On December 20, local time, Argentina's new President Javier Milley signed an emergency decree introducing about 300 measures to loosen economic regulation and cut public spending, covering many aspects from lifting export restrictions to privatizing state-owned enterprises.
For the troubled Argentine economy, Milley proposed a "shock" therapy to get out of it. Some Argentines welcomed it, but some critics argued that Milley's policy was too radical. Analysts believe that because of the drastic cuts in public spending by the "shock" therapy, the lives of local people will be in the throes before the economy may improve. Some even predict that Argentina's inflation rate could soar to around 300%.
"The first step towards ending Argentina's recession pattern"
"Today, we have taken the first step towards ending the recession pattern in Argentina. In a television and radio speech that day, Milley said the ultimate goal was to "rebuild the country."
The decree signed by Milley repealed major regulations covering the Argentine rental market, export duties, land ownership, food retailing, and other sectors, as well as changing regulatory rules for industries such as aviation, medicine, pharmaceuticals and tourism to allow more competitors to enter these industries.
The decree also repealed laws preventing the privatization of state-owned enterprises. Milley previously said he supported the privatization of state-owned enterprises, including Argentina's largest state-owned oil company, YPF.
Milley also announced that state subsidies for energy and transportation will be slashed from January next year. These subsidy cuts will have a direct impact on the daily lives of Argentine, who have long relied on the state's huge subsidies for transport and energy.
On December 10, 2023 local time, Argentine President-elect Javier Milley was sworn in at the parliament building in the capital Buenos Aires. Photo/IC photo
Since taking office on December 10, Milley has been in "shock" therapy for the Argentine economy. He said that "shock" therapy was the only solution to get Argentina out of its economic woes. But he warned the public that the country's economic situation would go through labor pains before it improved.
In addition to the latest decree, the new Argentine government has made a number of adjustments. Last week, the Argentine government devalued its national currency, the peso, by more than 50% and announced the dismissal of newly hired public sector employees, a reduction in budgets for social programs, cuts in drivers and fleets in the national public administration, and the sale of planes from two state-owned companies, along with an increase in food aid and child welfare.
Milley's "shock" therapy has been welcomed by parts of the country's population, who are disgusted by the country's prolonged economic recession. Some economists and investors also welcomed Milley's "bold" new deal. At the same time, however, these policies have been met with considerable criticism, with opponents arguing that the reforms are too radical and fearing that they will have an impact on the basic livelihoods of the poor.
Argentina is the second largest economy in South America, second only to Brazil in terms of total economic output, and has abundant natural resources. But in recent years, Argentina has been plagued by an economic crisis. Its economy is shrinking, inflation has soared above 160 percent, poverty has soared to over 40 percent, and the country's debt to the International Monetary Fund has reached $45 billion.
Milley used the emergency decree to stir up controversy
Local media commented that the new decree marked a culmination in Milley's campaign promises. Over the past two decades, Argentina's left-wing government has adopted policies of extensive regulation, high taxes, high public spending, and organized a large public sector. Milley's policy is clearly contrary to the Argentine government of the past. However, the implementation of these policies could lead to a bitter conflict between Milley and left-wing political forces in Argentina and powerful trade unions.
Just after Milley's speech, some residents of the capital, Buenos Aires, appeared on their balconies banging pots and pans in protest, while others shouted "Long live freedom" in protest in support of the New Deal.
The opposition in Argentina's Congress has criticized Milley's use of emergency decrees to enact new measures, arguing that the move is intended to bypass debate and voting in Congress.
According to the Argentine Constitution, the president can issue "urgent and necessary decrees" in most policy areas, except for taxation, criminal law, electoral matters and party rules, when "exceptional circumstances make it impossible for a decree to follow the normal procedure." Unless both houses of Congress vote to revoke it, the president's emergency decree will remain in effect.
"[The decree] has neither necessity nor urgency. Gorman Martínez, the leader of the Unión por la Patria, which has 40 percent of the seats in the lower house of the Argentine Congress, said he believes Milley should convene parliament to debate his measures as bills.
Thousands of people took to the streets to protest fiscal austerity
On the same day that Milley announced the new decree, thousands of Argentines took to the streets of Buenos Aires to protest against the economic policy of "shock therapy". It was the first large-scale protest in the country since Milley became president.
On December 20, 2023 local time, in Buenos Aires, Argentina, protests broke out in the local area to oppose the reform policies of the new President Milley. Photo/IC photo
Protesters chanted "End Milley's 'chainsaw' austerity". In previous election campaigns, Milley has repeatedly been shown holding a chainsaw that symbolizes radical reforms.
The day's protests were led by groups representing the unemployed, who made their way through the main street to the downtown Plaza de Mayo, located in front of the presidential palace and the country's historic and iconic rallying spot. Protesters are demanding more financial support from the government for the poor.
Monica Debole, a senior fellow at the Peterson Institute for International Economics, told the media that Milley's "shock" therapy initiative will certainly make people's lives worse before making life in Argentina possible.
Martín Castellano, head of Latin American research at the Institute of International Finance, said the organization predicts that the Argentine economy will shrink by 1.3% in 2024. "We think that next year will be a painful year for Argentines. He said.
Deborer said Milley's deep cuts in government subsidies in the new deal mean Argentines will pay more for things like electricity and transportation, while the depreciation of the Argentine peso will make imports more expensive, and the country's inflation rate could double to around 300% from the current base.
"In this case, there is a risk that people will lose patience and the support [for Milley] may disappear. Deborer said.
On December 20, local time, the Argentine police deployed a large number of police forces to maintain order at the protest site and prevent protesters from blocking roads.
Milley's newly appointed security minister, Patricia Burrich, last week proposed a new policy to maintain public order, allowing federal security forces to disperse destructive protests blocking roads.
The Argentine government further stated on 18 December that those who block the streets may lose their right to state benefits. At the train station in Buenos Aires, public radio read aloud to commuters the new measures, "Whoever interrupts traffic will not receive benefits." ”
Beijing News reporter Chen Yikai
Edited by Zhang Lei and proofread by Li Lijun