World News

After Street Clashes, Argentina’s Congress Passes Pension Overhaul

Posted December 19, 2017 7:22 p.m. EST

BUENOS AIRES — After days of intense clashes outside Argentina’s Congress that left scores injured and led to at least 70 arrests, lawmakers Tuesday approved a contentious bill tightening pension and social welfare benefits. The bill’s passage was a victory for President Mauricio Macri, but resistance to the changes has put him on the defensive.

The widespread opposition to the measure has called into question Macri’s ability to accelerate the pace of change he says is necessary to put Argentina’s economy on a solid footing after his coalition’s decisive victory in midterm elections.

“I didn’t vote for him so he could take money from my pocket,” said Cecilia Fernández, 68, one of thousands who took to the streets late Monday to bang pots and pans to protest against the bill.

The first sign that the bill would face stiff resistance came last week, when some opposition lawmakers joined large protests that broke out in downtown Buenos Aires, the capital. Lawmakers supporting the bill postponed debate.

On Monday, when Congress reconvened, tens of thousands took to the streets to protest the bill, and the country’s largest union federation called a general strike that paralyzed the country’s airports.

A few hundred protesters attacked police officers with rocks, setting off clashes that dragged on for hours. Officers clad in riot gear responded by firing tear gas and rubber bullets.

As night fell and the violence eased, thousands took to the streets with pots and pans. Some were protesting the pension overhaul, while others said they were denouncing the rare outbreak of political violence.

The clashes left 141 people injured, including 88 police officers, and led to the detention of 70 people in Buenos Aires, according to the state-run news agency Télam. At least 28 journalists were injured covering the protest, according to Sipreba, a journalist union.

Macri’s allies in the lower house of Congress rejected pleas from the opposition to suspend the session Monday and worked well into Tuesday morning.

The changes in the bill link increases in social welfare benefits to inflation and salaries, rather than tax revenue and salaries. The bill was approved 127-117 after 17 hours of debate. The Senate passed the measure last month.

“Despite everything they did, we demonstrated that democracy works in Argentina,” Macri said Tuesday morning as he condemned the violence of the previous day as “clearly orchestrated and premeditated.”

The changes will save the government about $3.2 billion next year, amounting to 0.4 percent of the country’s gross domestic product, according to Gabriel Zelpo, the chief economist at Elypsis, a research and consulting company based in Buenos Aires.

While the changes will help Macri reduce the deficit, the savings will be marginal because pension and welfare rolls have nearly doubled over the past decade and will remain “in serious need of reform,” according to Ariel Barraud, president of the Argentine Fiscal Analysis Institute.

“The level of conflict that even this simple proposal generates shows how controversial any change to the system will be,” Barraud said.

A survey by the polling company Ricardo Rouvier and Associates showed that 2 out of 3 Argentines rejected the overhaul, which the opposition has characterized as an austerity move.

“This is clearly an unpopular measure no matter how you look at it,” Rouvier said. “For the first time it hit at the heart of one of Macri’s key bases of support.”

Pension changes are politically fraught across much of Latin America, as politicians have sought to rein in spending during a period of recession or economic slowdown.

“Most pension systems in Latin America were designed with the demographics of the 20th century” in mind, said Carlos Végh, the chief economist for Latin America at the World Bank. “Life expectancy was far lower.”

The protests that took place on Monday in Buenos Aires illustrate how Macri’s victory in the midterm elections was a “double-edged sword,” said María Esperanza Casullo, a political-science professor at the Río Negro National University in southern Argentina. “There is a bewilderment in certain segments of society by what was an abrupt change of message: from assuring people they would not lose any benefits to saying that we all have to sacrifice a little bit.”

Macri conveyed that message again Tuesday morning, making it clear that change was necessary.

“There are nights that I have trouble sleeping due to the quantity and magnitude of the changes we have to make,” Macri said. “If we don’t do more than what we did in the past, we won’t have a future.”