(Buenos Aires) The Argentine Senate on Thursday morning approved in full the deregulatory reforms wanted by the ultra-liberal President Javier Milei, thus obtaining for the first time in six months in power the support of Parliament.
The project was adopted by the upper house after a marathon session that began Wednesday morning and was marked by riots which caused a total of ten injuries and as many arrests. It will return for final adoption to the Chamber of Deputies which voted for it in April imposing major changes.
The presidency welcomed the “historic approval” of this flagship law of the Milei government on the deregulation of the economy, known as the “omnibus law”, describing it as “the most ambitious legislative reform of the last 40 years”.
In March, the Senate rejected a “decree of necessity and emergency”, a mega-decree issued at the start of the Milei presidency and to date partially in force.
Javier Milei’s party, Libertad Avanza, is in the minority in Parliament – just seven seats out of 72 in the Senate and third largest in the House with 38 deputies.
“For the Argentines who are suffering, who are waiting, who do not want to see their children leave the country […], my vote is affirmative,” declared Victoria Villarruel, president of the Senate and vice-president of the country, whose voice was decisive.
After their vote, senators began examining a tax reform, initially part of the omnibus law and dissociated to be discussed separately in the same session.
On Wednesday, in parallel with discussions in the Senate, clashes between law enforcement and anti-Milei demonstrators broke out in Buenos Aires. “We cannot believe that in Argentina we are discussing a law that will take us back 100 years,” summarized Fabio Nunez, a 55-year-old lawyer, among the demonstrators.
According to the Health Ministry, seven people, including five opposition MPs, were treated in hospital after being sprayed with tear gas. Dozens of people were treated on site.
Cars were set on fire and police responded to the projectiles with tense shots of rubber bullets and water hoses.
At least ten people were arrested and nine police officers injured, a spokesperson for the Ministry of Security told AFP. As night fell, the police regained control of the streets.
The Argentine presidency denounced “terrorist groups who, using sticks, stones and even grenades, attempted to carry out a coup.”
The law had been rejected in its original form of 600 articles and adopted after major modifications in 238 articles by the Chamber of Deputies in April.
Among the concessions of an executive that has become more pragmatic over the months: the number of privatizations, reduced from around forty in the initial version to less than 10, including that still on the table of the public airline Aerolineas Argentinas.
The law also provides, among other things, for a more flexible labor market, reforms that “take us back to the last century when the employee had no rights,” said opposition senator Mariano Recalde.
It also includes controversial incentives for foreign investments exceeding $200 million with tax and customs benefits for thirty years. “We are giving a blank check for thirty years whose cost we do not know,” declared Senator Martin Lousteau.
The law is “an accelerator, a catalyst for the recovery of the economic situation,” argued Economy Minister Luis Caputo on Wednesday. “This government will not change course. The macroeconomic order will continue.”
During a video conference on Wednesday during which Mr. Milei presented his vision of the economy, American tycoon Elon Musk for his part encouraged Argentines to “give their full support to the president to implement this experiment because he is clear that the policies of the past have not worked.”
The CEO of electric vehicle maker Tesla has met with Milei several times and is showing interest in a country with major reserves of lithium, a key material for batteries.
Beyond the legislative tribulations, the promised austerity “shock therapy” – the “largest budgetary adjustment in the history of humanity” as Mr. Milei likes to repeat – is already producing effects since December: brutal devaluation of the peso (54%), freed prices and rents, end of transport and energy subsidies, freezing of public works, all-out budget cuts, etc.
The president regularly trumpets that inflation is “dominated”, with a continuous deceleration for five months: from 25% monthly to 8.8% in April. And a budget surplus in the first quarter, unprecedented in 16 years.
On the other hand, austerity strangles consumption, economic activity collapses, and recession sets in, with the economy contracting by 5.3% in the first quarter. With no imminent signs of rebound.
