Congress Approves Economic Reform Bill, Argentina

Argentina’s Chamber of Deputies, the lower house of the nation’s Congress, approved a reform bill targeting the nation’s economy in the country’s latest attempt to revitalize the economy following the election of Libertarian economist Javier Milei to the presidential office.

The Bill:

The bill addresses a number of issues, including the reinstitution of income tax for single workers who earn over 1.8 million Argentine pesos (ARS) (2,053 USD) a year meanwhile, married couples with two children will have a cap set at 2.2 million (2,509 USD), a cut on taxation of assets below 100,000 USD, an increase in deductions for family housing expenses with the bar being raised from 56 million ARS to 350 million, allowing entities to deduct more of their housing expenses from their taxable income, more powers for the President regarding key sectors such as administrative, economic, financial, and energy for a period of one year, alongside the privatization of nine companies including Aerolíneas Argentinas, Enarsa (a state owned oil and gas extraction company), Radio y Televisión Argentina, and Intercargo, while a number of entities will face partial privatization among other reforms.

The bill was originally dubbed the Omnibus Bill but was later renamed the “Bases Law” following massive cuts in the length of the bill. Originally sitting at 600 articles, the bill now stands at 250 following negotiations with the ruling party, their allies, and the opposition.


Deputies Romina Diez and Bertie Benegas Lynch during discussions around the bill. (Photo – Reuters/Agustin Marcarian)

The bill further addresses key labor reforms, including the increasing of workers’ “trial period” in a company, which will allow employees with 6–100 workers to offer an eight-month trial period while those with a maximum of five employees can extend trial periods to one year; the institution of an alternate compensation agreement for employees terminated or laid off, comprising no more than 8% of the employee’s salary, which would be solely funded by the employer; and the institution of financial compensation for employees fired or laid off in a discriminatory act if ruled as true by a court.

These labor reforms have been advertised as an attempt by the government to ease the burden on corporations operating in Argentina, allowing greater flexibility when it comes to contracting employees.

142 deputies voted in favor of the bill, while 106 opposed and five others declined to vote when the debates around the bill, which lasted nearly 24 hours, finally ended. Directly before the bill was finally passed, the opposition added a key article, increasing taxes on tobacco from 70 to 73%.


Argentine President Javier Milei speaking during an event in Buenos Aires. (Photo – Reuters)

These reforms have been met with fierce criticism from a number of Argentine unions, who claim that the bill would undo much of the labor rights they have historically fought for. The reforms elicited a strike from the nation’s oilseed and maritime worker unions on Monday. This strike was ultimately be called off by the unions following the reforms passing in the Chamber of Deputies; however, the unions have announced a meeting slated for next week in order to “see how we proceed,” before hinting that another strike may be organized when the reforms are passed to the Senate.

Continued opposition to Milei:

The strikes represent many Argentines’ continued opposition to President Milei after the Libertarian politician made massive cuts to the government’s budget, which ultimately led to the firing of 15 thousand state employees.

These cuts are part of the President’s “Chainsaw Plan,” an economic plan focused on drastically cutting down on what the President deems unnecessary government spending. This spending, Milei alleges, is the prime cause of the current economic disaster that Argentina is currently facing, further claiming that a “political caste” is responsible.


Javier Milei would often use a chainsaw to demonstrate the then-candidate’s economic plan. (Photo – Tomas Cuesta/Getty Images)

Demonstrations against Milei’s policies are common; previously, thousands of university students took to the streets of Buenos Aires last week after universities were forced to shut down due to the president’s cuts. In another protest, one union attempted to prevent Milei from attending the annual Llao Llao economic forum by blocking roads leading to the secluded resort that hosts the forum. These attempts ultimately fell flat, as Milei arrived via helicopter in a move that union spokesman Rodolfo Aguiar claimed was an act of cowardice.

Aguiar further alleged in a statement that Milei’s government seeks the “delivery of Patagonia (a region consisting of the southern tip of South America) to foreign powers,” before claiming in a later statement that “we are facing a program to colonize Argentina, and Javier Milei is in charge of executing it.”

Analysis:

While the bill’s passage through the Chamber of Deputies presents a hard-fought victory for the ruling party and their allies, the bill will surely face stiff resistance in the Argentine Senate, which is largely controlled by the opposition. However, much like in the Chamber of Deputies, the Libertarian Party and their allies may be able to convince the various independent parties to support the bill through further revisions or political favors. Currently, the Argentine Senate is made up of 72 senators, 33 of whom belong to the opposition and 13 are aligned with the Libertarian Party. This leaves a total of 26 non-aligned independent parties, which will be a key target for both the opposition and Milei’s party.

Further reforms are to be expected from Milei’s party, as the President failed to pass the original Omnibus Bill in January, forcing the ruling party to instead cut the bill down significantly. However, there is a growing concern from analysts and critics alike that while Milei’s policies may restore the Argentine economy, the health and wellbeing of citizens may decline as the government cuts essential services such as soup kitchens and public education, with thousands finding themselves unemployed following the cuts.

Protests against Milei and his reforms are also sure to continue, as both concerns regarding the economic state of the country and the president’s brash regard for various political and social figures across the world, many of whom he deems “communists.” These harsh relations include Brazilian President Luiz Inácio Lula da Silva, whom Milei referred to as an “angry communist” and a “socialist with a totalitarian vocation,” while throwing similar labels at His Holiness, Pope Francis, labeling him as an “imbecile” and “the representative of malignance on Earth.”

Despite his previous sentiments toward His Holiness, Milei’s relationship with the Patriarch of the West has seemingly improved, as during the President’s visit to the Holy See to attend the first canonization of a female Argentine saint, the two were seen embracing each other and in relative good spirits.

The same cannot be said about the Brazilian President, with an aide close to Lula previously demanding that Milei apologize to his Brazilian counterpart if he wished for talks to begin between the two.

“(Milei) freely offended President Lula,” Social Communications Minister Paulo Pimenta stated. “It’s up to Milei, as president-elect, to call and apologize. After that, I would consider the possibility of further talks.”

Milei has sought to initiate dialogue on two separate occasions, in December and April, respectively. This is likely in connection with Brazil’s economic role in Argentina, as the neighboring nation is Argentina’s largest economic partner in exports and imports. If Lula refuses dialogue again, as he did in December, the two will eventually meet during the Group of 20 Summit in Rio de Janeiro this year, which Lula is charged with hosting.

Trent Barr
Trent Barr
Trent Barr is an Intelligence Analyst for Atlas News. He has over ten years of experience and is trained in open source intelligence gathering. Trent Barr specializes in Latin American, German, and Vatican affairs while also holding an interest in Europe as a whole.

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