Argentina: the Governors and Government go to War, Milei Spews Bile, and INADI is to be closed down
I wrote the text below before reading this; the dispute is not fundamentally about the transport subsidies. It’s about the Central Bank refusing to allow Chubut to use the usual methods to finance its debts and holding on to its share of its federally elected taxes to clear them. No wonder the other governors back Torres. They don’t want to be treated like deadbeats being pursued by the banks for credit card debt.
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A couple of weeks ago I wrote
I don’t think the threats (by President Mile) against the governors and deputies are going to work, nor will stopping transport subsidies. It’ll just alienate them further.
And that’s exactly what has happened. Ignacio Torres is Governor of the oil and gas rich Province of Chubut. He’s also a member of Mauricio Macri’s PRO party and so you’d think he’d be a natural ally of Milei as PRO is all about free markets and getting guys with MBAs to run everything. In any sensible alternative world he would be, but not in Argentina. In retaliation for the governors refusal to back his now-withdrawn omnibus law Milei has cut off subsidies for public transport in their territories. In response Torres has threatened to shut down oil and gas production on Wednesday if they are not restored.
Can Torres do this? Who knows, we’re in uncharted territory. Article 124 of the Argentine Constitution gives “original dominion” of their natural resources to the provinces, not to the nation. But the exploitation of the oil and gas in Chubut has been licensed to various companies and the Constitution also guarantees the inviolability of private property. So it’s a legal stalemate. What is certain is that if Torres really wants to stop production at the well heads he’ll be able to find a way of doing it, legally or otherwise. The provincial security forces and public employees in general know their salary depends on him. His stance has been backed by all the Juntos por el Cambio (Together for Change) governors as well as those of the rest of the Patagonia region. They argue that they are only asking for their rightful share of the taxes that the national government collects in their territories.
Milei has responded by accusing Torres of being a chavista (!), calling the governors as a group “fiscal degenerates” and retweeting imbecilities like this, which suggests that because Chubut didn’t exist when the national state was founded it is a second class province. As legal scholars have been quick to point out, all Argentina’s provinces enjoy the status of pre-existence to the state regardless of when they were incorporated into it. Milei may have read a lot of books by Austrian economists but he seems to have missed out on high school civics.
So what’s Milei’s strategy? Why has he alienated leaders who should be his natural allies? I don’t think he has one, and because that’s who he is. It’s better to think of him as a religious leader than as a politician. He wants to purge the nation of fiscal sin and collectivist impulses and anyone who doesn’t share his vision in every detail is necessarily a heretic who must be expelled from the Community of Righteous Libertarians. Ricardo López Murphy is a veteran conservative politician and Chicago School economist and this week Milei described him as a traitor, criminal and trash.
The question of Milei’s mental health again arises; the sexual undertone (“degenerates”) to many of the insults dished out to friends as often as foes, the bizarre relationship with his sister, that he lives on Twitter, and the cringeiness of his relationship with Judaism.
It’s anyone’s guess what will happen next week. We might have a clash between provincial and federal security forces in Chubut and governors of other provinces may be tempted to follow its example in their territories. The national government may bring charges against Torres.
The overarching context for this is that there’s no stabilisation plan. Finance Minister Caputo is said to be technically competent and may be able to somewhat reduce inflation. But without a stabilisation plan that has broad political support the Argentine economy isn’t going to improve. Far from drawing up such a plan and seeking support from it the President spends his time ranting on Twitter and alienating potential allies.
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The government this week announced its intention to shut down INADI, the federal agency notionally responsible for promoting an end to racial and sexual discrimination. If that’s what it actually did then closing it would be a very bad idea indeed. However, its real function has been to provide employment for kirchnerista and allied political activists while they look for more remunerative positions as elected representatives, as well as to propagate the kirchnerista narrative about the catastrophe of the 1976 military dictatorship and Argentine history generally and to brand anyone who deviates from it as a fascist. As it will require Congress to pass a law to actually close it down the government may never see its wish to do so fulfilled but if it does, good riddance an enormous plate of ñoquis and nostalgics for revolutionary violence.
*The painting is of the Battle of Caseros
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