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Political and economic reform

Argentina: Political and economic reform

Elections to one-half of the Chamber of Deputies and one-third of the Senate were held on 22 October 2017. President Macri’s Cambiemos performed better than expected, increasing its representation in the 257-seat Chamber of Deputies from 86 to 108 seats, still short of an absolute majority. In the Senate Cambiemos controlled 24 seats, an increase of nine seats, although again it was insufficient for a majority. The Peronist opposition alliance led by Fernández de Kirchner’s FPV by contrast lost support, retaining 64 lower house seats (down from 75) and nine seats in the Senate (down from 18). Fernández herself secured a senate seat under the electoral list system, despite finishing third in the ballot in the province of Buenos Aires after two Cambiemos candidates.

The election results gave Macri fresh impetus to advance his ambitious economic and political reform programme. To this end, in November 2017 the President gained the agreement of the country’s provincial governors on an overhaul of the federal and provincial tax system. In addition to a cut in corporation tax for businesses that reinvested in the country, Macri sought to reduce the tax take of the regions in order to reinvigorate the economy. In exchange, there would be a redistribution of federal funds to the provinces. The support of the regional governors was necessary to assure the legislation’s passage through the federal parliament. Earlier in the month the Government had also reached accord with the powerful CGT on its proposed labour reforms that would increase competition and cut employer costs.

Also in November 2017, the Chamber of Deputies approved legislation increasing institutional accountability, part of the President’s plan to address the seemingly widespread corruption in government and business circles. A proposal to limit terms for public offices was also discussed by the upper house. This debate came soon after the resignation of the Attorney-General, Alejandra Gils Carbó, appointed under the FPV administration, who was herself facing a corruption investigation.

Despite the CGT’s agreement to support for the Government, in December 2017 trade unions organized protests outside the federal congress building against the proposed labour reforms, as well as against mooted changes to the pension system (already passed by the Senate at the end of November) that would increase retirement age and link payments to the rate of inflation. The protests spread and descended into violence as, on 19 December, the Chamber of Deputies approved the pension reforms. The Government argued the changes were necessary to secure the long term survival of the payment system, as well as to reduce the fiscal deficit and avoid further economic crises. Opponents maintained that pensioners would see a fall in their incomes. The Government achieved a further success the following day with its economic reforms when the Chamber of Deputies approved the contentious changes to the tax system. The Senate followed suit at the end of the month.

Despite the gradual reduction in energy subsidies since December 2015, in March 2018 the Ministry of Energy and Mines announced a further rise in gas prices, of between 28% and 40%, from April. The Government attributed to the need to increase prices on underinvestment in the sector and overgenerous subsidies under the previous FPV administration, as well as increasing international fuel prices. The announcement, coupled with still rising consumer prices, prompted widespread social discontent. The UCR, Cambiemos’s partner in the governing coalition, also opposed the measure, and threatened to vote with the opposition for a price freeze in the Congress. Faced with such resistance, in mid-April Macri announced that the rise in gas prices would be moderated. He also requested that provincial governments eliminate taxes on utilities to ease the financial burden on the population. Nevertheless, at the end of May the Senate approved legislation suspending the fuel price increases. Macri immediately responded by vetoing the law, insisting the rises were necessary to reduce the fiscal deficit. A further rise in utility prices, this time in natural gas, was announced on 8 October, prompting further protests. Exacerbating the discontent was the fact that the hike was to be backdated, owing to the fall in the value of the peso over the year (see Recent developments ). However, strong opposition in the Congreso forced the Government to abandon the retroactive aspect of the increase two days later.

President Macri dismissed the naval Chief of Staff, Adm. Marcelo Srur, on 15 December 2017. Srur’s sacking was in response to the loss of a submarine, the San Juan, with 44 crew members on board, in the previous month. The submarine had disappeared in the south Atlantic in mid-November, prompting an international search effort. The failure to locate the vessel, as well as the decision to abandon the search after 18 days, provoked criticism of the Government. Relatives of the missing crew demanded that the President meet with them personally to explain his administration’s handling of the tragedy. The submarine was found on the south Atlantic seabed in November 2018.

In mid-June 2018 the federal Chamber of Deputies narrowly approved the legalization of abortion in the first 14 weeks of pregnancy. Those convicted of ending a pregnancy currently faced up to four years’ imprisonment. In August, however, the Senate rejected the bill. The issue polarized the country, as well as the governing coalition, with protests for and against the law, and its rejection prompted demonstrations outside the Congress building.

In late July 2018 President Macri announced plans to change the remit of the military to allow it to participate in internal security matters. The decree was intended to allow the armed forces to help in the fight against drug trafficking and terrorism. Since the end of the dictatorship, the military’s role had been confined to protecting the country from foreign threats. The decree prompted protests from left-wing opposition parties that it could lead to an infringement of civil liberties, and even to human rights violations.

Citation: Political and economic reform (Argentina), in Europa World online. London, Routledge. Retrieved 18 August 2019 from http://www.europaworld.com/pub/entry/ar.dir.15162015491

Corruption cases Recent developments: currency crisis


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