The Controversial Dawn: Javier Milei's First 100 Days

Milei’s economic policies mark a radical departure from Argentina’s traditional approaches since the 2001 crises, due to the failure of ‘90s economic reforms. His promise of economic ‘shock therapy” materialized swiftly as he declared an economic emergency, unleashing a series of decrees aimed at liberalizing the economy. His staunch advocacy for tax cuts, deregulation, and a move towards dollarization have been touted as necessary to combat inflation and stimulate investment. However, these measures have also sparked fears of exacerbating income inequality and undermining the social safety net that many Argentines rely on.

Critics and supporters alike are watching closely as the peso undergoes significant devaluation, a strategy Milei’s administration believes will attract foreign investment. Yet, the immediate aftermath has seen an uptick in inflation, raising questions about the viability of his economic model in the long term. Argentina is currently experiencing high prices when measured in dollars, a reality its citizens encounter daily through elevated costs, despite earning low wages in pesos. This situation has also caught the attention of international tourists. Unfortunately, this poses a challenge for the tourism industry, a vital sector that had been expanding annually, bringing essential foreign currency to an economy facing crisis. This downturn affects not only Buenos Aires City but also the interior provinces, which had viewed tourism as a means to develop and diversify their local economies.

The austerity measures, especially significant cuts to public spending, have been difficult for many to accept. Concerns have risen about possible rises in poverty and unemployment. Additionally, these measures have sparked a fiscal conflict between state governors and the national government.

Milei's term has been characterized by a combative approach towards the political establishment and institutional authorities. While this approach has found resonance among those disenchanted with the political status quo, it has also intensified the divide in the political arena. The absence of a congressional majority has resulted in a legislative stalemate, obstructing the implementation of essential reforms. This impasse has compelled Milei to issue a contentious mega Decree of Necessity and Urgency (DNU 70/2024). However, significant sections of this decree are facing legal challenges and being declared unconstitutional because they overstep into areas constitutionally delegated to Congress. Moreover, even those aspects of the decree that might be deemed constitutional are subject to the approval of both chambers of Congress, which retains the authority to reject the decree in its entirety.

Efforts to sidestep the established legislative framework, especially through the issuance of decrees on subjects that the constitution allocates to the legislature, or on issues that demand extensive political agreement for their practical implementation – as demonstrated by the inclusion of labor reform in DNU 70/2024, which was rejected by the Senate and is likely to face rejection in the Chamber of Deputies as well – underscore concerns regarding the undermining of democratic standards and the aggregation of power. These initiatives, propelled by Milei’s party, La Libertad Avanza, which finds itself in a minority in both legislative bodies, have led to alerts from various observers about potential authoritarian trends.

The recent Senate’s rejection of the DNU, with a clear margin of 42 votes against, 25 in favor, and 4 abstentions, marked a significant defeat for Milei’s government. This decision not only halts the DNU but also highlights the increasing resistance from the opposition, which is close to forming a temporary majority capable of dictating the legislative agenda. This scenario is further complicated in the Chamber of Deputies, where Milei’s party, La Libertad Avanza, faces the challenge of securing a quorum for its proposals.

Milei doesn’t have an institutionalized political party that supports him and, lastly but vital for Argentine federalism, no does he have any governor who belongs to his political group. Although some of the governors, especially those who belongs to Juntos por el Cambio (a former coalition between the historical Partido Radical y the new PRO party), have declared the need to support the President, the cuts to discretional provincial transfers, debt, investment in infrastructure in the territory, social spending and the confrontations over co-participation founds (shared taxes) have eroded the relationship even with those who had expressed willingness to collaborate.

A curious and colorful note is that, for the first time in history, the lack of effective intergovernmental coordination institutions in Argentina, has led to all the governors and even the City of Buenos Aires’ Head of Government now having WhatsApp group where they share responses, actions, and policies.

The fiscal relationship between governors and Argentina’s president over the past 40 years has been a complex and evolving dynamic, deeply influenced by the country’s political and economic context. This relationship is pivotal for understanding the interplay of power at national and provincial levels, as well as the fiscal health and development priorities across Argentina.

Since the return to democracy in 1983, Argentina has grappled with challenges of federalism, where the distribution of fiscal resources and responsibilities between the national government and the provinces has been a continual source of tension. The country’s fiscal federalism structure is such that significant revenue-generating powers are concentrated at the national level, while provinces are responsible for key areas of public expenditure, such as education, health, and infrastructure. This mismatch has often forced provinces to rely heavily on fiscal transfers from the national government, making their finances vulnerable to shifts in political and economic conditions.

During the 1980s and 1990s, Argentina faced severe economic crises, including hyperinflation and debt defaults, which strained fiscal relations. The Convertibility Plan of the early 1990s, which pegged the Argentine peso to the US dollar, despite temporarily stabilizing the economy, also led to a significant centralization of fiscal resources. The national government used its control over co-participation funds (shared taxes) and other transfer mechanisms as tools to influence provincial politics, often rewarding allies with greater resources.

The economic crisis of 2001-2002 marked a turning point, leading to a reevaluation of the nation’s fiscal federalism. The subsequent years under the presidencies of Néstor Kirchner and Cristina Fernández de Kirchner saw attempts to use fiscal policy as a tool for social equity, with increased public spending and redistribution efforts. However, these policies also reinforced the provincial dependency on national transfers, which further entrenched the fiscal imbalance between levels of government.

The presidency of Mauricio Macri (2015-2019) attempted to address some of these imbalances through fiscal austerity measures and a greater focus on fiscal responsibility, both at the national and provincial level. However, these efforts were met with mixed results, as economic challenges persisted, and the tug-of-war between centralization and decentralization continued.

The fiscal relationship has also been characterized by negotiations and conflicts over debt, investment in infrastructure, and social spending. The leverage that the national government holds through its fiscal powers has often been used to influence provincial governments’ political and policy decisions, leading to periodic standoffs and negotiations.

Recent years have seen a renewed focus on the need for comprehensive fiscal federalism reform in Argentina. This focus is shared between think tanks, some individual politicians, analysts, and academics. The goal of such reform would be to create a more balanced and equitable distribution of resources, enhance fiscal autonomy for provinces, and establish clear, stable rules that govern fiscal relations. This involves not only adjustments in the distribution of tax revenues but also reforms in the areas of provincial debt, public investment, and social spending.

However, political parties and elected politicians have failed in the recent years to take action around this matter. The fiscal relationship between governors and the president in Argentina over the past 40 years reflects the broader challenges of governance, economic stability, and federalism in the country. While the specifics of this relationship have evolved with each administration, the underlying issues of fiscal imbalance, political power dynamics, and the need for comprehensive reform remain constant.

During its initial 100 days, Milei's administration has prioritized efforts to tackle fiscal challenges and implement economic reforms aimed at sustainable growth. However, it falls short of its objectives, mainly due to a focus on fiscal balance with insufficient consideration of the social consequences of these reforms. The absence of support from Congress and governors, along with significant public discontent stemming from the negative impacts of economic policies, poses a considerable challenge. Progress is contingent on political compromises that extend beyond immediate fiscal concerns, highlighting a critical need for a more balanced approach that also addresses the social fallout of these economic measures.

The societal response to Milei’s presidency has been as polarized as the man himself. On one hand, his supporters applaud his efforts to dismantle what they see as a corrupt, inefficient system, hailing Milei as a revolutionary figure poised to restore Argentina to economic prosperity. On the other, there is growing discontent among those who feel marginalized by his policies. The austerity measures, coupled with a perceived indifference towards the plight of the poor, have sparked widespread protests. The social unrest underscores a deepening crisis of inequality, challenging Milei’s vision for Argentina.

A notable observation emerges regarding the fragmented nature of social protest. This fragmentation is characterized by the predominance of sector-specific grievances, indicating a diversification of interests and priorities among different societal groups such as women, informal/formal workers, teachers, culture(?) and others. The multifaceted nature of these protests highlights a significant challenge in the aggregation of these diverse interests into a unified political or social opposition. This challenge is further compounded by the absence of a singular leadership figure or entity capable of coalescing these varied sectors into a cohesive force and is activated only as a response of declarations of the president or any of its officials.

One illustrative example of an attempt to bridge these sectoral divides was the mobilization effort initiated by the General Confederation of Labor (CGT) in January. Prior to the palpable effects of the prevailing socio-economic model, this effort represented a rare instance of cross-sectional and broad-based engagement. The CGT’’s call to action transcended the typical sectoral boundaries, offering a glimpse into the potential for unified social and political opposition. However, the momentum generated by this initiative was not sustained, leading to a deactivation or dissolution of this cross-sectional solidarity.

This phenomenon underscores a pivotal impediment to the development of a unified front against prevailing socio-economic and political challenges. The disintegration of what could potentially serve as a unifying platform suggests a need for further exploration into the mechanisms through which diverse social and political groups can find common ground.

Considering that March 24th has already passed, marked by significant demonstrations nationwide, the date’s importance cannot be overstated. This day, commemorating the victims of the 1976 military coup in Argentina and remembering those affected by state terrorism, adds a critical dimension to discussions on social mobilization. It embodies deep historical and emotional significance, potentially acting as a catalyst for widespread mobilization beyond specific complaints. The observance of this day unified various groups through a common history and a collective call for justice and human rights, especially in the face of a presidential stance that has denied these crimes and, at times, appeared to rhetorically support violence.

While March 24th has the potential to unify various groups in opposition, the absence of a political party or a charismatic leader to spearhead this movement is a weakness. This void in leadership poses a substantial threat to the health of democracy over time, highlighting a critical gap in the ability to collectively pursue necessary reforms and safeguard against injustices. Although the commemoration of the coup and its victims initially brings people together, the momentum of such unity is at risk without a clear and cohesive leadership. The lack of a legitimate central figure or organization to present a united vision and strategy significantly inhibit the potential for enduring collective action to confront ongoing issues.

The challenge, then, is not only to find common ground among diverse groups but also to identify or cultivate leadership that can harness this collective energy towards meaningful change. As Argentina continues to grapple with its past and its implications for the present, the quest for leadership and unity in opposition remains a central theme in the broader narrative of social and political mobilization.

Milei’s radical economic policies and political posturing have not gone unnoticed internationally. His push for dollarization and liberalization has intrigued foreign investors, yet there remains a cautious skepticism. The devaluation of the peso and the volatile economic landscape have raised concerns about Argentina’s financial stability and its implications for regional and global markets. International observers are keenly watching Milei’s maneuvers, pondering whether his presidency will usher in a new era of prosperity or push Argentina towards further isolation.

The success or failure of the socio-political model under scrutiny is not observed in isolation. Similar movements in other countries, particularly within Europe, view the unfolding events as a mirror to their own potential paths and as an experimental foray into socio-political strategies that could have profound implications for their local futures. This international perspective adds a layer of complexity and urgency to the situation, as these movements consider the outcomes as pivotal indicators for their own strategies and actions.

The global interconnectedness of social and political movements means that the developments within one nation can serve as a blueprint or cautionary tale for others. Consequently, the challenges of leadership and unity in the face of opposition are not merely domestic concerns but are also scrutinized by international observers and actors who are keenly aware of the potential ramifications beyond Argentina’s borders. The specter of failure, in this context, is not solely a national concern but a signal to similar movements across the globe that the strategies employed may require reevaluation or adjustment in accordance with the observed outcomes.

Therefore, the stakes of the socio-political experiment underway extend far beyond the immediate geographic and temporal confines. The global community of similar movements is watching closely and understands that the implications of success or failure could resonate through their own efforts, shaping strategies and perhaps even altering the trajectory of their campaigns. This global dimension underscores the significance of the endeavor and the imperative for effective leadership and unity, highlighting the interconnected nature of contemporary socio-political struggles.

As Milei’s first 100 days come to a close, the path ahead remains uncertain. The dichotomy of opinions reflects the complexity of his presidency – a blend of ambition and controversy. Whether his policies will lead to economic rejuvenation or exacerbate existing fissures is a question that looms large. Milei’s ability to navigate the political intricacies, address societal concerns, and engage with the international community will be critical in shaping Argentina’s future.

In the end, the legacy of Milei’s first 100 days will be defined not just by the policies he implements but by the societal and political fabric he weaves. As Argentina stands at a crossroads, the nation watches, waits, and wonders about what the future holds under the leadership of one of its most divisive figures.