Tuesday 21 November 2023

Argentina's difficult political balance, Mercosur and trade alliances beyond Latin America

With three digit inflation rates and decades of stagnation, forty years of democracy could mean absolutely nothing. In an election in which there were record numbers of voters, the incoming President Javier Milei got outstanding support accross the entire country with equally record numbers of provinces that came out to support him. 

It is not going to be an easy task. In fact, in Parliament opposition forces still have a commanding majority that could block every single attempt to change Argentinian politics and economics. The risk is that if more than 13 million voters that supported Javier Milei come to see Parliament as a sedicious force that stands on the way preventing changes then Parliament itself will be in trouble. Could government by decree become an alternative from the very beginning?

Argentinian Constitution extract

CHAPTER III Powers of the Executive Branch Section 99.- The President of the Nation has the following powers: 1.- He is the supreme head of the Nation, head of the government and he is politically responsible for the general administration of the country. 2.- He issues the instructions and rules necessary for the enforcement of the 16 laws of the nation, without altering their spirit with regulatory exceptions. 3.- He takes part in the making of laws according to the Constitution, promulgates them and has them published. The Executive Power shall in no event issue provisions of legislative nature, in which case they shall be absolutely and irreparably null and void. Only when due to exceptional circumstances the ordinary procedures foreseen by this Constitution for the enactment of laws are impossible to be followed, and when rules are not referred to criminal issues, taxation, electoral matters, or the system of political parties, he shall issue decrees on grounds of necessity and urgency, which shall be decided by a general agreement of ministers who shall countersign them together with the Chief of the Ministerial Cabinet.

The Constitution seems to indicate that only in exceptional circumstances the President can issue decrees and that 'The Executive Power shall in no event issue provisions of legislative nature, in wichi case they shall be absolutely and irreparably null and void.'. 

It is explicitly clear that the last and final word on legislative matters lies in Parliament and it is a Parliament in which the political party supporting the President directly will have 38 representatives in the House of Reprentatives of a total of 257 and in the Senate the number of Senators directly supporting the President will be 6 out of 72. Unavoidably, the President will have to seek support of other political parties to be able to pass any bills.

Given these numbers, all the scaremongering promoted by opponents of Javier Milei is totally unjustified. It is most probable that Mauricio Macri (Former President) and Patricia Bullrich (Former Minister under Mauricio Macri) of Juntos por el Cambio (Together for Change) will have a major say. 

The bone of contention will be that Javier Milei's electoral allies will have the seats that Javier Milei needs to govern and Javier Milei will be able to say that despite not having enough seats he has the popular mandate and that people supported his electoral platform.

If the President can manage to transform an electoral coalition into a governing coalition then there will be a peaceful working political transition. If the President does not manage to transform an electoral coaliton into a governing coalition then there will be political upheaval leading to dangerous political uncertainties.

In Uruguay, there are divisions in terms of supporting or not supporting Javier Milei. For example, Frente Amplio (Broadfront) in opposition was more inclined to support the losing candidate Sergio Massa. In Brazil, President Lula came openly in support of Sergio Massa. Javier Milei for starters indicated that he wanted to get rid of Mercosur - something he might not achieve given the fact that he will be effectively in coalition with Mauricio Macri and Patricia Bullrich.

Uruguay has expressed that it wants ever closer trade relations with China, independently of its membership of Mercosur. Argentina itself has plans to incorporate Chinese communications technology. Brazil is seeking a new alignement having become a supporter of new trade arrangements that will bring the country closer to economies linked to the Russian Federation and China.

In spite of the fact that there are other Latin American economies linked to Mercosur, Argentina, Brazil and Uruguay are the core of the trading block.






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