Argentine inflation seen issue in 2011 vote

BUENOS AIRES (Reuters) - Soaring food prices hitting Argentina's poor will hurt the chances of any candidate backed by President Cristina Fernandez in next year's presidential election, an opposition leader said on Wednesday.

Eduardo Duhalde, a former president who governed during the country's 2001-2002 economic crisis, intends to compete for the candidacy of the ruling Peronist Party ahead of the October 2011 vote.

Once a prominent backer of former President Nestor Kirchner, Fernandez's predecessor and husband, Duhalde is now a vocal government opponent known for his political connections in the working-class neighborhoods that form the backbone of Fernandez's political base.

As Fernandez struggles with popularity ratings of around 25 percent and with her support dwindling among Argentina's middle-class, Duhalde predicted it would be difficult for any government-allied candidate to hold onto power next year.

"Inflation is hitting the poor very hard and the middle class is already disenchanted with the government," Duhalde said at the Reuters Latin American Summit in Buenos Aires.

Analysts forecast inflation could clock more than 20 percent this year, potentially driving increasing numbers of Argentines into poverty as their incomes fail to cover basic food costs.

Fernandez blames the hikes on what she calls price-gouging businessmen and has used price controls to try to rein in the costs of basic foodstuffs. Critics say the government has not done enough to tackle inflation.

PRESIDENTIAL CAMPAIGNS

Fernandez is not expected to run for re-election next year, and it remains unclear who will represent her faction of the Peronist party. Many analysts believe Kirchner, who succeeded Duhalde in 2003, will make a bid for a second term.

Asked if he expected the ex-president to run, Duhalde responded, "It will depend on the how the economy is doing. I don't think he will, but we'll have to wait and see."

Along with Duhalde, Buenos Aires Mayor Mauricio Macri and Congressman Felipe Sola have publicly said they plan to launch presidential campaigns.

A recent poll looking at a potential Peronist primary showed Duhalde with less than 10 percent support, trailing Kirchner, who had more than 15 percent. It also showed around 40 percent of voters were undecided.

Duhalde, a former governor of Buenos Aires province, remains a power broker in the Peronist party because of his relationship with mayors in working-class suburbs in the province, home to more than a third of the electorate.

His candidacy marks a change of course for Duhalde, a caretaker president who stepped down from power vowing he would not seek elected office again.

He took over the presidency in 2002 appointed by Congress after the country went through five presidents in a week as economic upheaval triggered deadly street protests, a mammoth debt default and a sharp currency devaluation.

Duhalde, who out of office served as an official at the Mercosur trade bloc and now heads an Argentine think-tank, said he was motivated to run for the presidency again because he felt the Kirchners were putting the country on the wrong path.

He criticized Fernandez's governing style as polarizing and said her economic policies lacked a medium-term plan for developing Argentina's industries.

"We need a government project (to develop the economy) and people willing to support it who are willing to take on Kirchner," Duhalde said.

He added that former Economy Minister Roberto Lavagna, who served as economy minister under both Duhalde and Kirchner, would play a prominent role in his government if he wins.

Lavagna is widely credited with helping to craft Argentina's recovery from the crisis and launched a failed presidential bid in 2007.

"I'm not motivated by an personal interest," Duhalde said before taking one of several sharp digs at the government during the interview. "I just want to bring Argentines together and stop us from embarrassing ourselves in the region."

(Additional reporting by Jorge Otaola)