What might happen to Argentina after Milei’s mega-decree?

Argentina’s far-right libertarian President Javier Milei unleashed a mega-decree midweek changing or altogether scrapping 366 economic rules, a country’s first.

None of its previous leaders, democratically elected presidents and dictators alike, attempted such a massive dismantling of the system.

It is also precisely what Milei promised on the campaign trail, brandishing a live chainsaw to symbolise his bid to slash public spending, his response to Argentina’s triple-digit inflation after decades of financial mismanagement.

While, according to Argentine law, Congress still has the power to sink Milei’s program, many are concerned his deregulatory decisions might make matters worse in the South American country of 45.8 million. 

What is Millei’s decree set to change?

Ten days after taking office, and on the eve of the festive holidays, Milei presented his DNU, or “necessary and urgent” decree to loosen some of the rules governing the country’s economy as annual inflation hit 160%.

One big change will be the removal of all rules between tenant and landlord, such as laws putting a cap on rental increases.

In recent years, landlords have increasingly priced their properties in US dollars to avoid being stuck with rental income long overtaken by soaring inflation. This has been a nightmare for renters in a country where access to dollars has been strictly controlled. The deregulation will now make charging rent in dollars legal.

Milei has also loosened labour laws, with the trial period for new employees going from three to eight months. Compensation laws for dismissal without cause have been modified in favour of companies and he plans to renegotiate labour agreements in force since 1975. 

He also scrapped limits on exports and said the internet market will be liberalised.

Milei also ditched rules preventing the privatisation of state enterprises and has already set his sights on national airline Aerolineas Argentinas and oil company YPF, while namedropping Elon Musk’s Starlink as the company meant to take over the country’s satellite system, ARSAT.

He also moved to limit the right to strike, which is enshrined in the constitution.

Additionally, he moved to strike all subsidies to the public transportation company, which might see an immediate ten-fold increase in ticket prices in one of the most urbanised countries in the world.

Protesters have ‘Stockholm Syndrome’

Milei, an outsider whose rise to the top office stunned much of the country, blames the interventionism and protectionism of previous governments for choking the economy.

Before the announcement of the decree, the new government had already devalued Argentina’s peso by more than 50% and announced huge cuts in generous state subsidies of fuel and transport from January.

“The goal is to begin the path of reconstruction of the country, to return freedom and autonomy to individuals and begin to dismantle the enormous amount of regulations that have stopped, hindered and impeded economic growth,” said Milei.

Of those protesting his measures he said: “There may be people suffering from Stockholm syndrome. They are infatuated with a model that impoverishes them.”

The opposition — recently ousted from government — has slammed Milei for the decree and sees it as a way to bypass his lack of a majority in Congress.

Milei’s Libertad Avanza party, which is only two years old, has only 40 of the 257 seats in the lower house, and seven of 72 in the Senate.

“This is not the way. Send the reforms as bills. Do not be afraid of democratic debate,” said German Martinez, parliamentary chief for the Peronist coalition Union for the Homeland.

Constitutional lawyer Emiliano Vitaliani told AFP that the highest laws of the land say that “in principle, laws cannot be modified by decree and the president cannot replace Congress.”

Political scientist Lara Goyburu said the decision “leaps past all limits, decreeing many issues that need political agreements from Congress and the provinces.”

The decree can be overturned if it is rejected by both houses of Congress, said Vitalini. Otherwise, it comes into force on 29 December.

“The president has made a very big bet, and its success will depend on his ability to obtain legislative support which, until now, is not known,” said constitutional lawyer Alejandro Carrio in a column in Argentina’s La Nacion newspaper.