President Javier Milei recently managed to get his ‘Ley de Bases’ bill passed in the lower house of the Chamber of Deputies in late June. He secured support from Mauricio Macri’s PRO party, select members of the Unión Cívica Radical (UCR), Miguel Ángel Pichetto’s centrist Hacemos por Nuestra País caucus, and some provincial governors, including Peronists. This victory was crucial for Milei’s administration, especially after pulling the first version of the bill following intense negotiations. With the economic situation becoming more complicated, there are questions about how Milei’s ideological stance will clash with pragmatism.
Milei’s negotiating strategy, marked by intense conflict with political adversaries, shocked the political ecosystem with the unveiling of the ‘omnibus’ bill and the DNU emergency mega-decree. Despite initially building a reasonable team for governance, Milei had to resort to intense negotiations to secure support for his bill, which led to its eventual passage. The make-up of Milei’s support in Congress included a coalition of former Juntos por el Cambio members, provincial governor-aligned deputies, and opposition from pan-Peronist and far-left parties. The passage of the bill in the Senate also saw some debate, with UCR president Martín Lousteu apparently taking a prominent role before fading into the background.
While Milei knows he can conjure a winning majority by conceding ground and utilizing the tools at his disposal, such as Interior Minister Guillermo Francos and control of the budget, the ultimate success of his administration’s efforts remains uncertain. The DNU emergency decree could face challenges in Congress and scrutiny from the Supreme Court, which has historically been bold in its rulings concerning political matters. Milei’s plan to shape the court’s composition in favor of a “liberal court” has sparked controversy, particularly with the proposed judges Manuel García-Mansilla and Ariel Lijo.
Despite facing limited opposition from political opponents like Cristina Fernández de Kirchner, Milei’s legislative missteps are seen as a consequence of inexperience or fundamentalist positions rather than a lack of potential allies opposed to Kirchnerism. The success of Milei’s macroeconomic plan, evidenced by a budget surplus and a deceleration of inflation, could play a role in sustaining the administration’s popularity. However, as the effects of a deliberate recession become more widespread, questions arise about the administration’s ability to maintain its economic policies, particularly in light of increasing poverty and unemployment.
As the real-world effects of Milei’s economic plan continue to unfold, concerns about sustaining a strong peso policy, avoiding a deep devaluation that could fuel inflation, and addressing rising costs of basic necessities loom large. The administration’s hope for increased real wage growth and economic recovery amid painful social and economic challenges remains risky. Milei’s family and their hopes for a drop in inflation to improve living standards reflect the broader challenges facing Argentina’s economy and the Milei administration’s efforts to navigate them.
