In Brazil and Argentina, Politics Picks Up Where the Left Left Off

4 MINS READOct 5, 2017 | 19:48 GMT
President Mauricio Macri so far has avoided taking labor reforms to the legislature because his coalition lacks the congressional representation it would need to pass the controversial measures. To avoid the complications of the legislative process, Macri's administration is taking his reforms straight to the labor unions.

Argentine President Mauricio Macri lacks the legislative support he needs to pass controversial labor reforms. But bypassing Congress comes with its own risks.

  • The Argentine government will opt to negotiate directly with unions, rather than going through the legislature, to try to implement controversial labor reforms that would benefit private firms.
  • By avoiding the legislative process, however, President Mauricio Macri will leave his reforms susceptible to reversal under the next administration.
  • A leftist victory in Argentina's upcoming election, slated for 2019, would give the country's Peronist movement greater power to pass legislation than Brazil's Workers' Party would gain should former President Luiz Inacio Lula da Silva win the next Brazilian vote in October 2018.

Time is running out for Argentina's current administration to revise the country's business regulations. President Mauricio Macri so far has avoided taking labor reforms to the legislature because his coalition lacks the support it would need to pass the measures. Changing Argentina's labor laws through legislation would invite protest from the country's powerful unions. So soon before the next federal elections in 2019, moreover, leftist lawmakers likely would be unwilling to compromise on the proposed reforms. To avoid the complications and controversy of the legislative process, Macri's administration is taking his reforms straight to the country's labor unions. The president used the same strategy to negotiate changes in the oil and natural gas sector, working with unions in Neuquen province to address specific portions of their contracts and reduce labor costs for energy firms. Now, he's hoping to replicate that success elsewhere in Argentina's economy, such as in the automotive sector.

Even if Macri manages to bring his reforms to fruition by negotiating with the unions, his gains may be only temporary. Any deal he reaches that way would exist merely in collective contracts or special agreements that a future administration could easily change or rescind. And as leftist parties try to stage a comeback in South America, the upcoming federal elections may bode ill for the Macri administration's reform initiatives.

An Old Leader Faces New Challenges

South America is heading into a busy election season over the next two years. Colombia will will hold a presidential vote in May 2018, and Bolivia is set to hold elections in late 2019. Brazil and Argentina also are due for general elections, slated for October 2018 and October 2019, respectively. The contests carry particular weight, not only because Brazil and Argentina are home to South America's two largest economies, but also because the elections could bring leftist parties back to power there.

In Brazil, former President Luiz Inacio Lula da Silva of the Workers' Party is ahead in the polls and could receive as much as 35 percent of the vote next year, barring his prosecution and imprisonment on corruption charges. Da Silva's popularity — a legacy of his two previous terms in office during more prosperous times — has endured despite his implication in the Operation Car Wash scandal and may well propel him back to the presidency.

But the race for Brazil's presidency would be only half the battle for da Silva. Were he to win the election, he would return to office much weaker than he was during his previous stints as president. Aside from the risk of further corruption allegations, da Silva would face a fractured legislature. The Brazilian Congress currently comprises dozens of political parties with an array of ideologies. With that many parties in the legislature, the next Brazilian president is bound to meet resistance to his or her agenda from one side or another. Should he win the election, da Silva would have to take a page from current Brazilian President Michel Temer and cultivate close relationships with the different blocs of lawmakers to stand any chance of getting legislation through both houses.

A United Front Against Reform

Argentina's leftist politicians may have a simpler path back to power. After nearly a year and a half of subsidy cuts and increases in the price of electricity and natural gas, the current government could pay the price for its economic policies at the polls. Macri's austerity measures may prove unpopular with voters in the next election, though it's still too early to draw conclusions about the race's outcome. If a leftist candidate wins power in Argentina's next presidential vote, he or she likely would have more leeway to enact policy — or to overturn that of the previous administration — particularly if the Peronist movement's competing factions agree to work together. Rivalries among the movement's leaders, including former President Cristina Fernandez de Kirchner and Sergio Massa, have divided Argentina's left for several years. But Massa and Fernandez tend to have more ideals in common with each other than they do with the country's more centrist political groups, which fall mostly under Macri's Cambiemos coalition. By joining forces, the Peronists would have the power to put their policies in place and thwart measures they oppose, such as labor reforms, even if Cambiemos retains its sizable minority in Congress.

And so, whatever piecemeal reforms Macri manages to negotiate with Argentina's labor unions may be doomed by the next election. Given his shaky support in the legislature, the president's best option for implementing the changes he wants to bring to his country's industries is also the most precarious. The left, after all, is in an even better position to make a comeback in his country than it is in Brazil. 

Connected Content

Regions & Countries

Article Search

Copyright © Stratfor Enterprises, LLC. All rights reserved.

Stratfor Worldview


To empower members to confidently understand and navigate a continuously changing and complex global environment.