The CGT, Argentina's largest union, is calling for a general strike this Wednesday.
Javier Milei had warned: He would “cut” public spending and gradually establish a free market economy. He has the strange nickname “Trump of the Pampas” and was elected on November 19th with a clear slogan: “Viva la libertad carajo” (Long live freedom, damn it!). The Argentine president is threatened with a general strike this Wednesday at the call of the CGT, the country's largest union, which deeply regrets his liberal measures.
At his inauguration, the new president took his first action: the devaluation of the national currency, which rose from 400 to 800 pesos for 1 dollar. However, 40% of Argentines already live below the poverty line and inflation has risen by 200% in a year. But Argentina has “experienced a series of crises over the last hundred years, all of which have the same origin: the budget deficit,” defends Javier Milei in his inaugural speech.
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To this end, the Argentine government announced cuts in transport and energy subsidies starting in January. Javier Milei also believes that they artificially increase the price for the consumer. “The state, through these subsidies, supports artificially very low prices to make people feel that they have money, but (…) it is not free and people pay for it in inflation,” he justified the Minister of Economy Luis Caputo.
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“Decree of necessity and emergency”
On December 20, Javier Milei announced a “mega-decree” containing 366 articles summarized in 30 key points to free many sectors of the economy from the burden of the state. He called it the “Decree on Necessity and Emergency” (DNU). “The goal is to begin the path to rebuilding the country, restoring individual freedom and autonomy,” he explained, “and beginning to dismantle the enormous amount of regulation that has slowed, hampered, and hampered economic growth in our country have prevented.” country. These measures include the repeal of the Rent Act “so that the real estate market can function smoothly again.” According to the Argentine Real Estate Chamber, a month after the measure was introduced, prices fell by 20% and the number of available housing units doubled.
Javier Milei also repealed laws that prohibit or prevent the liberalization of public companies. The airline Aerolineas Argentinas, which was nationalized in 2008, and the oil company YPF are particularly affected. Several sectors were deregulated: tourism, health, internet, pharmacies, viticulture and trade. Finally, the Argentine government announced a “modernization of labor law to facilitate the process of creating real jobs.” The probationary period is now 3 to 8 months, and compensation in the event of termination has also been reduced. Certain provisions have been challenged by the courts, which must examine them further.
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Finally, 9 out of 18 ministries will be abolished, the secretariats and general directorates will be reduced from 106 to 54. A “34% reduction in state political offices,” declared Luis Caputo. Government advertising will be removed and public projects that have not yet begun will not be started. “Infrastructure projects in Argentina are carried out by the private sector because the state has neither money nor the financing to carry them out,” emphasized the minister. However, the government will “strengthen social policies that go directly to those who need them most, without intermediaries,” he added. In fact, according to the government, inflation cannot be brought under control for “18 to 24 months.”
“In a few months things will be worse than before, especially in terms of inflation. As the President says, an inconvenient truth is better than a convenient lie,” added Luis Caputo. The government estimates that its initial measures can save almost 5% of GDP.
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The “Omnibus” bill
A week after this “mega-decree”, Javier Milei presented a “mega-draft” with 183 pages and 664 articles. It is nicknamed the “Omnibus Law” due to the variety of subjects it covers: calculation of pensions, length of the working day, simplification of the divorce procedure… With this law, the Argentine President declares “a state of emergency in economic, financial, tax, security, defense, customs, energy, health, administrative and social affairs until December 31, 2025.”
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This bill, if passed, would allow the executive to take over prerogatives from Parliament in several areas (economic, tax, financial, security, etc.) in the context of a “public emergency”. It simplifies the electoral calendar, eliminates party primaries considered too costly for taxpayers, and restructures parliament. The latter was called into an extraordinary meeting until January 31 to consider the bill. Their acceptance is not guaranteed since Javier Milei's party “La Libertad Avanza” is only the third force with 38 of 257 deputies.
This series of reforms is being contested by part of the political class, as demonstrated by the demonstrations on December 22nd and 27th. However, it is very well received by the world economic authorities, as the Argentine President's invitation to Davos shows. “Don’t be intimidated by the political caste or the parasites that live on the state. “Do not submit to a political class that seeks only to remain in power and preserve its privileges,” he told his audience on January 17. In addition, on January 11, the IMF welcomed “the new authorities' significant efforts to restore macroeconomic stability and help Argentina meet its balance of payments needs” and proposed the provision of $4.7 billion in aid.
This Wednesday's demonstration sounds like a show of force against the executive branch. But Javier Milei has more than one trick up his sleeve: he charges the unions for the costs of security for the demonstrations. Several unions have already been fined 56 million pesos ($66,000) over the demonstrations on December 22 and 27.
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