Cambiemos moving closer towards majority in the Senate

25th July 2019

By Ezequiel Zambaglione

Cambiemos moving closer towards majority in the Senate

The ruling Cambiemos coalition has never managed to fully control Argentina’s Congress, forcing it into long and sometimes expensive negotiations with minority parties to pass laws or block opposition initiatives.

But research shows that, after a potential re-election, the government will be much closer to a majority in the Senate, where the seats up for renewal are those won in the 2013 election, when Cambiemos wasn’t yet formed.

</p> <p>If the projections are accurate, the more ambitious reforms it failed to pass during its first period, such as <a href="https://gettheessential.com/economy/2019/07/25/labor-reform-pension-reform-argentina-macri-election-imf">raising retirement age or making it easier to hire and fire employees</a>, could be within reach in 2020.</p> <h2><strong>6 more seats plus Pichetto</strong></h2> <p>The Mauricio Macri-Miguel Ángel Pichetto ticket is expected to increase the number of benches in the Senate from 25 to 31. To have majority in the Chamber, 37 votes are needed.</p> <p>Macri hopes Pichetto could be enough to bring 6 additional Peronist senators to the government’s side. The task is still difficult, but at least negotiations will be easier with Pichetto in the team, a man who used to lead the non-kirchnerite Peronist caucus in the Senate and is known for his deal-making abilities.</p> <p>Significantly, the Senate is expected to become more polarized through a decrease in PJ benches and an increase of both Frente de Todos and Juntos por el Cambio benches. The present polarization in society would be severely replicated in the Senate, where each of the main parties would have 40% of the Chamber.</p> <p>Controlling the majority of at least one chamber is important per se, as both the Senate and the House of Representatives are needed to reject decrees issued by the President. Even if further negotiations would still be needed in the House to pass a law, a stronger position in the Senate would already strengthen Macri’s grip on power.</p> <h2><strong>Up for renewal</strong></h2> <p>Argentina’s Senate has one third of its benches up for renewal every two years, with elected senators holding their bench for a six-year period once they are voted in.</p> <p>Each of the 24 electoral districts gets 3 benches. In each district, the winning party gets 2 and the runner-up gets the third. This year, the 8 electoral districts voting to renew their benches will be: Buenos Aires City, Chaco, Entre Ríos, Neuquén, Rio Negro, Salta, Santiago del Estero and Tierra del Fuego.</p> <p>The ruling Cambiemos coalition only holds 4 benches in those 8 districts (2 from BA City, 1 from Entre Ríos and 1 from Salta), while the Kirchnerite <em>Frente para la Victoria</em> will have to gamble 11 benches (2 from Chaco, 2 from Entre Rios, 1 from Neuquén, 2 from Rio Negro, 2 from Salta and 2 from Tierra del Fuego). Non-Kirchnerite Peronists will need to defend 2 seats (Neuquén and Santiago del Estero), and the other 7 benches to be renewed belong to other minority and regional parties (1 from Buenos Aires City, Chaco, Rio Negro, Neuquén and Tierra del Fuego and 2 for Santiago del Estero).</p> <p>As the chart below shows, Cambiemos currently holds 25 benches plus 2 that tend to sympathize with the ruling coalition, while Kirchnerism and Kirchnerite Peronists group 30 votes plus an additional 5 sympathizers, leaving them just two shy of a majority. This means that, as of today, the government needs to negotiate with almost all the rest of the Senate to pass a law or to stop the opposition from launching initiatives against it.</p> <p><strong> </strong><img class="wp-image-1637 aligncenter" src="https://gettheessential.com/wp-content/uploads/2019/07/senado1-300x190.png" alt="" width="466" height="295" srcset="https://gettheessential.com/wp-content/uploads/2019/07/senado1-300x190.png 300w, https://gettheessential.com/wp-content/uploads/2019/07/senado1.png 450w" sizes="(max-width: 466px) 100vw, 466px" /></p> <h2><strong>A 2020 forecast</strong></h2> <p>Looking into how the Senate will look like in 2020 is significant because it gives us an indication of the levels of governance the next administration could obtain. Securing a majority will be crucial to be able to pass some priority <a href="https://gettheessential.com/economy/2019/07/25/labor-reform-pension-reform-argentina-macri-election-imf">reforms</a> (pension and tax, among others).</p> <p>As mentioned, <em>Cambiemos</em> currently has 25 senators, of whom only 4 will need to run for renewal. It is expected to obtain 10 senators (the 4 it already has and 6 extra ones) to reach 31, still 6 away from majority.</p> <p>These other six senators are expected to be dragged from Peronism to <em>Juntos por el Cambio</em> (<em>Cambiemos</em>&#8216; new name for the 2019 election) by Pichetto. If these conditions are met, then Macri could have a potential majority in the 2020 Senate.</p> <p>Below is a prediction of the new senators by party and coalition, using provincial elections and polls as a forecasting mechanism.</p> <p><strong> </strong><img class="wp-image-1635 aligncenter" src="https://gettheessential.com/wp-content/uploads/2019/07/senado2-300x125.png" alt="" width="674" height="281" srcset="https://gettheessential.com/wp-content/uploads/2019/07/senado2-300x125.png 300w, https://gettheessential.com/wp-content/uploads/2019/07/senado2-600x251.png 600w, https://gettheessential.com/wp-content/uploads/2019/07/senado2-768x321.png 768w, https://gettheessential.com/wp-content/uploads/2019/07/senado2.png 885w" sizes="(max-width: 674px) 100vw, 674px" /></p> <h2><strong>Increased polarization</strong></h2> <p>Our main takeaways from the table are:</p> <ol> <li><em>Cambiemos</em> is expected to maintain the 4 benches it will be updating while adding 6 new benches: 1 from Chaco and 1 from Salta, 2 from the party <em>Juntos somos Río Negro</em> (Pichetto’s province), 1 from Neuquén (added by Pichetto), and 1 potential from Tierra del Fuego. This would bring Cambiemos to a core of 31 senators. This scenario is favorable relative to the current scenario: Macri would be 6 senators away from obtaining a majority. The idea is that Pichetto will be working to attract those votes from the available current Peronist senators.</li> <li><em>Frente de Todos</em> is also likely to have a good election in terms of control in the Senate, especially with regards to the core Kirchnerite supporters. The candidates named in the tickets suggest that Kirchnerite politicians will gain ground at the expense of non-kirchnerite Peronists.</li> </ol> <p>Even if the <em>Frente Todos</em> is expected to merely maintain or even lose one seat, the party will have a more homogeneous and loyal composition.</p> <p>This implies further polarization in the Senate, leaving <em>Cambiemos</em> on one side, Kirchnerism on the other side, and very little in the middle, a similar takeaway from the one seen in the Lower Chamber.</p> <p><strong> </strong><img class="wp-image-1634 aligncenter" src="https://gettheessential.com/wp-content/uploads/2019/07/senado3-300x144.png" alt="" width="490" height="235" srcset="https://gettheessential.com/wp-content/uploads/2019/07/senado3-300x144.png 300w, https://gettheessential.com/wp-content/uploads/2019/07/senado3-600x287.png 600w, https://gettheessential.com/wp-content/uploads/2019/07/senado3.png 608w" sizes="(max-width: 490px) 100vw, 490px" /></p> <p>

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Ezequiel Zambaglione

Ezequiel Zambaglione is the Head of Strategy at Balanz Capital, a leading investment firm in Argentina. He holds a master in Mathematics of Finance from Columbia and worked at Puente and Roubini Global Economics.