Thursday, July 18, 2024

ARGENTINA | 27-06-2024 12:01

Congress set for final showdown on Milei's sweeping reform package

Session scheduled to begin at midday and signs indicate the Milei government will secure its first legislative victory since taking office more than six months ago.

President Javier Milei is poised to score his first legislative triumph in Congress on Thursday as his sweeping economic reform package – albeit scaled down after six months of setbacks and lengthy debate – goes for final approval in the lower house.

Starting midday, lawmakers in the Chamber of Deputies will examine and debate amendments introduced by the upper house Senate to Milei’s so-called 'Ley de Bases' omnibus reform bill and accompanying fiscal package.

The debate began Thursday amid a heavy security operation in and around Congress following clashes between the security forces and demonstrators earlier this month when the Senate signed off the reforms.

If approved, Milei will be granted additional legislative powers for a year, an incentive scheme for large investments over 30 years, a relaxation of labour laws and the authorisation to privatise a number of public companies. Other changes are also included in the sweeping bill, which has more than 200 articles.

Deputies will also review an accompanying package of fiscal reforms, with both bills now closer than ever to becoming laws. It has been a tortuous process for the Milei administration, which has seen lawmakers introduce amendments in both houses. 

Milei’s La Libertad Avanza ruling party does not have majorities in either congressional chamber and has been forced to conduct arduous negotiations with allies to secure passage for its package.

The lower house, chaired by Speaker Martín Menem, is expected to vote in favour of amendments introduced by the Senate, though the libertarian caucus may see pushback on the reinstatement of income tax and a levy on personal assets.

Originally, the 'Ley de Bases' – which Milei launched with great pomp as the foundation of his government's plans – contained more than 600 articles intended to liberalise and deregulate the economy. But after a failed vote last February, the bill was slashed to 238 articles. 

The new version has been approved by the lower house and earlier this month, the Senate signed off too, though it also introduced amendments. The lower house must now sign off on those changes: deputies can either accept or reject them. 

To secure approval, the government has removed some state firms from the privatisation list, inducing flagship carrier Aerolíneas Argentinas, the Correo Argentino post office and Radio y Televisión Argentina (RTA), which controls Public TV and Radio Nacional.

A planned reform of the pension system, which would have eliminated a moratorium benefitting those who failed to match 30 years of minimum contributions, has also fallen. Another of the most contentious points remains income tax. 

Cabinet Chief Guillermo Francos said Wednesday that the government will insist on approving the original text of both bills in a debate that is expected to be lengthy.

Deputies can either accept the Senate's amendments or reject them and insist on the reintroduction of the original text of the bills. The Executive branch will have to enact the law or can veto it in whole, or in part.

The area around the National Congress building was fenced off on Thursday morning in advance of anticipated protests. 

Representatives from left wing parties Frente de Izquierda y de Trabajadores - Unidad and Nuevo MAS have confirmed they will take to the streets. A number of social organisations, including Polo Obrero, the Corriente Clasista y Combativa and UTEP, among others, will also demonstrate.

The National Security Ministry said that it would be enforcing Patricia Bullrich’s “anti-picket” protocol to ensure protesters do not block roads. 

Officers from the Federal Police, Border Guard, Coast Guard and City Police were to be deployed as part of the operation.

Security forces and protesters clashed earlier this month as the Senate debated Milei’s reform package. Incidents tipped over into violence, with tear gas and water cannons used against demonstrators and two cars set alight in the vicinity of Congress.

More than 30 arrests were made, though most were later released from custody.

Politically, approval "will mean a total success for the government," said political scientist and economist Pablo Tigani.

But economically, "it will be a return to the policies of the 1990s, with deregulation, privatisation and unconditional opening of the economy, which will cause a hard blow to industry and small and medium-sized national businesses, with a phenomenal transfer of income to the most concentrated sectors of the economy," he added.

In this sense, he warned that "laws do not mean much when the economic and social situation is explosive."

"I see problems of governability and a President who is in checkmate due to the social situation, despite having his laws," he explained.

Argentina, with its economy in recession and annual inflation running at 280 percent year-on-year as of May, suffered a 5.1 percent collapse in Gross Domestic Product in the first quarter of this year. More than half of its population currently lives in poverty.

Since Milei took office in December, indexes measuring inequality in wealth distribution have worsened to the highest since 2008.

"Getting the first law is of great political importance, but the government now has a new challenge because the opposition is going to begin to generate a completely different policy from that of the last six months," he said.

This will force Milei "to prioritise management, to be much more of a President and to stop promoting the character that allowed him to get this far," he said.


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