The government led by President Mauricio Macri has pushed its proposed pension reform through the federal congress. Pension reform is an integral part of the wider economic reforms that the Macri administration is seeking to implement to ensure Argentina’s medium and long-term economic growth, and the approval of the bill in the opposition-controlled congress constitutes a political victory. However, violent public protests organised by groups opposed to the pension reform, which include leftist political groups, civil society organisations, and unions, have depleted Macri’s political capital.
Following the positive performance in October’s mid-term federal legislative elections by the ruling centre-right Cambiemos coalition, which succeeded in increasing its minority representation in congress, the Macri government announced that it would seek to promote a series of structural economic reforms including labour, fiscal, and pension reform, to boost Argentina’s domestic economy. It opted to try to get the pension reform – arguably the most controversial of all the reform initiatives – through congress first.
The government’s proposed pension reform seeks to change the national pension system in order to make it sustainable and to reduce the fiscal deficit. This is to be achieved by changing how pension pay-outs are calculated, linking this to the national inflation rate and average salaries rather than to average salaries and the monthly takings of the national social security administration (Anses). The government argues that, in the long term, the changes will benefit pensioners by ensuring that pension pay-outs keep up with inflation. But opponents of the reform complain that in the short-term the proposed changes would negatively affect the level of pay-outs currently received by pensioners (with these due to fall by 8% next year according to some studies) as the inflation rate is expected to be lower than the average increase in Anses takings in coming years.
Hard-line leftist political opposition and vested interest groups such as the trade unions were always likely to look askance at the government’s proposed reforms. But pension reform affects a larger proportion of the population and so resistance to it is stronger and more widespread. In fact, resistance to the initiative has proved to be much stronger than the government had initially foreseen. The government submitted the pension reform bill to congress in November hoping that it could be approved before the end of year. But, after it was approved by the senate on 30 November, the bill became mired in the lower chamber last week, when opposition legislators obstructed its debate. Meanwhile, outside congress, opponents staged large demonstrations in rejection of the bill.
The turmoil outside congress, where some demonstrators clashed with the police while trying to break into the building, and inside congress, where legislators almost came to blows during heated confrontations, resulted in the suspension of the 14 December session in the lower chamber, when the deputies were scheduled to vote on the pension reform bill. However, the government was undeterred and another vote on the bill was scheduled for four days later. This once again prompted opponents to call for a mass protest march to congress to try to stop the bill’s approval. The protest march was well supported with thousands of people taking part. But this time the police erected an extensive cordon around the congress building to prevent protesters from trying to storm it.
Political costs
This led to a pitched battle between anti-riot police and some 300 hooded protesters who hurled sticks, rocks, and Molotov cocktails at the police line. The police resorted to tear gas and water cannon to repel the protesters. The disturbances left a toll of over 200 people injured (125 police officers and 33 civilians), with over 60 arrests made. Meanwhile, the Confederación General del Trabajo (CGT) umbrella trade union declared a 24-hour general strike in support of the protests. The CGT strike was observed by practically all public transport sector unions leading to the suspension of all bus, metro, and rail services as well as the closure of national and international airports around the country, causing the cancellation of hundreds of flights.
However, none of this stopped legislators in the lower chamber from continuing to debate the pension reform bill. Eventually, after 17 hours of intense debate (in which opposition legislators tried to use up as much time as possible to delay the vote) deputies voted on and approved the bill in the early hours of 19 December. The bill received 129 votes in favour and 117 against in the 257-seat chamber. The minority Cambiemos bench succeeded in securing the votes of sufficient moderate deputies from the majority bench of the main opposition Partido Justicialista (PJ, Peronits) to pass the bill. This feat was achieved in no small part thanks to the fiscal pact that President Macri reached with the governors of the country’s 24 provinces (most of whom are Peronists) under which he agreed to redistribute more federal taxes to the provinces in exchange for their support for the economic reform package.
-
Governors come out in support of reform
Underlining their support for the fiscal pact that they have reached with President Macri, 12 provincial governors publicly expressed their support for the pension reform bill on 18 December ahead of the vote in the federal chamber of deputies. After holding a meeting with Macri’s interior minister Rogelio Frigerio, the governors said that the pension reform would help to strengthen the finances of the federal government as well as the provinces. Among the governors that attended the meeting were some members of the hard-line opposition Kirchnerista Peronist faction such as the governor of Tierra del Fuego, Rosana Bertone, and the governor of Tucumán, Luis Juan Manzur, who served as health minister (2009-2015) in the previous Kirchnerista government.
Macri was able to reach a pact with the provincial governors due to October’s electoral result. But with those opposed to the pension reform vowing to continue their protest campaign and extend it nationwide until the reform is scrapped, governors may be hesitant to continue backing the reforms if social discontent becomes more widespread. The CGT’s decision to support the protests could also lead to a breakdown of the working relationship that the Macri administration has been able to establish with the union. This could in turn derail the labour reform. Following negotiations with the government, the CGT leadership agreed to offer its support for the proposed labour reform, but this could change if public opposition to the pension reform grows.
Macri is now trying to shore up public support for his administration to continue advancing with its proposed reforms. The clearest example of this is his decision to approve the payment of a one-off Ar$750 (US$42) bonus to all pensioners who receive less than Ar$10,000 in monthly pension pay-outs, which equates to 72% of all pensioners, to compensate for the lower pay-outs they are expected to receive under the reform next year.
Macri launches naval sweep
Another factor that has negatively affected the government’s image in recent weeks is the disappearance of the ARA San Juan naval submarine. The ARA San Juan and its 44-strong crew disappeared on 15 November while returning to its home port of Mar del Plata, Buenos Aires province, after conducting a routine patrol of Argentina’s southern territorial waters. With the authorities still unable to find the vessel, the case has raised serious questions about the navy’s handling of the emergency.
On 15 December President Macri ordered the replacement of the navy commander, Admiral Marcelo Srur, with Rear Admiral José Luis Villán. The change came amid rumours that Macri was unhappy with the way in which the navy command dealt with the case of the ARA San Juan and was considering conducting a major shake-up of the command. It also came after the defence ministry announced the creation of an investigative commission tasked with determining exactly what happened. Meanwhile, on 20 December, the federal chamber of deputies voted in favour of an opposition-proposed initiative calling for the creation of a congressional investigative commission to look into the ARA San Juan case. The initiative is now with the senate. If approved, the commission could unearth uncomfortable details about the authorities’ failings in the case.
-
Macri denounces orchestrated violence
On 19 December, President Macri defended the approval of his government’s pension reform bill and condemned the violent protests organised against the initiative. In a televised press conference from the Casa Rosada presidential palace, Macri insisted that the pension reform would be beneficial for the country and denounced the violent protests as an “orchestrated” attempt by his political detractors to destabilise his government and undermine democracy. “Despite all they did, we showed that democracy works in Argentina; we had a 17-hour debate in which the opposition spoke for 14 hours. They expressed their views and then there was a vote,” Macri said, adding that “nothing justifies the violence…and we will combat it in the judiciary”.