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The first 45 days of Milei


29 January, 2024


Javier Milei won the elections in Argentina on November 19, 2023 with 55.65% of the votes in a second round of elections, after having obtained 29.9% in the first round of the general election. This led to a scenario where Milei finally has majority citizen support and very limited parliamentary support. Since, of a total of 257 deputies, La Libertad Avanza (LLA) has only 38 and of a total of 72 senators, 7. Days after Milei began to serve as president of the Argentine nation, he issued a mega Decree of Necessity and Urgency (DNU) and sent a mega “omnibus” law to the Chamber of Deputies. It is a mega DNU because it contains a total of 366 reform measures and an “omnibus” mega law because it contains 664 articles. The DNU has already come into force and must be accepted completely (en bloc) yes or no, by a bicameral body of Congress made up of 8 deputies and 8 national senators. If the bicameral votes in favor (since democracy arrived 40 years ago, a DNU has never been rejected in Argentina, although a president has never sent a decree with 366 measures to accept them en bloc) the DNU will pass to both chambers, and if one of both chambers approves it, it will continue in force. If both chambers reject it, the DNU will be suspended.


Meanwhile, the DNU is in force and proposes measures such as the repeal of the rental law, repeal of the gondola law, repeal of the national purchase law, repeal of the industrial and commercial promotion law, repeal of the regulations that prevents the privatization of public companies, reform the customs code, modernization of the labor regime, modification of the civil code, modification of the commercial code, modification of the regulatory framework of prepaid medicine and social works, modification to the regime of pharmaceutical companies, deregulation of satellite internet services, deregulation of the tourism sector, etc. The repeals and deregulations are of such magnitude that the DNU intends to put in the hands of the president the decision to implement more than 300 measures in the industrial, commercial, labor and even civil fields. In relation to these unilateral measures that the president intends to take upon himself, the Chamber of Labor has already issued a precautionary measure that puts a stop to the fourth chapter of the DNU, in which the labor reforms are listed (with the objective of deregulating the labor market).



Respecto a la ley “ómnibus”, fue discutida durante todo el mes de enero, y finalmente tras arduas negociaciones con la oposición más negociadora (el PRO duro, parte del PRO blando, parte de la Unión Cívica Radical, parte de la Coalición Cívica y del Peronismo republicano federal), el oficialismo logró un dictamen de mayoría con disidencias parciales. La bancada de Unión por la Patria (el ex kirchnerista Frente de Todos) presentó un dictamen de minoría en rechazo al proyecto oficial. 



The main dissidents of the dialogueist opposition legislators are focused on the denial of the increase in withholdings on exports, the pensioner update system, political financing, and the mechanism through which the government intends to decide on privatizations. Thus, after the modifications to the original text of the “omnibus” law, the ruling party will now seek to have the mega law discussed in the Chamber of Deputies next Thursday, February 1.

 


La devaluación del peso impulsada apenas asumió Milei y la inflación que prosigue



After the great official devaluation days after Milei took office, the dollar went from almost 400 pesos to 800 pesos, which is how Milei's Economy Minister implemented a devaluation greater than 100%. Meanwhile, the blue dollar (the parallel dollar that moves according to what the market dictates) remained at 1070 pesos and then fell to 990 pesos. However, at this time, 45 days into Milei's administration, the parallel dollar has already climbed to 1,245 pesos, once again increasing the gap between the official dollar and the parallel dollar. The mega devaluation of the official dollar promoted by the government, which considered that the exchange rate remained strongly behind, led to a sincerity of prices, which implied a skyrocketing increase in prices.



Thus, the price of fuel went from costing 0.30 cents per liter to 1 dollar, medicines, appliances, clothing, cleaning supplies, and mainly food increased their prices in a chilling manner. The last monthly inflation measurement in December 2023 showed the figure of 25.5% and Milei frequently communicates that we should expect these inflation figures for a few more months. In supermarket shelves, most products suffered price increases much higher than the average figure measured by INDEC of 25.5%, reaching a 100% increase in many products in the basic basket. And Milei insists that we will have to suffer several more months of very high inflation.


 


Milei's pragmatism is undergoing mutations



Milei, before becoming president, fought with Pope Francis, with Together for Change and with Patricia Bullrich in particular, who was one of his great competitors until the general election on October 22, with Lula da Silva, the president of Brazil. with the Argentine caste, etc., and once elected president, the rapprochement and reconciliation with the Pope began, the rapprochement, reconciliation and inclusion of Patricia Bullrich to LLA, where she began to occupy the senior position in the Ministry of Security ; For her part, the new chancellor Diana Mondino has already brought closer positions with Brazil, and the caste that she questioned so much from Together for Change and Union for the Homeland already occupy national, provincial and local positions alongside LLA. President Milei decided to choose the appropriate pragmatism, mainly taking into consideration that, with 38 deputies, 7 senators, no provincial governor and no municipal mayor, it becomes very difficult to govern.



However, this pragmatism in the 45 days that he has been governing has shown mutations, since when the opposition legislators (the dialogueists and the non-dialogueists) spoke out against several points of the "omnibus" law, he held them responsible, claiming that the delay in Voting for the mega law is what led to the rise of the parallel dollar, which was climbing, as mentioned, from a value of 990 pesos to 1,245 pesos. Thus, according to Milei, the lack of support from Congress to approve the record time of extraordinary powers for two years with the possibility of extending them to two more years (his entire government management) is the cause of the increase in the dollar and the consequent inflation. Milei needs the support of legislators and attacking them instead of persuading them seems to show that the president at times loses the pragmatism of the first days of his administration.


However, this pragmatism in the 45 days that he has been governing has shown mutations, since when the opposition legislators (the dialogueists and the non-dialogueists) spoke out against several points of the "omnibus" law, he held them responsible, claiming that the delay in Voting for the mega law is what led to the rise of the parallel dollar, which was climbing, as mentioned, from a value of 990 pesos to 1,245 pesos. Thus, according to Milei, the lack of support from Congress to approve the record time of extraordinary powers for two years with the possibility of extending them to two more years (his entire government management) is the cause of the increase in the dollar and the consequent inflation. Milei needs the support of legislators and attacking them instead of persuading them seems to show that the president at times loses the pragmatism of the first days of his administration.


However, Milei had begun his administration trying to achieve a good dialogue with the unions, knowing that, if he negotiates and does not confront them, governance in the streets is more protected. The same thing happened with the governors, in none of the 24 provinces is there an LLA governor, and for this reason, Milei's relationship with the governors tried from the beginning to be cordial and very friendly. However, during these last few days, in the context of several governors rejecting some articles of the “omnibus” law, such as the one that proposes the increase in withholdings on agricultural exports, Milei literally told his Minister of Economy, Luis Caputo and his highest collaborators “I am going to leave them without money, I am going to melt them all, if the law is not approved the provinces will be the most affected,” while the Minister of Economy posted on his social network X ( ex Twitter) in a kind of direct threat towards the provinces "I met with the Secretary of the Treasury and the Undersecretary of the Provinces to outline all the provincial items that will be cut immediately if any of the economic articles are rejected." In this way, it could be seen during the last few days how the pragmatism of the beginnings of the government, regarding the relationship with all the provincial governors, is also faltering.



Do the union protests, the left and Kirchnerism detract from Milei's legitimacy?


We have had more than a decade of severe crisis in Argentina after the last government of Cristina Fernández de Kirchner since 2011, the Cambiemos government under the presidency of Mauricio Macri since 2015, and during the last four years the Kirchnerist government chaired by Alberto Fernández and vice chaired by Cristina Fernández de Kirchner, which since 2019, subjected us to the highest monthly inflation rates and ranked third as the nation with the highest level of interannual inflation globally (after Lebanon and Venezuela). When Milei came to power, year-on-year inflation was already climbing to 140%. This last Kirchnerist government, after its terrible management, generated at the same time that, for the first half of 2023, poverty reached, according to the INDEC, the figure of 40.1%, indigence of 9.3%, and that 56, 2% of children from 0 to 14 years old are poor (in relation to this last data, there was an increase of 5.3% compared to the first half of 2022).


And while inflation, poverty, destitution and child poverty escalated in a chilling way, with even more intensity in the period of the last Kirchnerist government, the leftist movements and the unions did not demonstrate, Alberto Fernández did not submit to any general strike. For this reason, unions, leftist movements, and Kirchnerism today present a very negative image to civil society, so negative that an outsider who was very opposed to these groups ended up winning the last election in Argentina. For this reason, today the union, leftist, and Kirchner protests do not seem to detract from Milei's legitimacy, but rather empower him.



Milei's empowerment may have its limit



The empowerment that Milei does not have in Congress does have it before public opinion, which is why he won the last election, and as mentioned, the criticism and protests of those largely responsible for this fatal crisis that the country is going through, far from diminishing his support citizen to the president increases it.

Does this mean that Milei has governance assured? No, he is not assured if he is not more friendly and conciliatory with Congress where he is in a hyper-minority, if he continues to threaten to withdraw resources from the provincial governors, and he is not assured after the short term, not even before public opinion. public, if together with its announcements that inflation in the coming months will remain the same or worse than the last one (25.5%), it does not establish a roadmap capable of communicating to citizens how much and to what extent the suffering will be and if it does not set a limit to the shock of structural adjustment, because citizens surely have a threshold limit of suffering.

To think that among the poor and middle sectors it will be possible to tolerate inflation continuing to escalate like this for months and the rates of public services being increased unexpectedly is daring. Therefore, perhaps it is not the unions, the social movements, or Kirchnerism that can put Milei's governability in check, but the citizens, even those who voted for him, if the president does not warn that it is unbearable to endure the levels of inflation and the adjustment that continues to communicate that they must continue to be supported in the short and medium term.


Does Milei propose real change or does she intend to return to the past?



Milei proposed a change so much that Together for Change lost the seal of change, to the point that after Milei's victory, the Together for Change coalition seems to continue disarming (the Civic Coalition has already formally communicated the withdrawal of the Cambiomist space, the PRO hard Macrista is already forming ranks behind Milei's LLA, a large part of the radicalism is analyzing how to continue, federal republican Peronism has already allied itself in an interbloc in Congress with the Civic Coalition and Córdoba Peronism). Milei proposed a change and won by proposing a change, a big change. However, for many, the new president intends to return to two models already experienced in the past.


A model that should be traced back to the mid-19th century, whose prosperity lasted until the beginning of the 20th century. In Argentina at that time, a model called Agroexporter predominated, from which Argentina exported agricultural products to Europe and imported manufactured products from the Old Continent. It was a prosperous time economically, because the product that measures the growth of the economy presented us with a astronomical figure that placed us as a true economic power. Argentina was the breadbasket of the world because Argentine grains spread throughout the world.


But at this time, socially, the majority of Argentines suffered from enormous deficiencies; The gross product grew because the wealth of the agro-exporters, of the owners of the large estates that represented a small elite in society, grew, while the vast majority of the population suffered great hardships.

Articulated with this, the rich elite that led Argentina to the economic peak was also the one that governed or elected those who governed. No more than 200 Argentine families could vote or be voted to lead the institutions and bureaucracy. Therefore, together with a model of enormous economic development we found ourselves with a political model that was described as limited democracy until 1912, where the conservatives in power, for long years flagged behind the National Autonomist Party (PAN), governed for decades uninterruptedly. , through fraud and with elections often won at gunpoint, where citizens were forced to vote for the conservative party.


But in 1912 the Sáenz Peña law was enacted, and thus we were able to begin to enjoy the universal, secret and obligatory vote, and when in 1916 the first post-Sáenz Peña law elections were held, and we enjoyed the right that all men of legal age Vote, without fraud and without guns, the first model that President Milei venerates is over.



The other model that Milei claims is much more contemporary, that of the 1990s, a decade where Convertibility allowed Argentina to stabilize its economy, stop suffering from the inflationary scourge, and this took place at a time when The international interest rate fell, that of the Latin American region became attractive, and so in 1989 the Brady plan was designed to restructure the external debt, and all countries, Argentina too, were able to sign their new plan to be able to get out of default after what became known as the lost decade, since since 1982 all countries in the region remained in default after military dictatorships.



The 1990s brought the entire region out of default, and Convertibility in Argentina along with a package of pro-market structural reforms led to overcoming the enormous fiscal and inflationary scourge. But this eternal Convertibility, with a sustained appreciation of the local currency, led Argentina to become the most expensive country in the world, and then the Argentine industry suffered and went bankrupt, and this led to the emergence of, along with deindustrialization, a growing unemployment, and the growing unemployment sustained over time generated a growing social disintegration, and all this occurred while corruption expanded throughout all areas of the State, starting with the leadership where the then president, Carlos Menem, accumulated a dozen corruption cases throughout his two presidencies and was finally convicted for paying bonuses to officials of his government and for the sale of the Sociedad Rural property.



An inefficient Recontra government like that of Fernando De la Rúa could not emerge successfully from this plot of corruption and this eternal Convertibility, and so after a boisterous and violent crisis of governability, with pots and pans in the streets and wounded and dead, he had to President De la Rúa left power two years before, and a little later, the Kirchners came to power (not to forget that the hardships that the 1990s bequeathed to us led the Kirchnerimo to present himself as “the healer” ” of those hardships).

These are the two models claimed by President Milei. And these two models do not represent a change, but a return to the past, to a past that led us to this present, a present where suffering is brutal.



Author:

Sandra Choroszczucha

Political scientist and Professor at the University of Buenos Aires.

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