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Argentina’s Senate has rejected President Javier Milei’s sweeping emergency decree to deregulate the economy, in a major blow to the libertarian leader and his attempt to deliver reforms for the crisis-stricken country.
Senators voted 42 to 25 to reject the decree, with four abstentions. Issued in December it modifies or eliminates more than 300 regulations affecting the housing rental market, food retailers, air travel, land ownership, and more.
Milei, a political outsider elected in November, is struggling to overcome a hostile Congress to enact his radical change agenda. His La Libertad Avanza coalition (LLA) controls less than 10 per cent of Senate seats and was unable to win over centrist opposition legislators, most of whom on Thursday voted with the left-leaning Peronist opposition movement, which holds 45 per cent of Senate seats.
Many centrist lawmakers argued the measure did not meet the requirements for an emergency decree under the constitution, and that Milei must present his deregulation reforms as bills.
The decree will stay in effect until it is also rejected by the lower house, where Milei holds 15 per cent of seats. Its survival depends on negotiations with opposition representatives there.
The result will threaten investor confidence in Milei’s government and could put downward pressure on prices for Argentina’s sovereign bonds and the peso, said Amilcar Collante, an economics professor at La Plata National University.
“This is a worry for the market because the president is on the verge of losing . . . the only set of substantial economic reforms he has been able to introduce so far,” he said.
Milei already opted to withdraw the other plank of his legislative agenda — a multipronged omnibus bill aiming to overhaul the Argentine state — from the floor of the lower house last month after lawmakers rejected several key articles.
The president and his cabinet launched a fresh effort to pass a scaled-back version of the omnibus bill this month, starting intense negotiations with Argentina’s powerful 23 provincial governors, who hold sway over lawmakers.
The text of the new bill, shared with legislators this Thursday, contains 269 articles aiming to privatise state companies, expand presidential powers, and replace the system for calculating pension increases, among other things.
The defeat puts Milei in “a much weaker position”, while the governors, none of whom belong to LLA, are “feeling more empowered” going into those negotiations, said Juan Negri, politics professor at Buenos Aires’ Torcuato Di Tella University.
“Milei has so far been able to distract from his political weakness, but it is now very exposed . . . other politicians will attempt to pile on.”
However, Negri noted the success of Milei’s reforms will ultimately depend on his ability to quickly bring down inflation in Argentina, which is running at an annual rate of 276 per cent. “If he can do that, will be able to consolidate public support, and try again to get political support,” he said. “The economy will define him.”
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