Can Argentina's economy chief helm Peronist 'shipwreck' to election win?

By Nicolás Misculin

BUENOS AIRES (Reuters) - Argentina's Economy Minister Sergio Massa is an unlikely hero for the embattled ruling Peronist party. Under his watch, inflation surged to 116%, the poverty rate hit 40%, dollar reserves ran dry, debt rose, and the peso sunk to record lows.

But the 51-year-old lawyer, a political wheeler-dealer, has pulled off something of a coup, defusing fierce infighting and opposition within the leftist coalition and gaining backing as a unity candidate to lead it into elections in October.

The Peronists, down-and-out just months ago as the economy reeled, have an outside shot at victory. Massa, a pragmatic centrist, is the most popular presidential candidate, according to polls, though overall he lags the center-right opposition ahead of primaries on Sunday that will give a snapshot of voter sentiment.

"Massa is not the ideal candidate, but a float in the middle of the shipwreck," said Andres Malamud, a political analyst, adding that the Peronists had been forced to back a centrist presidential candidate over a leftist one to avoid being pushed into third place.

Massa, who finished third in the first round of voting when he ran for president in 2015, is the clear favorite to lead the Union por la Patria coalition into the October election after seeing off a bid in June by a more left-leaning rival allied to powerful but divisive Vice President Cristina Fernandez de Kirchner.

Since then, the Peronists have rallied around Massa, hoping to boost their chances of avoiding heavy defeat against the Together for Change conservative bloc, currently split between two candidates, and outsider libertarian Javier Milei.

"I don't know if the entire bloc is happy, but the whole space is convinced that we are playing a difficult game and that what's ahead is very complicated for society. The opposition is always worse," an official from the so-called "Kirchner" wing of the Peronist movement said, asking not to be named.

"It's important to have Peronism unified and feel it's a competitive formula. There is a broad agreement to have unity."

Massa, nonetheless, faces a daunting task to win over voters. Argentines have seen their salaries and savings eroded by soaring inflation, while businesses have been hurt by tight capital controls and sky-high interest rates.

Even if he wins, Massa would need to tame price rises, rebuild the South American country's net foreign currency reserves, which many estimate are in negative territory, rework a stuttering $44 billion debt deal with the International Monetary Fund (IMF) and avoid further defaults.

'BEING PRAGMATIC, SOLVING PROBLEMS'

Agustin Rossi, the current chief of staff and candidate for vice president on Massa's ticket, told Reuters that the economy minister's handling of incredibly tough challenges played in his favor, despite many economic metrics continuing to worsen.

"He took the Ministry of Economy at a difficult time and he is steering the ship more than adequately. In Peronism, that is highly valued, not running away from difficulties," he said.

Massa, however, is between a rock and a hard place. The left criticizes him for cuts in social spending, while conservatives say he is not doing enough to reduce the fiscal deficit.

The son of Italian immigrants, Massa was chief of staff under Fernandez de Kirchner for a year, before falling out with the former two-term president and setting up his own party. He later returned to the Peronism and became a congressman.

Despite a mixed relationship with the Peronists' powerful left wing, Massa used his deal-making skills and wide networks to convince the coalition he was the ruling bloc's best shot at appealing to moderate voters and avoiding defeat in October.

"He is a person who works a lot on building relationships. He does not speak only with his own people, but also with those who think differently, he speaks with practically the entire opposition," an adviser to Massa for some two decades said on condition of anonymity.

"He prides himself on being pragmatic, solving problems."

The current government of centrist President Alberto Fernandez, who opted against seeking reelection as his polling numbers slid, said the coalition had been forced to adapt.

"Coexistence is currently very good within Peronism because the politics was put in order when our interests were unified," a government spokesman told Reuters, asking not to be named.

"No sectors were left out of the candidate lists; if we win the elections, I think harmony will continue."

(Reporting by Nicolás Misculin; Additional reporting by Jorge Otaola; Editing by Lucila Sigal, Adam Jourdan and Paul Simao)