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Challenges of Javier Milei's 'Omnibus Bill' persist in Argentine Senate

Argentine president Javier Milei. (Credit: AFP)

Following a 30-hour debate, Argentina's lower house approved this week a revised version of a massive reform bill pushed by President Javier Milei and his party La Libertad Avanza (Freedom Moves Forward).

Known as the "omnibus bill," the reform revolved around temporarily giving emergency administrative, economic, financial and energy-related powers to the presidency; implementing sweeping labor reforms and the privatization of public companies; and providing incentives to attract foreign investment into Argentina.

The approval marks a much-needed win for Milei, who has struggled to find widespread support for his budget-slashing measures since he took office last December. But before it can take effect, the bill must be approved in the Senate, where it's expected to face stiff opposition.

The bill's road to approval in the Lower House

Milei took office amid Argentina's worst economic crisis in over two decades. Over half of the population struggled to afford basic goods and services (a figure that has since increased) and annual inflation in December 2023 hit 211%, a three-decade high.

The president immediately announced a series of economic shock measures, including devaluing the Argentine peso, eliminating government price controls, and slashing government spending. So far, the purchasing power of the average Argentine hasn't been able to keep up with rising costs, and protests against Milei's reforms have erupted across Argentina. In April, Reuters reported that Argentina's economic activity dropped nearly 6% year-on-year in February.

Milei, however, has vowed to march on, certain that the measures are the only way to break with the country's decades-long boom and bust cycle and, more lately, a period of stagnation that began in 2011.

On February 7, Milei's initial omnibus bill failed to pass in the lower house. Some economic aspects of the bill's final text didn't achieve consensus from different sectors of the opposition during the article-by-article review. At the time, Milei accused lawmakers of "betrayal," chastising an institution he has previously referred to as "the rat's nest."

Since then, Milei's Interior Minister Guillermo Francos set out to negotiate with adamant lawmakers. Following weeks of back and forth, the omnibus bill was reduced from 664 articles to 232, and lawmakers this week approve the bill in a 142 to 106 vote with five abstentions.

Milei's reaction to the lower house this time was far more cordial, thanking the body for "understanding the historical moment" and supporting the law.

In its current form, the bill includes labor and fiscal reforms, ends a proposed pension buy back scheme from the previous government and paves the way for the privatization and sale of some government-owned companies, including water and sanitation service AySA and national airline Aerolíneas Argentinas.

It also deregulates oil and gas production, and proposes an "incentive framework for large investments" which would provide tax benefits to foreign firms that invest over USD $200 million in Argentina.

Milei's political success and challenges moving forward with his omnibus bill

According to political scientist and Tiempo Argentino columnist Julio Burdman, there is a distinction between Milei's main support base (an aligned bloc of supporters that politicians can count on) and the governability base (an expanded bloc that can be called on when needed). He wrote on X that "Milei's hegemony is characterized by a narrow support [base] with a broad governability base."

Speaking about Milei's victory in the lower house, Burdman told The Latin Times: The approval wasn't unexpected. The first attempt in February was close, but something went wrong with the negotiation tactics." He added that the government spent the past four months working on getting the necessary amount of lawmakers on board.

Still, Burdman believes that the bill's road ahead could be rocky, and will require further negotiations between both senators as well as provincial governors, many of whom hold sway over their territory's senators.

"From now until the voting session in the Senate, there will be much more negotiations than we have seen since he took office," he said. "I've been doing some numbers: the government needs to flip some provinces. Some governors must hop into the initiative to make this happen."

Governors are very often the provincial party bosses, and it is common to have federal government ministers negotiate national issues with governors, who can influence their provincial congressmen and senators.

These negotiations could take time, and may pose a challenge for Milei's government.

"Right now, all I can say is that Milei still has not guaranteed in the Senate what he achieved in the Lower House, where he gathered a lot of new votes," Burdman said.

In the Senate, Milei's far-right coalition can only count on seven out of 72 votes and controls no provincial governments The opposition Unión por la Patria coalition likely wields 33 votes, just four away from a majority. Even if Milei were able to court votes from the right-wing PRO party, he would most likely fall short of the votes needed to overcome the opposition if it were to present a united front.

Minister Francos will most likely try to persuade senators and political bosses from the centrist Radical Civic Union (UCR) party, which holds 13 votes in the Senate. What's more, if just one of the over 200 articles is rejected in the Senate, the reform could fall apart, representing another black eye for Milei's government.

© 2024 Latin Times. All rights reserved. Do not reproduce without permission.

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