March 10 gubernatorial and provincial legislative elections in Neuquén, home of the Vaca Muerta. Governor Omar Gutiérrez (2015-19) of the Neuquén Popular Movement (MPN), which has governed the province continuously since the return to democracy in 1983, is seeking re-election. Gutiérrez faces eight challengers, with his two principal rivals being the mayor of Neuquén’s capital city, Horacio “Pechi” Quiroga of President Mauricio Macri’s Let’s Change alliance and Peronist Ramón Rioseco, an ally of former Presidenti Cristina Fernández de Kirchner.
A Gutiérrez victory would result in a continuation of the positive status quo for natural gas and oil development in the province, as would a Quiroga victory, with the caveat that an MPN exit after 36 years in power could create some short-term instability in the provincial administration and foster a more politicized environment in the province than has been the case in recent years. A Rioseco victory would generate all of the short-term instability and politicization of a Quiroga victory with the added negative impact of policies and actions less conducive to oil and gas development as well as a high degree of friction, unlike either Gutiérrez or Quiroga, with the Macri Administration (assuming Macri wins another four-year term in October).
Río Negro (Election Preview: April 2, Post-Election Report: April 8). On April 7, Río Negro will elect its governor and provincial legislature. Candidate filing does not close until February 11, but Governor Alberto Weretilneck, leader of a local political party, Together We Are Río Negro, is running for re-election, although some in the opposition are planning on challenging his candidacy in court. It is unclear who President Macri’s candidate will be (though National Deputies Sergio Wisky and Lorena Matzen are the front-runners), but it is a near certainty that Peronist Martín Soría, mayor of General Roca and an ally of Cristina, will run.
Weretilneck’s re-election, would, as in Neuquén, result in a continuation of the positive status quo for oil and natural gas development in Río Negro. A Wisky/Matzen victory would signify the same, with the added benefit of more cordial and fluid ties with the national government. A Soría victory could lead to policies that are less conducive to energy development in the province, and would without question lead to a heightened level of friction and conflict with the Macri Administration.
Chubut (Election Preview: June 3; Post-Election Report: June 10). On June 9, Chubut will elect its governor and provincial legislature. Governor Mariano Arcioni, of the Peronist Federal Alternative alliance, will run for re-election. National deputy Gustavo Menna is the consensus nominee of President Macri’s Let’s Change alliance. Peronists who are aligned with Cristina are debating whether or not to support Arcioni or compete directly against him and Menna. The April 7 mandatory primaries will provide a good indicator of the relative popular support for the candidates (and will be analyzed in the April 8 post-election report on Río Negro).
Arcioni’s re-election would lead to a continuation of the positive status quo for oil and natural gas development in Río Negro. A Menna victory would also maintain this status quo while at the same time fostering a greater level of cooperation and confluence with the national government (once again assuming a Macri victory).
The dates of the Mendoza, Santa Cruz and Tierra del Fuego previews and reports will be determined once the election date is announced. The Mendoza and Santa Cruz elections could be held concurrently with the presidential contest, with the first round of the Tierra del Fuego election, along with a near certain second round gubernatorial runoff, most likely taking place in June.
Presidential (National) Election Previews (June 25, August 12, October 21, November 19) and Post-Election Reports (October 28, November 25).
The Argentine GDP declined by 3% in 2018 and is projected to decline by 2% in 2019 and the 2018 inflation rate of 48% is not expected to drop below 25% this year. President Macri’s approval ratings are upside down, only about one-third of voters say they will vote for him in the first round, and surveys suggest a moderate/pragmatic Peronist (Federal Alternative) such as Sergio Massa (2015 presidential candidate) or Juan Manuel Urtubey (Governor of Salta) would defeat Marci in a second round runoff.
Fortunately for Macri, current polling data suggest neither Massa nor Urtubey has a realistic prospect of making it into a runoff. Macri and Cristina (Citizen Unity) respectively enjoy the support of 32-36% and 31-35% of likely voters with neither Massa (13-17%) nor Urtubey (11-15%) in the same ballpark when presented separately as the Federal Alternative candidate. And, Macri is still well positioned to defeat Cristina in a runoff. But, Macri’s re-election depends in part on the nascent economic recovery expected to take place during the second semester of 2019, a recovery that could be thwarted if investors, business leaders and average citizens begin to believe Cristina could win, something that could send the economy into a tailspin at the exact time Macri needs it to be improving.
A Macri victory is vital for the continuation of the Argentine government’s current productive natural gas and oil development policies. Were Cristina to win, we would see a return to greater government intervention in the energy sector ranging from price controls, enhanced regulation and more de facto extortion as well as a substantial weakening of the rule of law and the value and sanctity of contracts. While the Macri Administration has adopted a long-term approach toward the energy sector, a Cristina Administration would pursue a much more short-term strategy regarding price controls, currency controls, regulations, confiscation and extortion that would provide short-term benefits for her government but have long term negative consequences for the energy sector and the country.
For the presidential race there are four key dates: June 22, August 11, October 27 and November 24. June 22 is the last day for candidates to formally file for federal office, and on that date we will know for certain if Cristina is running, who is competing for the Federal Alternative nomination, and which Peronists are supporting Cristina, which are supporting the Federal Alternative nominee and which are staying on the sidelines. Argentina’s mandatory primaries (August 11) will provide an excellent gauge of true popular support for Macri and Cristina, as well as for the Federal Alternative nominee. The presidential and congressional elections are on October 27, and November 24 is the date of the likely runoff.
Four previews of the state of play of the presidential campaign will be provided immediately before and/or after these critical junctures of the campaign process on June 25, August 12, October 21 and November 19. The post election reports will appear on October 28 and November 25.
Mark P. Jones is the Joseph D. Jamail Chair of Latin American Studies and the Director of the Center for Energy Studies’ Argentina Program at Rice University’s James A. Baker III Institute for Public Policy.