Argentina’s Senate has approved key state overhaul and tax packages proposed by President Javier Miliei, delivering an initial legislative victory to the libertarian leader in his campaign to deliver on his ambitious agenda.
Senators voted 37 to 36 to give their overall approval to the state overhaul bill after 11 hours of heated debate. But the lawmakers still must approve individual measures in an article-by-article vote that will last throughout the night.
If the Senate approves the bills with modifications, the lower house still has to okay them before Milei can officially pass his first law since entering office last December
Argentina’s Senate Wednesday night began voting on state overhaul and tax bills proposed by President Javier Milei in the most serious test to date of the libertarian leader’s vision of governance and change.
The vote opened after hours of debate overshadowed by scenes of violent chaos outside Congress in downtown Buenos Aires. Protesters urging senators to reject Milei’s program of harsh austerity and economic deregulation hurled sticks, stones and Molotov cocktails at police who fired water cannons and tear gas to disperse the crowds.
If the Senate passes the bills Wednesday with modifications, the lower house still has to approve them before Milei can clinch his first legislative victory since entering office last December.
The fiery right-wing economist rose to power on promises he would resolve Argentina’s worst economic crisis in two decades, with annual inflation climbing toward 300% and a recession deepening.
But his political party of relative novices holds just a tiny minority of seats in Congress and he has struggled to strike deals with the opposition.
Senators are voting on two bills, a tax package that lowers the income tax threshold and a 238-article state reform bill that passed the lower house of Congress in late April after weeks of negotiations.
Initially dubbed the “omnibus bill” because of its more than 600 articles, the watered-down version at hand still delegates broad legislative powers to the president in energy, pensions, security and other areas.
The proposal’s immense scope — and staunch opposition to it — has limited progress.
“We have the weakest president we’ve ever seen who is trying to pass the biggest bill we’ve ever seen,” said Ana Iparraguirre, an Argentina-based analyst at Washington strategy firm GBAO. “That’s the contradiction.”
Unlike previous Argentine leaders since the return of democracy in 1983, Milei has failed to pass a single piece of legislation during his first six months in office. Instead, the populist outsider has relied on executive powers to slash state spending and sweep away economic restrictions.
“Today, it’s almost more important for Milei to demonstrate that he can pass laws in Congress than what he passes,” said Lucas Romero, director of Synopsis consultancy.
The package faces resistance from the left-leaning Peronist movement loyal to former president Cristina Fernández de Kirchner, which has dominated Argentine politics for the last two decades and holds sway over the country’s powerful trade unions.
Thousands of bankers, teachers, truckers and workers from a range of other unions converged around Congress throughout the day, banging drums, blasting trumpets and chanting, “Our country is not for sale!” and “We will defend the state!”
“If this law passes, we are going to lose so many of our labor and pension rights,” said 54-year-old teacher Miriam Rajovitcher protesting alongside her colleagues, middle-class Argentines who say they’ve had to reconfigure their lives since Milei slashed their school budgets and devalued the currency, sending inflation soaring. “I am so much worse off.
The rally took a tense turn when hundreds of riot officers pushed back with their shields against angry protesters trying to surge through a barrier.
Police used pepper spray, water cannons and tear gas against the huge crowds while demonstrators set two overturned cars ablaze and threw Molotov cocktails.
Dozens of protesters were being treated by medics in the streets and police said 20 officers had been injured in the clashes. At least five Peronist lawmakers said they were hospitalized after police sprayed pepper spray in their eyes.
“Today the government is declaring war on the Argentine people,” Peronist lawmaker Cecilia Moreau told reporters outside Congress.
The presidency called protesters “terrorists” and accused them of “attempting to carry out a coup d’état” by disrupting Congress.
The Peronist bloc controls 33 out of 72 seats in the Senate while Milei’s party, Freedom Advances, holds just seven seats. The bill needs 37 votes from the 72 total legislators in the Senate to get a majority.
Analysts say that foreign investors and the International Monetary Fund, to which Argentina owes a staggering $44 billion, are closely watching Wednesday’s vote to see whether Milei can build consensus with his opponents to deliver on his ambitions.
“This is a make-or-break moment for the Milei administration,” said Marcelo J. García, Americas director at geopolitical risk firm Horizon Engage. “If he doesn’t pass this, we are heading into a political crisis.”
Wednesday’s article-by-article vote will stretch for hours, with analysts expecting lawmakers to further weaken the most divisive sections of the bills.
One of the most controversial measures is an incentive program to spur foreign investments that offers lucrative tax breaks for 30 years, no import tariffs and other perks for big corporations that critics say go too far.
“What this law is hurting most are the pockets of workers, not the big companies that are just going to get richer,” said 36-year-old Juan Barreto, a bank employee jostling amid crowds of his fellow union members.
Argentina’s unions have also voiced vehement opposition to measures that would make it easier for companies to fire employees as well as plans to privatize some state-owned companies. The question of which ones will head to auction has generated intense debate.
Backlash to the tax bill has centered on an amnesty that would allow Argentines to register undeclared assets at home and abroad without paying heavy taxes, as well as a lower income tax threshold to boost revenue.
Frustrated by legislative resistance, the president has moderated his previous all-or-nothing approach. Earlier this month, in a bid to break the impasse, Milei fired his politically inexperienced Cabinet chief and replaced him with Interior Minister Guillermo Francos, a career politician skilled at congressional wheeling and dealing.
In recent weeks, Argentina has gotten a taste of what awaits if Congress fails to pass the bills.
Sovereign bonds have tumbled. The country’s currency, the peso, has depreciated as well, widening the gap between the official and black market exchange rate to nearly 40%. The peso was trading at 1,255 per greenback on the informal market Wednesday, a rate far lower than earlier this year.
Even as the IMF has praised Milei’s agenda and released tranches of frozen loans, the fund has held back from striking a new deal with Argentina.
Meanwhile, Milei has been in Silicon Valley rubbing shoulders with billionaire tech executives Elon Musk, Tim Cook and Mark Zuckerberg. The meetings however, have not produced any announcements of substantial investments.
“What you’re seeing in the last three weeks is the market and investors getting a little nervous,” said Garcia. “The market is saying, ‘Show me that you can govern.’”
(AP)
