Argentina First Couple Warns of 'Chaos' After Blow at Polls

Argentina's president expressed defiance Monday after voters took away the ruling party's edge in Congress.

Sunday's midterm elections have severely weakened President Cristina Fernandez and her husband, former President Nestor Kirchner, who had warned that "chaos" would ensue if the government lost its legislative majorities.

Instead, markets reacted with relief, and political opponents were invigorated by the reality that the autocratic Kirchners will have to reach compromises to get laws passed once the new senators and deputies take office Dec. 10.

That's an uncomfortable new situation for the ruling couple, who have developed a take-no-prisoners style of politics over the last six years. In a long and rambling news conference, Fernandez acknowledged the need to build new alliances, but said "compromises don't mean giving up your positions."

She noted that the ruling faction still won a plurality of 31 percent of the votes nationwide, and lost in the Buenos Aires province by "a tiny difference."

Kirchner still got enough votes to serve in the Chamber of Deputies, but the setback forced his resignation as leader of the Peronist party, and his hopes of replacing his wife as president again in 2011 now seem to be a long shot.

And while the opposition remains fractured for now, some charismatic figures could pose a threat in the near future, including the man who beat Kirchner — Colombian-born millionaire Francisco De Narvaez.

Other potential leaders include Santa Fe governor Carlos Reutmann, Buenos Aires mayor Mauricio Macri and vice president Julio Cobos.

And if Sunday's losses inspire more of the Kirchners' allies to abandon them, they may become even more reluctant to concede any political battles "for fear of losing all control," said Daniel Kerner, Latin America analyst at the Eurasia Group in New York.

Buenos Aires province governor Daniel Scioli took Kirchner's place as party chief, after a resignation speech in which Kirchner acknowledged their weakened position. Kirchner vowed to keep working "to become a real and potent alternative" before the next presidential election.

Kirchner was widely popular for lifting Argentina's battered economy from the depths of economic crisis to more than 8 percent yearly growth. But his wife hasn't had the same touch. Her approval rating dropped to around 29 percent after she insisted on an export tax hike that stagnated the farm sector. And she came off as unbending when she extended price caps and subsidies, nationalized $23 billion in pension funds and took over Argentina's top airline as part of a larger effort to impose more state control over the economy.