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Recent developments: Macri in power

Argentina: Recent developments: Macri in power

Macri was sworn into office on 10 December 2015. The handover of power was not without incident, with outgoing President Fernández and many FPV deputies boycotting the ceremony. Macri’s inauguration speech called for unity in order to overcome the economic and political challenges facing the country. His Cabinet included Susana Malcorra as Minister of Foreign Affairs and former President of the Central Bank Alfonso Prat-Gay as head of the newly merged economy and public finance portfolio. Prat-Gay was to lead the new economic team in charge of reviving the country’s deteriorating finances and securing access to international credit. To this end, one of the new Government’s first acts was to abolish the foreign currency controls imposed by the Fernández administration in 2011 and return to a single floating exchange rate. (The President of the Central Bank, Alejandro Vanoli, resigned the day before Macri took office following repeated criticism by the incoming head of state.) The Macri Government also reopened negotiations with the hold-out creditors (see Debt ‘default’ ) in January 2016; resolution of the impasse in April allowed Argentina to access much needed foreign credit. Macri also used an emergency decree early in the same month to overturn the controversial 2009 law limiting the number of licences that media companies were allowed to own. A new regulatory body was also established.

One of the main priorities facing the new administration was a reduction in the fiscal deficit. To this end, in early 2016 the Government made clear its intentions to reduce the public sector salary bill, and government representatives opened negotiations on wage restraints with trade union leaders. By the end of February at least 21,000 public sector jobs had been lost, prompting protests by workers. In response, in April opposition senators, who enjoyed a legislative majority, approved a law banning any job losses in the public or private sector for 180 days. To avoid its passage in the lower house of Congress, in early May Macri responded by eliciting an agreement with business leaders not to implement job cuts for at least 90 days. Nevertheless, in mid-May the proposal was approved in the Chamber of Deputies. The following day Macri exercised his presidential veto for the first time, dismissing the legislation. At the same time, however, he announced increases to the minimum wage; earlier in the year increases to the income tax threshold had also been unveiled.

The Macri Government also ended subsidies on electricity bills in February 2016, and on gas and water costs in April. Under the Fernández administration, consumers had enjoyed generous subsidies on utilities. In some cases, gas tariffs rose by an average of 300%, prompting strong opposition from consumers. The new Government argued that the rises were necessary to be able to reform the energy sector, which had suffered from a lack of investment. At the end of June further demonstrations were held against the increases, to protest, and to demand pay rises. In July a federal court ruled that the increases in fuel costs were illegal as there had been no public consultation prior to the announcement. The court ordered tariffs to revert to previous levels. Although the Government appealed against the ruling, three days later it announced that a cap would be set on the price increases. However, in September the Supreme Court ruled that the increases could remain in place until a public consultation, beginning that month, was concluded.

Trade unions in the country mobilized opposition to the utility cost increases, as well as rising inflation, throughout 2016 and 2017. In August 2016 the main union confederation, the Central General del Trabajo (CGT), merged its three main factions better to oppose the Government’s austerity measures. At the beginning of the month, in an attempt to appease social protests and secure support from regional governors for its legislative agenda, the Government announced extra funding for provinces. At the same time, a health care reform was unveiled that would provide financing for union health insurance schemes. None the less, social discontent continued, as did efforts in the opposition-controlled Congress to approve legislation increasing wage levels and unemployment benefits. In late November the Government reached agreement with opposition parties to pass a law allowing more funding for social programmes and creating jobs. The concession allowed the administration to gain legislative approval for its 2017 budget, which was duly passed on 30 November. However, at the end of December, faced with a still struggling economy, Macri announced the departure of Prat-Gay from the Cabinet and also the separation of the economy and public finance portfolios. Nicolás Dujovne took charge of the latter ministry while Prat-Gay’s deputy, Luis Caputo, was appointed economy minister. Protests by trade union members continued in 2017, and in early April the CGT organized a one-day general strike in support of salary increases. One week later teachers staged a protest in the Plaza de Mayo in Buenos Aires to demand a wage rise.

Tensions between the Government and the opposition-controlled Congress remained high in 2016. Earlier in November the Government suffered a significant legislative defeat in its attempt to introduce electoral reform, one of President Macri’s campaign pledges. The Senate rejected a proposal to introduce an electronic voting system, among other reforms, which was intended to increase transparency in the electoral process. Then, on 6 December, the lower house approved an opposition-introduced measure to increase the income tax threshold by 40%. The FPV argued that high inflation had meant that many poorer workers were paying income tax. The Government reacted by threatening to reduce funding to provincial governments.

Although the FPV had enjoyed a majority in the Congress following the 2015 elections, in February 2016 12 FPV deputies broke from the faction to form another Peronist bloc. The former ruling party suffered a further setback in April when former President Fernández and a former FPV minister, Julio de Vido, were implicated in a money laundering case. In June one of de Vido’s close associates was arrested after being found throwing bags of cash into the grounds of a monastery. The episode prompted a further loss of legislative support for the FPV. In July Fernández testified in a corruption case involving her administration, and in October a further scandal emerged after the Anti-Corruption Office accused a former minister of industry under Fernández, Débora Giorgi, of defrauding the state of up to 300m. pesos in unpaid loans. In March 2017 a federal court ruled that the former President should stand trial on charges of financial mismanagement while in office.

Citation: Recent developments: Macri in power (Argentina), in Europa World online. London, Routledge. Retrieved 18 December 2017 from

The 2015 elections Human Rights and the Dirty War

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