BUENOS AIRES, Argentina (AP) — When interviewed about his plans after a surprise election victory last fall, Argentina’s president-elect Javier Milei he gave his answer in the blink of an eye: “To eliminate inflation”.
“After that…” he stopped, as if searching for anything else that might be important. “Life,” he said, shrugging.
Driven by a single-minded obsession with cut spending to tame inflation — now close to 300% — the former television commentator with just two years of experience in Congress made it clear from the beginning that he had little interest in anything other than economic deregulation.
But the all-or-nothing approach has left the temperamental libertarian economist without a single legislative achievement 142 days into his presidency, raising questions about whether he can deliver on his promised free-market revolution to rescue Argentina from its worst economic crisis in world. Two decades.
Milei, who ran against “thieve politicians”, encounter resistance of the flammable Argentine Congress, which he calls a “rat’s nest”. His proposals were rejected by political rivals, who he calls “parasites”. And he is struggling to win over disgruntled governors, whom he reportedly threatened to “annoy” in a meeting last month.
But now, experts say, Milei is adapting to the game, backing out of some campaign promises while maneuvering to secure enough other priorities to claim victory.
“He received a quick education in Machiavellian operations,” said Christopher Ecclestone, a strategist at investment bank Hallgarten & Company. “He is now using incentives and punishments to get what he wants.”
On Tuesday, lawmakers – and protesters – converged on downtown Buenos Aires as the Chamber of Deputies continued to debate a drastically scaled-down version of Milei’s economic reform package, known as the general bill.
Here’s a look at the bill being discussed — and what it means for Argentina and its self-proclaimed “anarcho-capitalist” leader.
DID MILEI ACHIEVE ANY OF HER GOALS?
The first thing Milei did was issue an emergency decree that allowed him to implement hundreds of dramatic changes without congressional oversight.
In just a few months, Milei devalued the Argentine peso by 54%, eliminated food and rent price controls, froze all public works projects, halved the number of federal ministries, reduced government revenue transfers to provinces, cut fuel and transport subsidies and fired 15,000 civil servants.
Milei declared “a new era of prosperity” last week when Argentina recorded its first quarterly fiscal surplus since 2008. He stabilized the black market peso exchange rate after months of free fall. Bond prices rose.
But this is little comfort for poor and middle-class Argentines struggling to survive as prices rise and wages lose value. More than 40% of Argentines now live below the poverty line. Community kitchens say they are overloaded.
“I’m forced to ask for donations because I can’t buy clothes for my son,” said Alicia Martinez, 37, in Villa 31, a poor neighborhood in central Buenos Aires. “I don’t know how much more I can take.”
WHAT HAPPENED TO YOUR LAWS SO FAR?
Milei may have won the second round with 56% of the vote last November, but experts say no Argentine president has had less influence in Congress since the fall of Argentina’s military dictatorship in 1983.
“He is the weakest president in institutional terms that Argentina has ever seen,” said Ana Iparraguirre, a partner at the Washington-based political strategy firm GBAO.
Founded in 2021, his libertarian party, Freedom Advances, holds just 15% of the seats in the Chamber of Deputies and 10% in the Senate. None of Argentina’s 23 powerful provincial governors – who hold the key to legislative support – are allies.
Milei is fighting two battles in Congress – one over his emergency decree and the other over his fundamental bill.
Argentina’s Senate overturned the decree last month on the grounds that it was unconstitutional. The decree remains in force until the lower house rejects it. But some judges have already suspended legislative chapters that deregulate the labor market following union petitions.
The omnibus bill didn’t fare much better. Lower House approved in general terms a watered-down version of the original 664-article bill in February. But opposition lawmakers rejected important proposals, prompting Milei to withdraw everything.
Moderating his tone, Milei entered weeks of negotiations with the main right-wing and center parties – and emerged with an even slimmer bill being debated in the Chamber of Deputies.
WHAT IS ON THIS OMNIBUS ACCOUNT?
The overall bill remains controversial as it grants Milei vast legislative powers in energy, taxes, pensions, security and other areas.
But measures that could have bankrupted Argentina’s powerful unions by eliminating automatic dues have disappeared. Gone are the more extreme privatization plans that would have sold Argentina’s national bank and largest oil company.
In other concessions, Milei agreed that he would not eliminate certain state agencies that he largely withdrew from funding, such as Argentina’s national film institute and main research body. To win over cash-strapped governors, Milei reduced salary limits subject to income tax.
“He presents himself as an uncompromising radical thinker, but when push comes to shove, he is perfectly capable of making concessions,” said Eugenia Mitchelstein, an associate professor of politics at the University of San Andrés in Argentina. “His 100-day honeymoon is over… He needs this bill passed.”
WHY DOES THIS ACCOUNT MATTER?
Milei’s pushed through its reform with little more than budget cuts by decree.
The International Monetary Fund expects an economic contraction of 2.8% for Argentina this year. Companies are soaring. Argentines are reducing consumption, fueling fears of a recession.
Milei bets that foreign investment can help Argentina overcome the situation. But first he needs to show investors – and the IMF, to which Argentina owes $44 billion – “that he can govern,” said Lucas Romero, who heads the consultancy Synopsis.
Economy Minister Luis Caputo seemed to acknowledge this during his comments on Monday at the Buenos Aires Stock Exchange addressed to businesspeople.
“Our economic recovery depends on how successful we are in convincing them,” he said.
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Associated Press writer Almudena Calatrava contributed to this report.
