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Intel Brief: Argentina’s President Milei's controversial economic reforms face strong opposition and protests

 
Dyami Map Argentina




Date: 05/01/2024

Where: Argentina

Who’s involved:  Newly elected President of Argentina Javier Milei, Argentinian Congress Security Minister Patricia Bullrich, Argentinian civil society, workers unions and activists 






What happened?

  • On 20/12/2023, Argentina’s new President Javier Milei, who officially took office only in December 2023 after being elected on 19/11/2023, issued a 366-article Decree of “Necessity and Urgency” (DNU) to radically deregulate Argentina’s economy. He claims that this will boost the country’s exports,  investment, and international trade. 

  • The DNU technically took effect on 28/12/2023. However, the measures are currently under review by the Argentinian Congress. The revision, which started on 26/12/2023, will last until the end of January 2024. The DNU must be approved by at least one of the two chambers to remain in force

  • The DNU is the first step of the "shock therapy" to revive the Argentine economy promised by Milei in his electoral campaign. The DNU proposes lowering income tax for high earners, eliminating dozens of state regulations, devaluing the national currency - already devalued by 50 percent since Milei took office - to open the door to the dollarization, and the privatization of several state-owned companies, including Aerolíneas Argentinas, the oil company YFP, and the country's largest bank, Banco de la Nación. Moreover, the decree announces the establishment of a "state of public emergency in economic, financial, fiscal, pension, defense, tariff, energy, health, administrative and social matters until December 31, 2025." 

  • President Milei’s DNU provides about $20 million in cuts to public expenses and services, like education, transport, and healthcare. It also abolishes fixed prices for essential goods and the price ceilings of the Tenancy Law, which are expected to severely affect the lower-income working class. A key section of the DNU is dedicated to regressive labor reforms which would result in substantial restrictions on workers' protections, benefits, and rights. Also, the decree provides for a ban on the right to strike in the sectors of "essential services," including health care, education, banking, energy, transportation, exports, industries, and hospitality.

  • The decree also reinforces the new anti-protest protocol issued by Security Minister Patricia Bullrich, which authorizes security forces to shut down protests that block the streets and increases detention penalties for protesters. Additionally, Milei threatened to reduce the social benefits for anyone who violated the new anti-protest measures

  • From 22/12/2023, thousands took to the streets of Buenos Aires and major cities to demonstrate against the DNU, perceived to be unconstitutional and undemocratic.  The General Confederation of Workers (CGT) has announced that protests will continue until the repeal of the decree and has called a general strike for 24/01/2023. The DNU is spawning strong opposition nationwide, so much so that even more moderate members of Milei's coalition have expressed concerns about the mega-decree

Analysis:

  • Decrees of necessity and urgency (DNUs) are exceptional mechanisms under the Argentine Constitution that allow the executive to enact or amend laws in a situation of emergency, without prior debate by Congress. Milei declared that the economic crisis and inflation in Argentina justify using the measure. In deference, the opposition objected that the DNU does not meet the requirements of the Constitution. 

  • The DNU is currently in force, but to remain in law, it needs to pass several legislative hurdles. The DNU must first be evaluated by a permanent bilateral committee of Parliament to assess the requirements of "necessity and urgency." Next, the DNU will be examined in the Chamber of Deputies and Senate plenary sessions. However, the two chambers of Parliament can only reject or accept the DNU but cannot amend or modify it. The DNU will finally enter into force if only one of the chambers approves it by an absolute majority. Given Milei's party's lack of a majority in the chambers -40 out of 257 seats in the Chamber and 7 out of 72 votes in the Senate - it is likely that the decision will be postponed until 01/03/2024, which will guarantee sufficient time to create a majority consensus. 

  • Milei’s DNU 70/2023 represents an unprecedented use of executive power by Argentine administrations, as there has never been a decree of this kind containing as many measures. Also, the DNU presents several critical and controversial aspects. First, if approved, this DNU declares the extension of the two-year emergency period, implying that the Milei government could introduce extraordinary measures, holding both legislative and executive power until the end of 2025, bypassing the legislature even on issues usually entrusted to Congress. This would jeopardize the rule of law and the functioning of Argentina's democracy

  • The DNU includes substantial restrictions on the civil rights of minorities and workers. Particular attention should be paid to the heavy restrictions on the right to strike and the new repressive capabilities envisioned by the state apparatus. In addition, the DNU includes restrictions on forming and operating social organizations, thus altering the social democratic framework and affecting the Argentine population's freedom of expression,  participation, and opposition. Not surprisingly, the DNU measures, which directly impact the working class, are fomenting fervent protests. Despite the deterrent of the new anti-protest laws, it is very likely that the resistance from the opposition will persist at least until Congress decides on the validity of the decree.

  • The core of Miles's DNU is the deregulation of trade, industries, and services to revitalize Argentina's economy, based on the dubious idea of the creation of a system of free competition that allows and values private free decision and the initiative of individuals. Currently, Argentina's economy is experiencing a deep crisis, with inflation exceeding 160% and 40% of the population living in a condition of poverty. Whatever the economic effect in the long-term, the implications of this measure will likely be destructive for the Argentinian people, especially for the working class. Not only could deregulation create greater disarray instead of boosting the country's economy, but the drastic cuts in government subsidies and services could push more of the population into poverty.


Conclusion:

Milei's DNU appears to be the first step in Latin America’s most radical economic reform in recent decades. The outcome of such radical reforms is likely to cause major disruptions to Argentine politics and society. Despite the tightening of anti-protest laws, the decree will likely continue to foment strong opposition and resistance from Argentinian civil society organizations. The protesters consider the decree unconstitutional and directed at demolishing the democratic foundations of the Argentine state, and is likely to cause considerable unrest in the coming weeks. 


 
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