March 21, 2024

Analysis

100 Days of Milei

Argentina under the “chainsaw”

Lea este artículo en español aquí.

Javier Milei’s election to the Argentine presidency in November sent shockwaves throughout the country. While the media personality was not altogether an outsider, his party La Libertad Avanza (LLA), formed in 2021, fundamentally lacked political experience. Until Milei’s inauguration in December, the LLA had no governors or representatives in the Senate, and only three seats in the Chamber of Deputies. 

The long agony of Argentina’s stagnation, impoverishment, and inflation explains the success of Milei’s dystopian vision. Argentina ended 2023 in the red, marked by a 78 percent devaluation of the peso and a 1.8 percent decline in GDP. The average salary ($320 per month) was the lowest since the great crisis of 2001, with 44 percent of the population living below the poverty line. The country lacked financial reserves to deal with a suffocating external debt, and had an annual inflation rate of 160 percent and counting. Amid the successive crises of neoliberalism and the decline of progressive Latin American projects, Milei seized the presidency wielding a chainsaw and promising cuts, austerity, and collective suffering. 

In the months since the election, many analysts have speculated about the types of policies the self-proclaimed libertarian capitalist might dare, and ultimately manage, to pass. Milei’s two most prominent proposals, the Urgent Necessity Decree (Decreto de Necesidad de Urgencia, DNU) and the “Omnibus” Bill, have been caught in limbo for weeks amid political disputes with the LLA’s opponents, and even some former allies. After the first one hundred days at the helm, what has Milei managed to achieve? And what does this herald for the years to come?

A hectic agenda

In his first week in office, Javier Milei formed a cabinet by co-opting some opposition leaders while keeping his distance from the political factions that had supported him in the runoff election (known as balotaje in Argentina). With precarious political alliances that he never ceased to regard with suspicion, Milei began to frenetically dominate the political agenda. Within days of assuming office, he presented his proposal for the DNU. Should it pass, it would involve the  privatization of several state-owned companies, the deregulation of price controls, the flexibilization of labor law, and the liberalization of real estate, energy, tourism, pharmaceutical, communication, and healthcare markets, among others.

In its scope and dimensions, the DNU aims to reshape the entire social fabric of the country based on an ultra-capitalist dogmatism. In a similar vein, and quick off the block, Milei introduced an Omnibus Bill to Congress consisting of over 660 articles, symbolically named the “Law of Bases and Points of Departure for the Freedom of Argentinians.” Given its breadth and depth, the bill was practically a constitutional reform. Additionally, it included two points that raised alarms among both the political class and various social forces.

The proposal called for declaring a public emergency with regard to economic, financial, tariff, energy, and administrative matters, which would grant Milei “extraordinary powers” to decide on these issues without Congressional approval for almost the entirety of his term. The law promoted a security code aimed at penalizing any form of social protest, such as imposing fines on organizations participating in protests or banning traffic interruptions, with penalties of up to five years for those who “lead, organize, or coordinate a meeting or demonstration” that obstructs urban circulation.

Milei did not have much luck with either initiative. On the same night as the decree was announced, protesters filled the streets of Buenos Aires. Even more powerful was the call for a general strike at the end of January. At the same time, the judiciary responded to requests for precautionary measures presented by civil associations and union centers, ultimately deciding to declare the unconstitutionality of several points of the decree. This led to various amendments including scaling back proposals that deregulated labor laws, limited the right to strike, and relaxed the contractual indemnity regime.

When it came time to pass the bill through Congress, the government encountered unexpected opposition from liberals and conservatives alike, including many of those it saw as  potential allies. After two weeks of unsuccessful sessions, the LLA failed to secure the necessary votes to approve the law in the Chamber of Deputies, though this was largely due to the party’s parliamentary inexperience and the executive branch’s intransigence.

One week later, Milei opened a new front of the conflict with lawmakers, sparring with provincial governors over the distribution of taxes and national resources. This had the effect of triggering something of a rebellion among the governors, reviving the historical dispute between federalism and centralism. Why Milei opted to provoke both  governors and political factions that had supported him in the runoff election remains unclear. Was it a strategy to monopolize all right-wing votes or simply an effort to take advantage of the honeymoon period of the first one hundred days of government, pushing through as many reforms as possible? The possibility that the decision was simply a consequence of Milei’s political ineptitude in building alliances should not be underestimated.

Of course, governing effectively requires engaging with the different political functions of state and social forces. The LLA only holds thirty-eight out of 257 seats in the Lower House, and seven out of seventy-two in the Upper House. It holds no gubernatorial or mayoral seats, nor does it have its own political structure in the provinces. With this weak political base, governability depends on the support of other political forces. In a country with a long tradition of social organization, during a social crisis that shows no signs of improvement, government action is never disconnected from the streets. 

The adjustment

The complete deregulation of prices, the removal of energy subsidies, and the 100 percent devaluation of the Argentinian peso against the dollar have all contributed to the inflationary momentum, resulting in a nearly 50 percent increase in prices in December and January alone. It should not be imagined that this is not a substantive part of Milei’s economic plan. From the outset, the anti-inflationary policy essentially consisted of eroding wages and pensions and inducing a brutal self-imposed recession.

This has involved significant spending cuts. According to data published by the Congressional Budget Office, total expenditures of the National Administration in January recorded a real year-on-year decline of 11.9 percent; social programs were the hardest hit with a nearly 60 percent cut compared to the previous year. The situation is dire. 

In such circumstances, there has been a significant loss of purchasing power of formal wages. While Argentina still maintains a high level of unionization compared to other Latin American countries, providing some level of protection through wage negotiations and labor struggles, Milei’s government has taken particular aim at labor and is clearly working to weaken its remaining power. The situation is different for informal workers and self-employed individuals, who account for 45 percent of Argentina’s workforce and depend on the daily level of economic activity.

Middle-class households have also been hit, as the cost of private education, healthcare, vacations, and fuel have increased above the average inflation rate, and there are no savings instruments to protect against these rising costs as a result of low interest rates.

While the crisis is certainly hitting hardest in the lower-income sectors, its impact is even more pronounced for women. The “feminization” of poverty deepens as each crisis intensifies income inequality, unequal access to the labor market and, with it, unequal distribution of caregiving responsibilities. It’s worth noting that, along with women, transgender, transvestite, and non-binary individuals—who are absent from public statistics—record the highest levels of informal employment.

Equally alarming is the situation of retirees and pensioners, a sector that has been severely affected by the two previous administrations but has now become the primary variable for adjustment to achieve the desired fiscal surplus: the reduction in pension spending, through a fierce reduction in pensions, accounts for 1.5 percent of the projected reduction in the fiscal deficit for this year.

This combination could pose a problem for Milei, who found support among all these sectors during the election. It also marks a crucial point for a government that so far seems unwilling—or perhaps unable—to translate that popular support into institutional strength. Economic signals are also unclear, and the president seems more focused on polarizing the electorate against the amorphous enemy, which he calls the “establishment,” than on managing the state, forging alliances, alleviating the social crisis, and charting a comprehensible economic model.

The Milei chapter

For the time being, polls show that Milei continues to enjoy high support among those who voted for him, although he has not managed to gain new supporters in an increasingly polarized society. As time passes and the crisis worsens, patience for Milei’s “anti-establishment” government is likely to wane. On the night of December 20, following the announcement of the DNU via national broadcast, protests erupted at the gates of the National Congress. The chosen date carries significant symbolic weight due to the events of December 19–20, 2001, when nationwide uprisings erupted in response to the government’s efforts to pass its so-called Anti-Picketing Protocol. Those protests ultimately led to the resignation of the president, thirty-nine deaths, and the beginning of a political crisis that would give rise to a new historical cycle. Security forces were deployed at the access points to the City of Buenos Aires; police officers filmed passengers and checked their belongings on public transportation, while station loudspeakers broadcasted intimidating messages. The government aimed to assert its stance against some of its main political enemies—social organizations—and thus solidify its policy of controlling, disciplining, and persecuting social protests.

Forty-five days into his term, Javier Milei faced a multisectoral general strike: social movements, feminist collectives, cultural organizations, and recently reactivated neighborhood assemblies joined with labor unions, turning the strike into a genuine cross-movement protest against the Omnibus Bill and the DNU. It is still too early to tell if such strike activity will continue, but the alarm bells are ringing. In March, the start of the school year and conflicts over salary negotiations in the education sector coincided with the two most important mobilizations in the country: the 8 March feminist strike and the march for human rights, scheduled for March 24.

Following the parliamentary defeat of the Omnibus Bill, the government insists on almost daily provocations to different sectors: defunding cultural organizations, announcing changes in immigration laws, statements about repealing the abortion law, and closing human rights-related agencies. This is a strategy of opening multiple simultaneous fronts to generate wear and tear and, consequently, lower levels of mobilization.

This poses a strategic challenge for popular organizations, which must respond to each specific government attack. Nonetheless, Argentina’s powerful tradition of grassroots resistance remains the greatest threat to Milei and his government. Milei may well be trying to reshape the social fabric of Argentina, but after his first 100 days in government, whether or not he’ll be able to do so remains unclear. 

This essay was translated from Spanish for Phenomenal World by Maria Isabel Tamayo.

Further Reading
Anarcho-Capitalism

Argentina between the IMF and China

Milei’s Argentina

An interview with Mercedes D’Alessandro

Milei and the World

An interview with Maia Colodenco on Argentina’s foreign policy


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