SHOCK MEASURES
Later than scheduled on Tuesday evening, Economy Minister Luis Caputo finally unleashed a battery of shock measures including a steep devaluation of the official exchange rate to 800 pesos and various public spending cuts. On the trade front, the SIRA import restrictions were abolished, accompanied by upping both the PAIS tax on imports and export duties. The main public spending cuts took the form of not renewing the contracts of state employees hired in the past year, the suspension of both any new public works and state advertising and a reduction “to minimal levels” of transfers to the provinces (the cuts also included the reduction of ministries from 19 to nine, which had already been enacted in Milei’s very first decree on Monday preceding Caputo’s announcements). The income tax floor will be readjusted downwards, even if President Javier Milei voted for its virtual elimination when a deputy. Cuts in subsidies leading to transport fare and utility billing hikes and a reversion to updating pensions via presidential decree are on the cards but will kick in early next year, not immediately. The only initiative not reflecting austerity was to double AUH child benefits and increase the Tarjeta Alimentar food stamps by 50 percent. The reaction of the money markets was relatively subdued but supermarket prices quickly moved up in a wide range between 20 and 100 percent, fuel prices surged by up to 45 percent, Aerolíneas Argentinas increased its air fares by 100 percent and a kilo of beef cost 8,000 pesos.
UP YOURS FROM THE LADY IN RED
President Javier Milei’s inauguration last Sunday went smoothly enough with the protocol being duly observed and his speech outside Congress painting the direst picture of the inherited economic situation corresponding to expectations but there was one disruptive note – Vice-President Cristina Fernández de Kirchner responded to shouts of “chorra ("thief")” as she entered the parliamentary precinct by raising an “up yours” finger in the air. During the ceremony she was distinctly more informal and even cordial with Milei than a stiff outgoing President Alberto Fernández. Another major noise buzzing around the social networks in unofficial accounts of the inauguration took the form of a rumour that Milei’s physical image had been Photoshopped/run through an AI filter to give him a slimmer and more elegant look (even a casual glance at the image would indicate so).
NOVEMBER INFLATION
Last month’s inflation was given on Wednesday as 12.8 percent by an INDEC national statistics bureau which will remain under Marco Lavagna in the new administration, an accelerated rate bringing annual inflation up to 160.9 percent (the highest since 1990) and threatening to take 2023 inflation beyond 200 percent. Core inflation (excluding seasonal and regulated prices) was even higher at 13.4 percent while the key item of food and beverages was almost the leading culprit at 15.7 percent, slightly behind health (15.9 percent) and ahead of communications (15.2 percent) among the main factors.
SENATE JOCKEYING
While Martín Menem has been confirmed as Speaker in the lower house of Congress, there was a minor revolution within the tiny libertarian Senate caucus with Bartolomé Abdala of San Luis displacing the original choice of Formosa’s Francisco Paoltroni as the new provisional president. All 39 non-Peronist senators voted in favour while the 29 Peronist senators present abstained, arguing that the session was unconstitutional with the Senate in recess since President Javier Milei had yet to call extraordinary sessions of Congress.
YES TO OECD AND CHINA
Foreign Minister Diana Mondino wasted no time in renewing Argentina’s application to join the OECD (Organisation for Economic Co-operation and Development), discontinued by the previous Frente de Todos government, while ruling out the entry into BRICS (Brazil, Russia, India, China and South Africa) extended to that government. But this did not prevent President Javier Milei from sending a letter to Beijing requesting an acceleration of the currency swap with China – a fact the government did not publicise but was revealed when a Chinese official posted a photograph of the encounter online.
BARRA NOT BARRED
President Javier Milei finally formalised in midweeek the controversial appointment of former Supreme Court justice Rodolfo Barra, 75, as his Treasury Prosecutor in replacement of Carlos Zannini, despite exceeding the age limit of 70. Decree 23/2023 published in the Official Gazette and signed by his entire Cabinet pleaded the rights of the elderly as stipulated in Article 18 of the Inter-American Convention for the Protection of the Human Rights of Older Persons. Barra’s age was not the only motive for controversy – his well-known teenage Nazi sympathies were also cited as reasons for repudiating his choice.
ALBERTO’S PARTING SHOT
A last-minute presidential decree by Alberto Fernández on the eve of leaving office last weekend apparently ordering the state to pick up the bill for the bodyguards of ex-presidents abroad kicked up a storm of opposition criticism before being laid to rest. The move seemed tailor-made for the plans of Fernández to spend the next few months in Spain. Until then the Federal Police had the mission of providing security for ex-presidents only on Argentine soil. Juntos por el Cambio deputies Cristian Ritondo and Graciela Ocaña both urged President Javier Milei to make the repeal of this decree the first action of his administration – it was not but by Wednesday this decree was already history, quashed by another decree with Security Minister Patricia Bullrich (who does not have the authority to issue such a decree) commenting: “The privileges of the political class are being ended.” However, in a strange turn of events, Bullrich then deleted the post and Presidential Spokesperson Manuel Adorni attempted to sidestep the issue before reports. Fernández accused the minister and her team of ordering “a press operation” to tarnish his reputation and observed that his alteration only changed the body responsible for providing such security.
GOP GOES AFTER CFK
Within three days of leaving office, former vice-president (and president) Cristina Fernández de Kirchner again came under fire – this time from the United States where five Republican senators on Wednesday urged sanctions against her for “acts of corruption,” calling her in a letter to US President Joe Biden, “a convicted kleptocrat who stole billions from the state coffers and allowed evil actors such as China and Iran to deepen their corrupt influence in a fundamental ally of the United States, Argentina,” giving as an example a deep space station in Argentina allegedly “controlled by the Chinese military."
TO ERR HUMAN, TO FORGIVE DIVINE
Pope Francis has smoothed over his controversy with the new President Javier Milei, arising from the ferocious insults of the far right leader, by pointing out last Tuesday that campaign politics are one thing and government another in an interview with the Mexican channel Televisa. Before taking office last Sunday Milei had referred to Francis on several occasions as “the evil on Earth occupying the throne in the house of God,” also calling him “sinister” and “imbecile,” as well as criticising him for “pushing Communism.” The reconciliation started with a telephone call from the Pope after his runoff victory last month, when the president- elect invited Francis to visit his homeland “with all the honours of a head of state and as the spiritual leader of Argentines because Catholicism is the majority religion.” Yet the Pope gave no details as to his response to that invitation in Tuesday’s interview.
WOMAN DIES IN FIRE
A woman died on Tuesday as a result of a fire on the sixth and seventh floors of the building adjacent to the Labour Secretariat (formerly Labour Ministry – one of the portfolios downgraded by the incoming Javier Milei administration). At least 42 people suffering carbon monoxide poisoning had to be treated in hospital.
VENEZUELAN PLANE SHUNTING
The Venezuelan Emtrasur freight plane, grounded at Ezeiza International Airport since mid-2022 on suspicions of terrorist links due to the presence of Iranians among its crew, made its first moves in 18 months last Tuesday, circulating around secondary runways without taking off in what airport sources described as routine maintenance manoeuvres ordered by Ezeiza authorities. Meanwhile its Venezuelan owners express pessimism about ever recovering the aircraft.
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