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.

Javier Milei: New President for Argentina

The electoral success of Javier Milei was such that Sergio Massa - the Justicialista contender - spoke before official data was published to concede.

It was essential for Sergio Massa to make vows for a peaceful and proper transition indicating that dialogue and peaceful coexistence are the rule in a country with extraordinary high inflation rates.

The key word is change. 'We need change. We cannot expect improvements if we keep implementing the same policies over and over again'. 

On December 10th, 2023, the new President will be officially, formally, inaugurated. Time to have a look at the new Argentinian Parliament. Javier Milei was successful in most Argentinian provinces and this includes Buenos Aires where he was successful in areas that had traditionally supported Justicialismo (Peronismo).

It is foreseen that from this evening within Justicialismo a leadership struggle is just beginning and that former President and now also former Vice President Cristina Fernandez will lead Justicialismo once Sergio Massa lost the Presidential Election.

There will also be a new balance of forces within the Union Civica Radical that divided itself. Some chose to support Sergio Massa and most of them chose to support Javier Milei. It is also said that, in spite of getting 56% of the votes, given the need to reach agreements in Parliament to be able to govern, the new President will have to be more moderate than he appeared to be during the electoral campaign.

The size and role of the state will be at stake. The general philosophy is to reduce the Welfare State to promote employment, to stop paying people not to work. There will be both ideological and financial changes. With three digit inflation rates, a huge effort will have to be made to generate enough jobs to be able to cut the Welfare State without a major upheaval and this indicates that any changes will have to be gradual in a country in which a very high percentage of its population lives below poverty levels.

Javier Milei indicated that he has in mind a different idea regarding Mercosur, but this will have to wait while the new President tries to sort out the internal situation in Argentina.

Commentators define Javier Milei as a charismatic leader and that charisma is based on success and that the electorate chose Javier Milei because they expect miracles and that to be able to produce miracles the new President will soon be in a collision course with traditional political forces that chose to support him to defeat Justicialismo. 

Argentina is a country in which both Cristina Fernandez and Mauricio Macri (one Justicialista and another Radical) have still a strong power base. Regardless of the electoral success (56%), the new President will have to navigate in a country in which he will have to deal with powerful foes and friends that have their own political agendas. It has been said that younger generations belonging to the upper middle class are leaving the country and that a high number of the younger generations that belong to the lower middle class no longer believe in democracy.

Second Round of Elections in Argentina: Radical Bullrich endorses Milei against Peronista Massa

 

Lider Radical Patricia Bullrich distances herself from two sectors of the alliance that supported her candidacy in the first round of elections to reject Peronista (Justicialista) candidate Sergio Massa (Argentinian Economics Minister) and support Javier Milei. 

Cristina Bullrich said she could not possible support Sergio Massa that she responsabilizes for the state of the economy in Argentina.

Her support for Javier Milei keeps the contest wide open. She got 24% of the vote in the first round of elections. Other political leaders have shown their allegiance of one of the two remaining Presidential Candidates. Divisions in Argentina spread across national borders and Argentina is one of two most powerful players in Mercosur. It is usually said that if Argentina sneezes Uruguay catches a cold.

In Uruguay, the political crisis surrounding the award of a Uruguayan passport to a well known drug trafficker is rocking the ruling coalition headed by President Luis Alberto Lacalle Pou of the Partido National - one of the two conservative parties that make up the ruling coalition. The Opposition represented by Frente Amplio (Broad Front) plans to focus the heat on President Luis Alberto Lacalle Pou to reveal how he knew about the affair. At this moment in time, Cabildo Abierto - member of the ruling coalition - has expressed doubts about remaing as member of the coalition.

Everything in Argentina and in Uruguay is touch and go. A return of the Frente Amplio is not unthinkable if the ruling coalition falls apart. Brazilian President Luiz Inacio Lula da Silva has publicly endorsed Sergio Massa and is ideologically closer to Frente Amplio. It must be said that Javier Milei has stated that he wants Argentina to leave Mercosur. So this is more than a second round of a Presidential Election in Argentina. The survival of the Mercosur is at stake and relationships inside the bloc and outside the bloc could be affected by what happens in the next fews days in Argentina.

Allende before, Lula next

 

In the 1970s, many in the left celebrated the arrival of Salvador Allende. 11 September 1973 ended with bloodshed and the rest is history.

I happened to be in the River Plate region at the time. I was told about the imminent military coup in Chile and was even told when and how it was going to happen.

There are different versions about Salvador Allende's death: one version of events was that he killed himself not to be arrested and another version is that he was killed when he was still at La Moneda Palace. It makes no difference. The fact is that that put an end to his life and to his government.

This is Lula's second coming and this time the difference between his party and the opposition is less than 1 per cent of the vote. This means that opposition in Parliament will be fierce. As soon as Lula tries to implement any policy that goes against the flow, the transit of any bill through Parliament will be traumatic. 

When Latin American countries go left, alarm bells start ringing in the US State Department and like it happened in 1973, the CIA and others will have already made contingency plans to deal with governments that are seen as a security threat to the USA.

In Argentina, the second most important member of Mercosur, the situation is unbearable. Neither Radicales nor Justicialistas have been able to bring things under control. Indebtedness, galloping inflation in Argentina has led Uruguay to take urgent measures to curb importation of goods coming from Argentina as a massive influx would endanger Uruguay's own economy.

What happens in Chile? Well, just a few days ago a Referendum was called to try and reform Pinochet's Constitution and there were not enough votes to change the Constitution. The fact that this happens many years after the end of the military regime tells you, without a shadow of a doubt, that the country is very much divided. And what happens in Venezuela? Let us remember that Uruguay, Argentina, Brazil, Chile and Venezuela are members of Mercosur. With Lula at the helm, will Brazil get closer to Venezuela and Cuba? Left-wing hope could well lead to left-wing tragedy.