Argentine President Javier Milay
On March 19, local time, Argentine President Javier Milay celebrated his 100th day in office.
During his time in power, the new president has issued a series of emergency decrees in pursuit of his "chainsaw reforms," including drastic cuts in the country's public sector to reduce the number of civil servants, "cutting" the peso exchange rate, and lowering fuel prices. and subsidies for transportation to reduce state spending, among other measures. In less than 100 days, Argentina has achieved fiscal surpluses for two consecutive months and inflation has slowed.
Juan Negri, director of the Center for Political Science and International Studies at the University of Torcuato di Tella in Argentina, told The Paper (www.thepaper.cn) that deregulation of the economy, privatization reform of state-owned enterprises, etc. The economic package includes the most important thing in Milley's reform plan. Currently, lowering the inflation rate is Argentina's most important and urgent priority.
However, because the Millay camp does not hold a majority in the legislative body and cannot effectively control the power of any province in the country, outsiders believe that Milai's reforms may face many challenges.
There are various signs that Milley's reforms not only face many obstacles, but some policies have even had a negative impact on his popularity. Guo Cunhai, director of the Argentinian Studies Center of the Institute of Latin American Studies at the Chinese Academy of Social Sciences, analyzed, “Millais, who was born as a ‘political amateur’, lacks a firm support camp in the House of Representatives, the Senate and the local government, and because of his necessary spirit of political compromise, To a certain extent, it limits the effectiveness of reform policies."
Javier Milley's supporters
"shock therapy" with mixed reviews
Since taking office, Milley has announced a series of public spending cuts aimed at Reduce public sector spending to just 5% of Argentina's gross domestic product by the end of 2023, including cutting state fuel and transport subsidies, suspending public works tenders and eliminating regulatory rules. Inflation in Argentina has slowed, data from
shows. Data released by the government statistics agency "indec" on March 12 showed that on an annual basis, the current inflation rate is still the highest level in three decades, reaching 276.2% in February. However, monthly inflation slowed to 13.2% in February, compared with 20.6% in January and 25.5% in December.
At the same time, Argentina’s Minister of Economy Luis Caputo said on the 15th that Argentina’s basic fiscal surplus in February was 1.23 trillion pesos (equivalent to approximately 10.4 billion yuan). This is also the second consecutive month that the country has achieved a fiscal surplus. . Previously, Caputo announced that Argentina achieved a fiscal surplus of 518.408 billion pesos (equivalent to RMB 4.4 billion) in the national public sector in January. This was the first time in 12 years that Argentina achieved a fiscal surplus.
Juan Negri, director of the Center for Political Science and International Studies at the University of Torcuato di Tella in Argentina, told The Paper that the economic package including deregulation of the economy, privatization reform of state-owned enterprises, etc. is The most central issue in Millay's reform plan. In his view, many of the measures proposed by Milley, although tough, appear "very reasonable".
"He (Milay) did this to curb inflation. At present, reducing the level of inflation is the criterion for judging the success of Milai's policy, and it is also the most important thing for the government. I think that reducing the inflation rate is the most important and most important thing in Argentina at present." Urgent matter."
Capital Economics emerging markets economist Kimberley Sperrfechter told CNN that given that currency depreciation tends to help boost exports Commodity competitiveness in the global market, Millay's currency devaluation policy may help stabilize the Argentine economy. “Half-cutting the peso exchange rate and gradually removing price controls may push up inflation for now, but it may also bring long-term stability to the country’s economic development,” Spelficht said.
“The price of Argentina’s blue dollar (black market dollar) has stabilized and declined in recent months, compared to the rate at which it depreciated from 300 pesos to the dollar to 1,000 pesos over the past year. The exchange value has still declined compared to the highest point." Yuan Mengqi, an assistant researcher at the Institute of International and Regional Studies at Tsinghua University, told The Paper that for the Argentinian people, the actual dollar value of their wages has increased, which is good news.
Although Argentina has achieved a fiscal surplus in just two months, the "cost" is extremely high.
There are reports that fiscal austerity policies may lead Argentina into a more serious economic recession. The Association of Global Financial Companies predicts that Argentina’s economy may shrink by 7.8% in the first quarter of this year. The International Monetary Fund predicts that Argentina's economic aggregate will shrink by 2.8% this year.
Mario Rapoport, professor of economics at the University of Buenos Aires, analyzed on the website "the dialogue" that Millay's policy of loosening price controls may cause the inflation rate to double and cause Prices for public projects such as energy, transportation, health and education increased. It is reported that due to rising energy prices and the reduction of government subsidy policies for public transportation, the minimum bus fare in the capital Buenos Aires has increased fivefold since the beginning of January, from 52 pesos (equivalent to RMB 0.4 yuan) rose to 270 pesos (equivalent to RMB 2.3 yuan).
In addition, Milai's decree also includes reducing the income of workers and retirees, which will lower people's living standards to a certain extent. A report by the Social Debt Observatory of the Catholic University of Argentina showed that the country’s poverty rate soared to 57.4%, which is also the highest level in 20 years. Reuters quoted a UNICEF report on the 12th as saying that if Milley does not change his austerity policies, Argentina's child poverty rate will rise to 70.8% in the first quarter of this year from 57% at the end of last year, and the extreme poverty rate among children and adolescents will rise. to 34.4%.
Argentine President Javier Milai
The Dilemma of the "Minority" President
In November 2023, amid the people's calls for change, Milai was elected president with 56% of the vote in the general election. However, the far-right party "Freedom Forward" under the leadership of Millais is still a minority at the central and local levels. The vast majority of local provinces in the country are still controlled by the center-left and center-right governing coalitions. Its path to reform is destined to not be smooth. . As Carol Wise, professor of political science and international relations at the University of Southern California, said, "Millay's election is not a 'new thing,' and it is assumed that his reforms lack sound economic and political institutional reforms. , failure is inevitable.”
At present, the two traditional political forces in Argentina, the center-left party "Unite for the Motherland" and the center-right party "Union of Change", basically control the House of Representatives and the Senate, while the "Freedom Forward Party" only holds 38 seats among the 257 seats in the House of Representatives. , holding only 7 seats among the 72 seats in the Senate. It is worth mentioning that Argentina has a federal government and the federal government cannot interfere with the administrative power of local governments. Under the premise that the two major ruling coalitions almost monopolize the power to govern all provinces, the ruling party has very little influence on local governments.
Since the Milais government promulgated a series of reform bills, the progress of reforms has always been slow, both at the legislative level and at the local level. According to Reuters, on March 14, local time, the Senate rejected a comprehensive emergency decree on economic deregulation with 42 votes against, 25 votes in favor, and 4 abstentions. The bill plans to amend or eliminate more than 300 regulations affecting the housing rental market, food retailers, air travel, land ownership and more. This is also the second failure of the Millay government to promote reforms through legislation after the comprehensive reform bill (ley Ómnibus) was opposed by the House of Representatives during the article-by-article review process on February 6.
At the same time, after Milai came to power, the relationship between the Argentine federal government and local governments became increasingly tense. On February 24, after Milais announced that the federal government would cut financial subsidies to local governments, Argentina's main oil-producing provinces issued a warning to cut energy supplies.Ignacio Torres, the governor of Chubut Province in southern Argentina, together with the governors of five other provinces including Patagonia, announced that if the Ministry of Economy does not provide financial subsidies to Chubut Province, Chubut Province will Suspension of oil and gas supplies.
Some analysts believe that Milai is very similar to "outsider" politicians in other countries. His rise to power is due to his blunt criticism of Argentina's many long-term shortcomings, naming the "culprits" and proposing straightforward solutions. However, governing is different from campaigning. Milley’s status as a “minority” in Congress and local governments will force him to rely heavily on the center-right opposition forces led by former President Macri in governing, and to withdraw some of his radical positions in order to seek to reconcile with traditional political forces. Reach a consensus.
As the economic reform process has encountered multiple obstacles, Milai is likely to put political reform on the agenda, which has also deepened the outside world's concerns that Argentina may fall into political turmoil. Grant Tudor, an analyst at the "Protect Democracy" organization, analyzed in an article in "Foreign Policy" that Milley used a "public emergency" as a "guise" in the omnibus bill to expand the president's powers. Executive power allows the government to bypass Congress on major issues. At the same time, Milley also proposed in the bill to change the country's electoral system and replace Argentina's "proportional representation system" with the "winner-take-all" system currently used in the United States, thereby enhancing his political power in Congress.
Guo Cunhai said that the reason why Millay wanted to reform the electoral system was not only to strengthen the power of his own party, but also to strengthen the power of small parties in parliament. However, the possibility of achieving electoral system reform is slim, as evidenced by the resistance to emergency decrees and comprehensive reform bills.
"The core content of Milley's reform plan is actually fragmented. The resistance he faces is not only Congress, but also the public opinion he relies on. The public approval ratings of successive Argentine presidents generally show an upward trend in the early days of taking office, but Milley Within less than 100 days after taking office, the public support rate has already shown a downward trend, which was relatively rare in the past." Guo Cunhai analyzed.
Javier Milai greets supporters after being sworn in.
Reflection of “Reality” and “History”
The background of Milai’s rise to power and the neoliberal ideas he upholds are reminiscent of former President Carlos Menem, who came to power in 1989. Before the 1989 election, Argentina also experienced political turmoil, sluggish economic growth, and hyperinflation. After Menem, a self-proclaimed Peronist, was elected as the president of Argentina, he adopted a series of liberalizing economic policies, including setting the exchange ratio of the U.S. dollar to the peso at 1:1, implementing large-scale privatization, and Foreign capital opens up the country's financial and trade sectors. During Menem's first term in office, Argentina's economic conditions improved, the government effectively curbed inflation, and the economy entered a growth stage.
However, Menem's policies planted a "ticking time bomb" for the outbreak of the 2001 economic crisis. Under the combined influence of the Asian financial crisis and the Brazilian currency crisis, Argentina's export revenue dropped significantly and its economy fell into recession. The "Buenos Aires Times" website reported that in 1999, the last year of Menem's term, the currency peg policy proposed by the government led to high prices for the country's products and a lack of export competitiveness, and the fiscal deficit further expanded. In 2001, the Argentine government's foreign debt arrears amounted to US$95 billion, and shortly thereafter it announced that it would abandon its currency peg policy. Protests and riots spread across the country after the government announced austerity measures, increasing taxes and limiting bank withdrawals.
Regarding the question of whether Milai’s reforms continue Menem’s policies, Juan Negri told The Paper that as the leader of the Justice Party and a Peronist, Menem’s party has a seat in Congress. , and also received a steady stream of support from local governments and trade unions, which the Milais camp obviously cannot compare with.In addition, although Milley describes himself as a "neoliberal", compared with Menem's pragmatism, Milley's policies are ideological and appear more dogmatic.
After a period of turmoil, Argentina abandoned the liberal model and turned to the Peronist line. When Justice Party member Néstor Kirchner and his wife Cristina Fernandez Kirchner took office as president, the Argentine government began to increase its intervention in economic activities, including reforming the distribution system, Implement a high-welfare social security system, strengthen trade protection and restrict the inflow of foreign capital.
Juan Santarcángelo, a senior researcher at the National Economic and Technical Research Council (conicet) at the National University of Quilmes, analyzed on the "the dialogue" website that in the long run, neoliberal policies are impossible Poverty reduction, empirical evidence shows that such policies have had an adverse impact on poverty reduction. "How long the honeymoon period of Milley's policies will last remains a big question. The effects of his policies were significant, and potentially negative. In just two months, Milley's policies caused demand and production levels to fall in many industries. , this is very similar to the situation in 2001." Santacangelo said.
In reality, Argentina's economic woes go beyond specific lines and what politicians can solve. Neither neoliberalism, which advocates marketization, nor Peronism, which strengthens the government's dominance, has put the country's economic development on track. Looking at Argentina's modern history, it is not difficult to find that Argentina's development path is like a "pendulum", swinging between economic growth and dysfunction.
Guo Cunhai said that Argentina’s economic difficulties did not form in the short term. In order to solve economic problems, Argentina's development in recent decades has basically revolved around the two paths of "Peronism" and "anti-Peronism".
Once upon a time, Argentina was one of the richest countries in the world. In 1913, Argentina became one of the ten richest countries in the world per capita, ahead of France, Germany and Italy. Starting in the 1930s, Argentina's economy quickly fell into depression due to the government's lax fiscal discipline and over-reliance on commodity exports for economic growth. Over the following decades, Argentina experienced stagnant growth, rising debt, falling real incomes, and hyperinflation.
Some analysts believe that because Argentina’s economic growth is highly dependent on the export of bulk commodities, including agricultural products and minerals, it means that fluctuations in international market prices have a great impact on the country’s economic stability. For a country with a low level of industrialization and extremely dependent on imports of major industrial products, exporting low value-added primary commodities leads to the outflow of a large amount of wealth and capital. At the same time, regardless of whether they are left-wing or right-wing governments, those in power have long lacked strict fiscal discipline and have been unable to abide by the bottom line of budget balance. The result is excessive government spending, low national savings rates, and high national debt.
"The effects of the reforms of successive governments have been relatively limited. They have not fundamentally improved and optimized the economic structure, leading to Argentina's over-reliance on the external market. In addition, as Milai said, the high welfare system has become an obstacle to improving economic efficiency. However, regardless of Whether it is a left-wing government or a right-wing government, it will be difficult for them to completely overthrow the long-standing high welfare system at the political level." Guo Cunhai analyzed.
