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Argentine Political Outlook (May-23-16) PDF Imprimir E-Mail
May-23-16 - by Rosendo Fraga

1. According to the ruling coalition, the veto of the "occupational emergency" bill allows Macri to regain the political initiative and be strong towards unions and peronism, marking a difference from radical party administrations. The president could have impeded the final approval without resorting to the veto. If the Cambiemos congress members had not given quorum, the previous week scenario would have occurred with the FPV, the Dissident Peronism led by Diego Bossio and the left gathering 109 members, 18 away from the quorum, since Massa's bloc would not have given it. But Cambiemos' deliberate strategy was to allow for the final approval of the law to veto it swiftly. In the ruling party's view, such move took Massa by surprise as he was trying to impose a middle-stance bill favorable to the SMEs -which account for 70% of the registered employment- and allowed the president to show he won't give in to Peronism and unions, which as happened with past non-peronists governments, gathered in Congress to limit the power of radical party Administrations. Although it was a political tactic, it must be noted that Macri announced the veto before giving it half approval at the Senate and when in fact he resorted to it 131 times in his 8-year city Mayor Administration, when Nestor Kirchner actually used it 36 times in four years and Cristina Kirchner, 36 times in eight years. Macri has shown he is willing to prevent the approval of the laws driven by the opposition, which is important given his weakness in Congress. Historically, and keeping control of one third of one of the two Houses, the president has been able to prevent Congress from annulling the veto, since two thirds of the Houses are required for that.

2. In a mid-term view, the veto sparks doubts on whether the ruling coalition will be able to push its bills in Congress. Just as in late March Macri had the most important political victory in his government when managing to get the holdouts bill approved by more than two thirds at the Senate and almost the same in the Lower House, now with this bill -which the opposition calls "anti-layoffs" and the ruling coalition labels "anti-employment"- he had his most important political defeat so far. The vetoed bill was approved by 48 to 16 at the Senate and by 147 to 3 in the Lower House, as 88 Cambiemos members abstained. Besides, for the first time, all factions of peronism and all union confederations agreed on a political action despite their divisions and lack of unified leadership. The doubt towards the future is whether the government will be in a capacity to impose its own parliamentary agenda. The veto and the emergency decree are exception instruments, which cannot be the basis for governance. To show its capacity to impose the agenda, the Administration negotiates with governors that in mid-June the Senate should give consent for the nomination of the new members of the Supreme Court proposed by the Executive branch.

3. The same week that the Executive used the veto for the first time, it made the most important compromise to governments and unions -key players in Peronism. The delay in honoring the agreements brokered in February and Marc with both was the main cause of the ruling party defeat in Congress, between April and May. However, last Wednesday, the Executive agreed a 9-point refund of the coparticipation for the 15 governors claiming for it -3 in cash and 6 through borrowing- which had been withheld by Kirchnerism and even before in some cases. At the same time, allocations worth 28 billion pesos were transferred to the provinces, which had been delayed in the first quarter of the year. On the following day, at the meeting of the council of minimum, vital and mobile salary, the Administration honored two announcements made in February to unions: an increase of the minimum wage from 6,000 to 8,000 pesos and the increase of the unemployment insurance from 400 to 3,000 pesos. During the week, the delayed agreement was also honored to start giving back the 29 billion pesos withheld by Kirchnerism to the union-run social welfare funds, reimbursing the first installment of 10% of such figure. The budget allocations for social assistance were increased -especially in the province of Buenos Aires- and the president pledged the head of the peronist state union (Rodriguez) that there will be no more dismissals in the public sector. With these actions, the veto will not cause a rupture among government, unions and governors, but it is clear that in this political context, the approval of the law could have been averted.

4. Meanwhile, the social context, the corruption investigations and the foreign policy remain the three central pillars. The social leader closest to Macri (Margarita Barrientos) said that 80 families attended her community kitchen a few months ago, and now the figure has gone up to 120. The Church warned that the combination of increased inflation and total or partial job layoffs in the informal or "black" employment sector, have caused a hard context for the vulnerable sectors. Despite the ruling coalition signals for the litigations against Kirchnerism to cool down, several judges and prosecutors keep on moving. But the judge of the Baez case (Casanello) shows political ductility, which according to the political signals, could prosecute the former president or not. At the same time, the prosecutor investigating the links to the Macri family with "the Panama Papers" expands his investigation field. But in foreign policy, government shows concrete advances. In the past days, the president made official the candidacy of the foreign affairs minister (Malcorra) as the UN Secretary General.  Argentina started gaining support to be the venue of the G20 Summit next year and the OECD receives in June 1 Argentina's request to be a member country of the organization. The visit of the Brazilian foreign minister (Serra) shows the convergence between the two countries both in terms of political and economic direction, as was said by President Temer, and also in foreign policy, as shown by their attitude towards the Venezuelan crisis.

5. To conclude:

a) According to the ruling coalition, the veto of the "occupational emergency" bill allows the president to resume the political initiative and stand strong before Peronism and unions.

b) Now the question is the government's capacity to push its own bills, by showing that when Peronism gets together, it has broad dominance of both Houses.

c) While the president resorted to the veto, he also honored agreements with governors and unions, which had been delayed, in terms of co-participation and the union-run social welfare funds.

d) At the same time, the social context shows signs of deterioration, the corruption investigations continue at a different pace and foreign policy shows progress in different fields.

 
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