By EMILIO CAFASSI
For these tricks of history, Javier Milei knew how to detect popular rejection in the face of political decomposition and decadence, calling it “chaste”
The celebration of Argentine independence on July 9 marked the end of a stage intensely sought after by President Javier Milei, after just over six months of complex – although successful – negotiations, blackmail and corruption. The level of collaboration from a broad political spectrum to achieve the result of signing the so-called “May Pact” (for the original purpose of celebrating and signing it on yet another anniversary of nationality) is much more decisive than the initiatives themselves presidential.
This pact represents the culmination of an offensive of unprecedented magnitude against popular sectors, the State and even smaller and less concentrated business sectors, which together generate greater demand for employment of the workforce.
Collaboration is reflected in the validity of the extensive and broad Decree of Necessity and Urgency (70/23), which the Chamber of Deputies does not repeal, despite the Senate having done so; the approval of the “Bases..” law, a limited version of the original that sank amidst the inability and lack of regulatory knowledge of the deputies, but which was later resurrected with some cuts; and the validity of the security protocol, which left dozens of victims of repressive terror, culminate in this political-symbolic gesture crowned the following morning with a military parade.
In short, Javier Milei is not alone nor is he a phenomenon that disappears with passing eccentricity. It is, on the contrary, the culmination of a web of agreements, between gifts and various favors, for a large majority of the political “caste” – whose condemnation the majority of citizens entrusted the execution to Javier Milei – while he publicly only verbalizes this condemnation, to anoint it with balms between four walls.
To sign the ten-point agreement, all governors were summoned and – judging by the result – also the presidents of the two national legislative chambers and, as always accompanies him, his own sister. The harvest was no less: it managed to get three quarters of the governors (18 of the 24, all men, in fact) to sign a generic declaration, rescuing the hegemonic phraseology of more than a quarter of a century ago, known as the Washington Consensus, also originally prescribed in ten points by economist John Williamson.
Both say practically the same thing as can be seen in the table created for comparative purposes. Both focus on fiscal discipline and balance, emphasize fiscal reform, enshrine the full liberalization of trade and barriers, privatization, legal security and private property. At most, they differ in terms of form in relation to public spending, where in the national case, there are even greater advances in labor and social security reform, in addition to detailing the emphasis on sharing federal taxes, which is so attractive to governors.
Without having a single governor from his own political party, “Freedom advances” (LLA), there should be no doubt about the genuine collaboration of the Peronists, the radicals and the party of Mauricio Macri (PRO). It can be argued that this is a mere symbolic gesture, even bizarre for being made after the cold austral midnight, without concrete executive consequences or political costs. It could be a simple participation in an event, like boring school days.
Comparison between the 10 points of the Washington Consensus and the May Pact
| Points | Washington Consensus | May Pact |
| Fiscal Discipline and Fiscal Balance | Promotes discipline in fiscal policy, focusing on avoiding large fiscal deficits relative to GDP. | It insists on a non-negotiable fiscal balance. |
| Tax reform | It proposes a tax reform that broadens the tax base and adopts moderate marginal tax rates. | It proposes a tax reform that reduces tax pressure and simplifies the lives of Argentines. |
| Commercial Opening | Promotes trade liberalization and the elimination of quantitative restrictions. | Defends opening to international trade so that Argentina can once again be a protagonist in the global market. |
| Privatization | He defends the privatization of state-owned companies. | Although it does not explicitly mention privatization, the provinces' commitment to natural resource exploration and other reforms could imply indirect privatization. |
| Legal Security for Property Rights | Highlights the importance of legal security for property rights. | It insists on the inviolability of private property. |
| Reduction of Public Expenses | Redirecting public spending on subsidies for investment in essential services for development. | It aims to reduce public spending to historic levels of 25% of GDP. |
| Education | Greater investment in primary education. | It proposes useful and modern initial, primary and secondary education, with full literacy and no school dropouts. |
| labor reform | It does not directly address labor reform. | Promotes a modern labor reform that encourages formal work. |
| Social Security Reform | It does not specify pension reform. | It proposes a pension reform that guarantees the sustainability of the system and respects those who contributed. |
| Federal Tax Sharing | Doesn't mention it. | Re-discussion of the sharing of federal taxes to eliminate the current extortionate model. |
| Foreign Direct Investment (FDI) | Liberalization of barriers to foreign direct investment. | It does not explicitly mention foreign direct investment. |
| Deregulation | Advocates the abolition of regulations that impede market access or restrict competition. | It does not explicitly mention deregulation, although the proposed reforms may involve less regulation. |
This is not the case with the pompous law “Bases and starting points for the freedom of Argentines”, which, being a reduced version of the law omnibus original February (which is why it is called the law combi), is subject to all types of negotiations for months, although no less comprehensive, but with broad and profound consequences.
This law, although in the Senate there was a tie – calculated in detail to allow final approval by the vice president – in the Chamber it had overwhelming support after 64 hours of session. It obtained 147 votes in favor against 107 against and two abstentions. Its complement, the law on “Palliative and Relevant Fiscal Measures”, called the fiscal package, obtained 144 votes in favor against 108 against and three abstentions.
In a synthetic and exclusively descriptive way, the law declares an emergency in administrative, economic, financial and energy matters for one year, where the Executive Branch receives special powers to manage these areas, reporting monthly to Congress (art. 1). With regard to State Reform, it emphasizes administrative reorganization, including the modernization of processes and the reduction of public spending (art. 20).
With regard to privatization and deregulation, it highlights measures to encourage private investment (art. 40) and the deregulation of key sectors of the economy, the sale of non-strategic state assets to reduce the fiscal deficit. It also introduces flexibility in the labor market with the argument of promoting employment and competitiveness through the simplification of labor regulations and the reduction of the tax burden for employers (art. 60).
Special mention deserves the chapter on the “Regime of Incentives for Large Investments” (RIGI), which establishes incentives and protection of “acquired rights” for investments that exceed 200 million dollars with an adhesion period of 2 years from the sanction of the law , extendable for a period of up to one year. It offers tax, customs and exchange incentives for 30 years, including a reduction in Income Tax from 35% to 25%, accelerated VAT refunds and zero retentions on exports resulting from these investments. It appears that the articles were written to serve large hydrocarbon exploration groups, in addition to extractivists in general (articles 164 to 207).
For its part, the so-called tax package establishes an exceptional regime for regularizing tax, customs and social security debts that includes benefits and remissions of interest and fines for taxpayers who adhere (arts. 1 to 4). Furthermore, it implements temporary measures to alleviate the tax burden of individuals and legal entities affected by the economic crisis, offering payment facilities and interest reductions for tax debts (art. 6). Creates a regime for regularizing undeclared assets, both in the country and abroad, using the renowned “bleach"[I] in Argentine economic history, establishing specific deadlines and conditions for the declaration and payment of taxes on these goods (articles 18 and 28).
This result differs substantially from the original initiative, the law omnibus? Or, in other words, must it have succumbed due to the resistance and dynamism of the “caste” it fought, renouncing cardinal aspects of its strategy? On the one hand, it had to reduce the extent and duration of delegated powers (arts. 3 and 4), while, on the other, it had to limit the declaration of public companies subject to privatization (arts. 8 to 11th).
Furthermore, some initiatives fell by the wayside, such as the creation of a single public contracting regime, the regulation on the advertising of public events without political and personal promotion of public servants (something precisely progressive and particularly irritating for the “caste”), as well as such as more detailed reforms of energy and environmental legislation or the educational system. I prefer to consider all of this a political cost of your registration and consequent issuance as a member of that same “caste”.
None of the regulations, already in force, contradict the economic-social direction that the government is implementing based on the DNU, which parliament refuses to revoke. On the contrary, it deepens it with devastating consequences. In general terms, a detailed study by the Interdisciplinary Institute of Public Policies of the University of Buenos Aires and Conicet (IIEP) maintains that the current recession is one of the biggest in history in sectoral terms, followed by that of 1975-1978 (the end of the government of Isabel Perón and state terrorism), although the losses were distributed a little more equally than before.
Without space to go into details, we note that the Gross Domestic Product (GDP) fell 5,1% year-on-year in the first quarter of 2024, with the exclusive growth in exports due to the boost in the agricultural sector, which improved compared to the previous year, that of prolonged drought.
In case the analogy of the aforementioned study was not sufficient in economic matters, the event ended with a military parade. One of the most widespread objections to the signing of the May Pact in Tucumán and the parade is the magnitude of the financial cost of both acts in a context of a heartbreaking increase in poverty and the proclaimed reduction in fiscal expenditure. I share this criticism, but it doesn't seem essential to me.
The obscene display of the paraphernalia of war and repression, of uniformities and disciplines in their broadest sense, is repugnant to me. Far from the honor and pride demonstrated, its institutions deserve repudiation and shame. In addition to my subjective impact, this forced “reconciliation” with society has political consequences and it is no coincidence that the economic recipe and its implementation are so similar to the period of state terrorism.
Near the stage were banners that vindicated the 1980s coup plotters, the leaders who delivered the children to the Falklands. On Avenida Cabildo there was a parade of cars Falcon dressed in national symbols – a model used by the dictatorship to kidnap those who later disappeared. It is no coincidence that the vice president, defender of genocide and the criminal institution, joined in that antics by riding aboard a tank alongside Javier Milei, who was also making shooting gestures, Bolsonaro style.
Through these tricks of history, Javier Milei knew how to detect popular rejection of political decomposition and decadence, calling it “chaste”, to exclude himself – not without a certain right to consider himself outsider – he ends up merging intimately, trapped in the clutches of undeniable corruption or simply seduced by its sweetness into a form of organic and systemic contamination.
*Emilio Cafassi is a professor of sociology at the University of Buenos Aires.
Translation: Arthur Scavone
Translator's note
[I] Whitening refers to the regularization of money obtained through means that sought to escape fiscal control.
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