SUBJECT: A profile of Roberto Lavagna, likely opposition candidate in 2007.
SIGNIFICANCE: Lavagna's probable presidential candidacy has generated strong disquiet in the government, despite President Nestor Kirchner's seemingly unassailable lead in opinion polls.
ANALYSIS: Roberto Lavagna was appointed economy minister by interim President Eduardo Duhalde in April 2002, at the height of the economic crisis, and retained by President Nestor Kirchner, who took office in May 2003.
Strong economic recovery was widely attributed to Lavagna's management, as was the successful restructuring of defaulted debt in 2005, although efforts to combat rising inflation proved less effective.
However, Lavagna remained an outsider in the Kirchner cabinet, most of whose members were long-time associates of the president, and his independent attitude caused frictions. He was also involved in sharp clashes with Planning Minister Julio de Vido, a Kirchner intimate, over alleged lack of transparency in public works tenders, and was the only member of the cabinet who did not campaign for Senator Cristina Fernandez de Kirchner in the October 2005 elections. On November 28, 2005, he was dismissed from his post and replaced by Felisa Miceli, a self-denominated "soldier of the Kirchnerist cause".
Political profile. While Lavagna, aged 64, is a technocrat with a more academic than political profile, his political (if not electioneering) skills are widely acknowledged. He is well connected across a range of 'progressive' tendencies:
* Although a Peronist, Lavagna served as secretary of industry and foreign trade under Radical President Raul Alfonsin from 1985-87.
* He was appointed ambassador to the EU and the WTO by the Alianza government headed by President Fernando de la Rua (1999-2001).
Although Lavagna maintained a low public profile after leaving the ministry, in recent months a presidential candidacy next year has been widely mooted, raising both media attention and public expectations that make an about-face unlikely. He has the backing of some Peronist legislators linked with Duhalde (and at odds with Kirchner), and of much of the Radical leadership, including Alfonsin. This link appears mutually promising: Lavagna has a good image but lacks a party, while the Radicals lack a credible candidate but maintain a national party structure (although a number of Radical governors are now allied with Kirchner).
Lavagna also maintains respectful relations with Mauricio Macri, leader of the centre-right Compromiso para el Cambio, who is likely to stand either for president or mayor of Buenos Aires; Lavagna could support a (potentially successful) Macri mayoral bid. While Macri has hinted that he would welcome a formal alliance, Lavagna has rejected this on ideological grounds, though a decision may eventually depend on whether an alliance or separate presidential candidacies appear more likely to force a second round.
* Policy stance. Although Lavagna has yet to announce his candidacy formally, he has recently criticised various government policies, in an effort to reinforce his image as policy-driven rather than opportunistic:
* State intervention. In a July 30 interview with Brazilian newspaper Folha de Sao Paulo, Lavagna noted that economic policy had shifted to greater emphasis on 'price fixing' and government involvement in the economy, as evidenced by its share acquisition in airline Aerolineas Argentinas and the takeover of water company Aguas Argentinas. Lavagna warned that the state lacks resources to maintain an expanded role in such enterprises.
* Presidential power. Lavagna has also criticised Kirchner's accumulation of power, including the consolidation of the Cabinet Chief's faculty to reassign or increase budget funds without congressional approval and the use of government decrees.
* Energy. Lavagna has warned that declining hydrocarbons output, failure to add new generating capacity since 2000 and delays in tendering energy projects represent a serious threat to sustainable growth.
* Mercosur. The recent entry of Venezuela, with strong Argentine backing, runs the risk of distorting the bloc's political agenda, according to Lavagna.
* Public finances. Solid growth and fiscal performance have raised greater spending demands, affecting provincial governments in particular; Lavagna has warned that some provinces may enter into deficit by 2007 (the largest, Buenos Aires province, will do so this year).
* Security. The issue of rising crime is regarded as one of the most serious among citizens and is an especially sensitive one for the government, given the lack of progress on this issue and recent statements by Interior Minister Anibal Fernandez to the effect that the "sense of insecurity", rather than actual crime, had increased. Lavagna recently dismissed proposals for reform of the criminal code and called for greater coordination between the police and the Justice Ministry to enforce existing legislation.
Opinion polls. Current opinion polls give Lavagna little chance of victory (although he will certainly rise if his candidacy is formalised):
* According to a poll carried out by OPSM between June 27 and July 7, Kirchner would receive 61.3% of the votes if elections were held now, to 12.1% for Lavagna and 10.5% for Macri. If Fernandez de Kirchner were the government candidate, she would win by 36.6%, to 16.0% for Lavagna and 10.5% for Macri. In a second round, Kirchner would defeat Lavagna by 73.6% to 22.0%; while Fernandez de Kirchner would win by 63.5% to 27.3%. This poll also indicated that 77.7% thought economic policy had improved or remained constant since Lavagna was dismissed, while 58.4% regarded Kirchner as the architect of economic recovery (against 26.3% for Lavagna).
* According to a national poll by CEOP in July, Kirchner has a positive image among 75.0%, in comparison with 59.0% for Fernandez de Kirchner, 44.5% for Lavagna and 36.8% for Macri. However, a parallel study carried out jointly by four polling firms gives Kirchner 60.0% of voting intentions, with 12.0% for Macri and 8.5% for Lavagna; Fernandez de Kirchner would receive 43.0% of the vote, to 16.5% for Macri and 12.0% for Lavagna.
Nevertheless, Lavagna's relatively high profile, the respect he commands both domestically and internationally, and his ability to exercise an opposition role on the centre-left has generated disproportionate insecurity within the government -- not least given the possibility that he could force a second round run-off in which he would attract support from a range of opponents. Recent government statements have concentrated on criticising both his candidacy and his economic management -- in particular with regard to inflation. This will make it crucial for the government to try to reduce inflation this year, in an effort to discredit his performance as minister. A Lavagna rise in the polls may also influence the decision as to whether Kirchner or Fernandez de Kirchner will be the government candidate, based on the calculation of their respective chances of first-round victory.
CONCLUSION: Although Lavagna will not win next year, his potential candidacy has shaken the government's complacent attitude towards a fractured opposition, demonstrating his ability to influence the political panorama. This may help to define a coherent opposition platform that will gain influence as growth slows, raising pressure on the government to adopt more prudent fiscal and monetary policy in a second term.