Argentina’s New Order

Newly elected Argentine president Mauricio Macri has inaugurated harsh austerity measures and quashed dissent.

It’s been four months since multi-millionaire businessman Mauricio Macri took office as president of Argentina, narrowly defeating Daniel Scioli — the uninspiring candidate of the Peronist ruling party Frente para la Victoria — in last November’s elections.

The win was a coup for the unapologetically pro-market, but ideologically neoconservative Cambiemos coalition, ending a twelve-year stretch of Peronist leadership. Since he was sworn in last December, Macri has wasted little time rolling back the populist policies of the Kirchner era.

In his inaugural speech Macri offered a potpourri of promises: ending the confrontational politics of his populist predecessor, Cristina Fernández de Kirchner; creating an independent judiciary; fighting corruption and drug trafficking; maintaining welfare programs; and eliminating poverty.

However, since then, Macri has moved swiftly to reconfigure the Argentinean economy along explicitly neoliberal lines — to the joy of domestic capitalists and international corporations alike. To do so he has relied on an unprecedented number of “emergency decrees” (similar to executive orders in the US) to bypass Congress — where the Frente para la Victoria has a majority in both houses.

Within a week of coming to power, Macri had already introduced a number of structural reforms aimed at breaking the dirigiste policies of the Kirchner government and boosting the country’s ailing economy. In December the new government scrapped taxes on exports of grain, beef, and fish, while reducing taxes on the exportation of soya from 35 to 30 percent, in a bid to satisfy large landowners (the historical backbone of the Argentinean right).

Soon after, Alfonso Prat-Gay, a former JPMorgan executive turned finance minister, removed currency controls on the dollar, leading to an immediate 30 percent devaluation of the Argentinean peso. The Economist, unsurprisingly, was over the moon, arguing that Macri’s first decisions “are bringing benefits and making waves.”

The question of who has benefitted the most from these government policies is crystal clear. As the New York Times recently noted, Macri’s policies favor influential landowners and members of the urban middle- and upper class who have access to US dollars. His policies also mean a drastic pay cut for the working class.

The Macri government’s initial reforms marked the beginning of a wider attempt to realign Argentina’s political and economic relations with the US, EU, and the pro-US Pacific Alliance states of Mexico, Colombia, Peru, and Chile, while loosening its ties with the Mercosur and China.

As a sign of this, the government has re-established relations with Western-dominated international financial institutions, such as the IMF and the World Bank, and initiated discussions on a potential free-trade deal with the EU. Macri has also successfully pushed for an agreement with foreign “vulture funds” (with whom the Kirchner government refused to negotiate), in an effort to access foreign-issued debt to offset the cost of devaluing the peso and eliminating export taxes on specific goods.

According to a preliminary agreement signed late last month, the Argentinean government will pay $4.65 billion to four vulture funds, including conservative billionaire Paul Singer’s Elliott Management Corp. While the agreement still needs to pass a number of legal hurdles — including approval from the Argentinean senate (it passed through Congress last week, thanks to parts of the opposition, including several Frente para la Victoria MPs, voting with the government) — the government would pay about 75 percent of what investors say the country owes, which is ten to fifteen times more than the amount they initially borrowed from the hedge funds.

Yet while the government’s pro-business measures have been praised in international financial circles, the Argentinean economy continues to face serious problems. The IMF is forecasting a “mild” economic recession for 2016, with economic growth contracting by 1 percent while inflation, notoriously difficult to predict, shows no signs of decreasing from its current level of 25 to 40 percent.

Along with its pro-business policies, the Macri government has begun to unveil a number of austerity measures, including drastic cuts to education and health care, and a whopping 300 percent increase in electricity prices (previously subsidized under the Kirchner government) effective last month.

The government is also firing public-sector workers en masse, as part of a wider crackdown on workers’ rights and dissenting views. At the time of publication, around 25,000 public-sector workers have received pink slips nationwide and according to the minister of modernization, Andrés Ibarra, the government intends to fire another 25,000 workers in the coming months.

The government’s austerity drive is rapidly spilling over into the private sector as well, with more than 75,000 private-sector workers (primarily in the construction, automobile, and mining industries) losing their jobs in the first two months of 2016 — a massive increase compared to the previous year. However, most ordinary Argentineans hear little of these events, since the National Radio — which recently hired a new, pro-government director — has prohibited its news programs from mentioning anything about the wave of dismissals spreading across the country.

Officially, these layoffs have been legitimized through a dual discourse that claims, on the one hand, that the state needs to be “modernized,” while, on the other hand, that many public-sector workers were either political appointments by the last Kirchner government or “lazy gnocchis” — a popular, but derogatory term used to describe public-sector employees who receive high salaries, often through family or political connections, but only turn up at the end of each month to receive a pay check.

These measures haven’t been negative for all Argentineans though. As Sara Kozameh writes, many in Macri’s inner circle have profited from the government’s reorganization efforts, and the administration is being stacked with Macri’s personal friends and loyal, technocratic managers.

These new appointments include Prat-Gay as finance minister, Juan José Aranguren (a former Royal Dutch Shell executive) as minister of energy and production, and Susana Malcorra (a former Telecom Argentina executive and United Nations diplomat) as minister of foreign affairs. Macri’s circle includes higher-ups from some of the world’s largest (and most scandal-plagued) corporations, such as JPMorgan, HSBC, Monsanto, Shell, or the Buenos Aires-based media giant Grupo Clarín.

The new Macri government has also made clear how it intends to treat those who disagree with its policies. Earlier this year, Milagro Sala, a leader of the Tupac Amaru Neighborhood Association, was detained for speaking out against the Cambiemos-led administration of Gerardo Morales in the northern province of Jujuy, and protests in La Plata were met with a violent crackdown — demonstrators were dispersed with tear gas and rubber bullets.

As a sign of the new way of thinking inside the “Casa Rosada,” the Macri government has also pressed forward with the introduction of a new “protocol” for how to deal with social protests. According to the protocol — which was drawn up by the ministry of security and the ministry of justice without consulting human rights groups — the right to social protest will only be guaranteed if it “does not limit the freedom of movement of people [and capital].”

This effectively gives Argentinian police a blank check to clamp down on any dissent that’s considered a threat to “order.” Minister of Security Patricia Bullrich recently summarized the new rules: “We will give them [the demonstrators] five to ten minutes and then ask them kindly . . . to move their demonstration to another place. If they do not go away, we will remove them.”

While the government’s measures have been criticized by trade unions, human rights groups, and the Peronist opposition in congress, the latter — perhaps taking advantage of the opening of Macri’s ascendancy to power — has had no qualms about introducing austerity measures in provinces and municipalities where it holds a majority.

In light of all this, what are the chances for resisting the onslaught of the Right?

The Peronist party is undergoing a prolonged internal crisis, with the right wing — led by former presidential candidate Sergio Massa and Juan Manuel Urtubey, governor of the northern province of Salta — openly seeking to align itself with Macri. Meanwhile, the center-left of the party appears paralyzed by last year’s electoral defeat and uncertainty about the future leadership of Frente para la Victoria.

Similarly, leaders of the main trade union confederations have barely attempted to confront the Macri government’s new austerity measures, in the vain hope that a more conciliatory tone will help them in future negotiations.

While the situation is not looking bright for progressive politics in Argentina, there are prospects for an anti-austerity coalition emerging from below, based on the main parties of the radical left, rank-and-file trade unionists, and a plethora of radical social movements.

The fight against austerity has only just begun.