Ex-Argentine President Néstor Kirchner Dies

By MATT MOFFETT

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Associated Press

Argentina's former president Néstor Kirchner, pictured here on July 6, 2010, has died.

BUENOS AIRES—The death of Néstor Kirchner, a former president who is considered the power by the throne in the government of his wife, Cristina Kirchner, raises big question marks over Argentina's political future ahead of next year's presidential election.

The populist Mr. Kirchner, 60 years old, died early Wednesday morning of a heart attack, after being hospitalized for the third time this year. He had an angioplasty after a heart attack in September.

Mr. Kirchner had been expected to seek another term in 2011 presidential elections or be instrumental in his wife's re-election campaign.

In the seven years in which either Mr. or Mrs. Kirchner have governed Argentina, the state has greatly expanded its role in the economy, while the tone of politics has been marked by sharp disputes between the government and opposition.

Mr. Kirchner's death increases the chances that Mrs. Kirchner will be the standard bearer for the left in Argentina's October 2011 election and the symbol of her husband's legacy. A report by Barclays Capital said that Mrs. Kirchner is likely to benefit from a "wave of sympathy." She had been doing somewhat better in opinion polls during the past year, partly due to rapid growth in Argentina's farm-based economy.

But Argentine pollster Mariel Fornoni said that governing or campaigning without her husband will be "a test of fire" for Mrs. Kirchner, who was widely considered to rely heavily on her late husband's political guidance.

"It's very early to say what will happen, because [Mr. Kirchner's] personalist style was an essential part of this government," Ms. Fornoni said. "The panorama has been changed suddenly and will have to be reconfigured."

One name to watch is Buenos Aires province governor Daniel Scioli, who has remained loyal to the Kirchners while also maintaining ties to farmers and parts of the private sector that the Kirchners have alienated. It's conceivable he could emerge as a consensus candidate to unite the governing Peronist party, Barclays noted.

But the death of Mr. Kirchner could also better the chances of a number of more pragmatic candidates who had suffered under Mr. Kirchner's withering attacks. One of these is Julio Cobos, Mrs. Kirchner's vice president, who broke with the Kirchners two years ago after siding with farmers in a dispute over raising grain export taxes.

Another politician with his eye on the presidency is Mauricio Macri, the conservative mayor of Buenos Aires who has been ensnarled in a lawsuit over wiretapping that he says was trumped up by Kirchner allies.

In 2003, Mr. Kirchner, then a little-known Patagonian governor, won the presidency, largely because some bigger names in the Peronist party were hesitant to seek the job after an economic collapse in 2001-02. Under Mr. Kirchner, the economy enjoyed a strong recovery, aided by booming Chinese demand for Argentine soybeans.

But Mr. Kirchner's highly interventionist economic policies weren't welcomed by foreign investors. Negotiations on restructuring Argentina's world-record breaking $100 billion sovereign bond default in 2001 were overtly hostile, with Mr. Kirchner taking a take-it-or-leave-it strategy on a bond exchange offer that finally took place in 2005. Earlier this year, that exchange was reopened to investors still holding nearly $20 billion in bonds.

Wednesday morning, after news of Mr. Kirchner's death, Argentina's bonds rallied. The country's risk premium on JPMorgan's Emerging Markets Bond Index Global tightened 0.53 percentage point to 5.42 percentage points over U.S. Treasurys, lifting it 3.17% and making it by far the index's top performer.

"It's analogous to a stock rallying 5% when a bad CEO leaves [or] dies," said Sara Zervos, an international debt portfolio manager at Oppenheimer. While there will be a short-term uncertainty, Ms. Zervos said, "in the long run, the market … will see this as the first clear opportunity for significant, positive political change in Argentina."

By the time Mr. Kirchner engineered the presidential candidacy of his wife, a longtime legislator, in December 2007, Mr. Kirchner's combativeness was wearing thin with Argentines.

Just a few months after she came into office, Mrs. Kirchner became embroiled in a bruising battle with farmers over an export-tax increase, which—coupled with the global recession—sapped much of her support.

Mr. Kirchner appeared to enjoy confronting his political adversaries. He frequently dismissed public advice that he slow down and refrain from what by all accounts was a frenetic schedule filled with daily campaign-like events and speeches.

The Kirchners had enjoyed a resurgence of sorts over the past year thanks to the fast growing economy and missteps by their political opponents.

Goldman Sachs in a research note said that "a cabinet reshuffle over the next few months should not be ruled out."

Write to Matt Moffett at matthew.moffett@wsj.com