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Argentine Political Outlook (May-02-16) PDF Imprimir E-Mail
May-02-16 - by Rosendo Fraga

1. The half approval at the Senate of the anti-dismissals bill is the first relevant political defeat of the Cambiemos Administration in Congress. Before the vote, the President announced that if the bill, which suspends dismissals for 6 months and considers a double compensation as an alternative is approved, he would veto it. Despite this, on April 27 the bill was approved by 48 to 16. Not only the FPV bloc voted for the bill but also the Federal Peronism and the Frente Renovador, while Cambiemos only had its own legislators. Less than a month earlier, on March 30, exactly the opposite happened: the Senate gave final approval to the holdouts bill by 54 to 16, obtaining the support from more than half of the FPV senators. This change confirms that the four-month "honeymoon" enjoyed by Macri ended in April (from December 10 to April 10). The bill moves to Congress, where Massa attempts to moderate it with uncertain outcomes. If the bill was passed and the President vetoes it, two thirds of both houses would be required to override the veto. They do exist at the Senate but they are not confirmed at the House since although Cambiemos only has one third, the entire opposition would be required to vote against the veto, which is not easy to get. As happened under Alfonsin and De la Rua, before completing one year in office, Macri had the first limit to his power -a combination of trade unionism and Congress. For the former, the situation was the law on trade union reorganization, the latter faced the labor reform and now the anti-dismissals bill is at stake. But the Senate also gave half approval to the law which forces the Executive to request the authorization of Congress for borrowing purposes and postponed -without a confirmed date- the discussion of Macri's proposals to fill the vacancies in the Court.

2. Two days later, an unprecedented trade union protest brought together the five union confederations for the first time and had the support of the various factions of Peronism and the left. Unions were able to mobilize approximately 100,000 people, in a rally in which they expressed their demonstration power, showing five times more capacity than Kirchnerism two weeks ago, when it gathered around 20,000 people. The keynote speaker was Moyano, who claimed that if the President vetoed the anti-dismissals bill, trade unions would react. In statements issued on the next day, he said in relation to the veto that trade unions could launch a strike and the same was expressed by other relevant trade union leaders. The President answered with a very weak gesture, attending the May 1 "locro" served at the headquarters of the food trade union, where the leader (Barrionuevo) decided to not attend at the last minute, just as he had done on the day before with the trade union demonstration. The reality is that the demonstration showed more power than a strike, since the latter is done by controlling the transport unions and the demonstration, instead, required the union structure to work effectively to launch it. Alfonsín had his first trade union protest in the ninth month of Government, De la Rua in the third and Macri in the fifth. But behind the Trade Union protest is the fact that, in February, the Government agreed to return the 26 billion pesos that Kirchnerism retained from union-run social welfare funds in ten installments and after more than two months of the agreement the first installment has not yet been paid.

3. The demonstration showed that trade unions and not the Governors, are becoming the axis of Peronism. April records the highest monthly inflation since May 2002, in addition to the lack of efficacy of social measures to mitigate the impact on the low-income sectors and a strong sub-execution of the State spending, including the social health and security allocations. This combination has created a change in the political and social climate that helps explain how in less than a month, both Peronism and trade unionism, went from a pro-dialogue opposition to a harder one. This week the new authorities of Peronism take over, with Gioja as president, Scioli as vice president and a union leader (Caló) as number three. It is a transient leadership but in which La Campora has been displaced from the top, as happened in the trade union demonstration, where the pro-K union leaders could not make it to the stage and even several were booed by union activists. Both the demonstration organized by Kirchnerism due to Cristina's return as well as the trade union protest, show that "the street" has become the sphere of political decision and for now Cambiemos has no answer in this field.

4. On May 10 Macri completes five months in office and the political initiative must urgently be taken up in a socio-economic context which is harder than expected. The central issue that must be solved is whether a permanent coalition with sectors of Peronism is required to maintain governance, as the Governor of Buenos Aires (Vidal) has with Massa. Without a permanent coalition, every step that Government takes in Congress needs a specific negotiation, that becomes more difficult when the situation gets complicated. The problem is that a permanent coalition requires granting participation in power which is resisted by Macri for now. Also the Government must consider whether the ministries of public security and social welfare -the two ministries that operate in relation to "the streets"- should require a transformation. Finally, consideration should be given to the slow pace at which social support measures are being taken and the budget sub-execution that affects critical areas, such as the allocation for shantytown works, of which only 1% was executed in the first quarter.

5. To conclude:

a) The drastic change at the Senate in less than a month and before Macri completes five months in office, ratifies the "honeymoon" period of the current Administration is over.

b) The trade union demonstration confirmed it in a month when the convergence of soaring inflation, delayed implementation of social support measures and spending under-execution, have affected the "vulnerable" sectors.

c) The protest of trade unions shows them as the axis of peronism -and not the governors- and Kirchnerism is one part of Peronism, although a minority share.

d) In view of the changing context, the Cambiemos Administration must consider whether it needs a permanent coalition with sectors of Peronism to consolidate governance.

 
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