FOLLOWING the 1973 US-backed military coup in Chile, the country became a testing ground for neoliberal economics that was forcefully administered at the point of a bayonet.

Fifty years later, on the other side of the Andes, Argentinian President Javier Milei is seeking to introduce sweeping economic reforms that make the Chilean model seem relatively tame by comparison.

Unlike Augusto Pinochet in Chile, Milei did not seize power by force but was elected by a substantial majority in November of last year.

The self-styled “libertarian capitalist” took office on December 10, announcing his intention to take a chainsaw to the structures of the Argentinian state by the introduction of an omnibus Bill containing over 600 articles that would have granted him unprecedented powers that no other civilian president had enjoyed since the fall of the civil-military dictatorship and the return of constitutional rule in 1983.

With no majority in either chamber of Argentina’s bicameral legislature, the Bill stood no chance of becoming law. Some political analysts believe that its introduction was merely a ploy to negotiate a watered-down version that would still give Milei much of what he wanted.

Six months on, Milei has become the first president not to have passed any legislation during his first half year in office. However, that has not prevented him from using his executive powers to maximum effect by slashing public spending, making thousands of civil servants redundant and closing down the Ministry for Women, among others.

His omnibus Bill, now cut to 230 articles and known as the Base Law, was approved by the lower House of Congress in April, thanks mainly to the support of deputies loyal to former president Mauricio Macri who presided over a disastrous right-wing administration from 2015-19 that left Argentina mired in debt following the disbursement of a US$57 billion loan from the IMF.

On June 12, after a marathon session, the Bill was passed on the casting vote of the Senate president and Milei’s deputy, Victoria Villarruel, but only after further concessions had been granted, such as the withdrawal of proposals to privatise state airline Aerolineas Argentinas, the post office and publicly owned state TV and radio.

Nevertheless, when the Bill returns to the lower house at the end of the month, the deputies have the option to either approve the Bill in its amended form or reject the Senate changes and vote for the original proposals.

Some of the most contentious parts of Milei’s Bill include the intention to privatise virtually every public entity and service, erode labour rights and end the ability of retirees to pay missing years of contributions to access the state pension scheme.
 
The president would also be granted emergency legislative powers over administrative, economic, financial and energy-related issues for one year.

As bad as these measures are, potentially the most damaging part of the legislation is the “Incentive to large investors” (RIGI in its Spanish acronym) that would permit foreign investors in the areas of forestry, mining, energy, technology, tourism, steel, petrol and gas to enjoy significant competitive advantages over domestic enterprises.

The most significant concessions would allow them to avoid paying national and local taxes, repatriate their profits, be under no obligation to purchase infrastructure locally and have no responsibility for workers’ welfare in remote areas of exploration that were previously uninhabited.

Were they to be challenged, and in the event of a dispute, the Argentinian state would recognise their right to resort to arbitration under the notorious system of international investor-state dispute settlement mechanisms and would defend them against local or foreign lawsuits as well.

From a domestic business perspective, critics of the RIGI say that investment should not only create employment but also generate other productive sectors by stimulating demand for national inputs and raw materials.

They maintain that it should encourage higher wages and subsequent tax revenue that is then reinserted into a national economy that has been virtually stagnant since 2012. Instead, it could cost millions of jobs for workers directly or indirectly involved in industry, particularly those in small and medium companies.

It is indisputable that the process is incapable of promoting any form of controlled development for the benefit not just of business but of the entire population, will increase the plunder of natural resources by overseas corporations and have severe consequences as a result of linked legislation that will remove protections for the environment. The RIGI will negatively affect Argentina’s economic sovereignty and merely serve to exacerbate dependency on foreign capital.

None of this appears to be of the slightest interest to Milei. During his election campaign, he rightly identified Argentina’s chronic inflation problem as being people’s most pressing concern and is determined to bring it under control by the imposition of the most brutal “free-market” mechanisms to reduce a fiscal deficit that he sees as the root of the problem.

The resultant spikes in unemployment and levels of poverty are, he says, inevitable collateral damage in a war against inflation that will eventually lead the country to the sunlit uplands of wealth and prosperity.

Inevitably, his policies have provoked fierce opposition from trade unions and organisations representing the poor and dispossessed in the shape of massive marches and demonstrations around the country, but particularly in the capital, Buenos Aires.

As the Base Law was being debated on June 12, the thousands of protesters who had gathered outside congress were assaulted and beaten by paramilitary police in a clear message to the effect that dissent would not be tolerated.

Five politicians caught up in the melee were hit with pepper spray and ended up in hospital — though this was of no concern to Security Minister Patricia Bullrich, who ludicrously claimed that the police were just doing their job in preventing “a modern-day coup d’etat.”

Milei has spent 30 days of his first six months in office travelling around the world to meet leading right-wing politicians. A volatile individual, he has caused diplomatic incidents by publicly abusing the presidents of Mexico, Colombia and China as well as the prime minister of Spain.

Ironically, these antics and growing civil unrest in Argentina have made foreign capital wary of putting its money into the country, despite the ultra-favourable investment climate that Milei is attempting to create.

What investors want is stability, and half a century ago in Chile they had a repressive military dictatorship that gave them just that, in contrast to a potentially volatile scenario in Argentina where the polls show a growing number of voters beginning to doubt that things are going to get better any time soon.