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Presented in its original, mammoth 664-article form shortly after Milei took office as President of Argentina back in December, the Ley de Bases – a mega-bill to deregulate Argentina’s economy – was passed by Argentina’s lower house, the Chamber of Deputies, last Friday.
The bill’s journey through the upper house, the Senate, saw it slashed down to 232 articles – an enormous change to the original, far more radical draft submitted by self-styled “anarcho-capitalist” Milei – and only scraping through with a 36-36 vote, with the decision clinched by Vice President Victoria Villarruel.
Its final approval by the Chamber of Deputies came without further amendment.
It is a major win for Milei, having arrived to Argentina’s presidency following a campaign warning – nay, promising – an uphill battle. He came with a rallying cry to shock Argentina’s dysfunctional economy to its core: “no hay plata.” [“There is no money.”]
For many Argentinians, economic crises are simply a fact of life. After nearly a century of spiral from boom to bust, political and institutional instability, and divergent ideologies swinging like a pendulum, the phrase “rich as an Argentine” – that a century ago described one of the world’s most prosperous nations – is now used in irony.
The country suffers from the world’s highest inflation rate, soaring above 200% per annum when Milei took office; depleted hard currency reserves, struggling to repay a US$44Bn loan from the International Monetary Fund (IMF) and taking out a currency swap line with China worth US$18Bn; and an economy riddled with arbitrary exchange rates, capital controls, and burdensome import restrictions.
With the Ley de Bases passed, albeit in a reduced form, the pressure is now on Milei to deliver on his promises to jump-start Argentina’s economy.
To that end, amongst its hundreds of articles the Ley de Bases includes a variety of provisions to make Argentina’s business and investment environment more attractive, with large flows of foreign direct investment (FDI) seen by Milei as a critical piece of this economic puzzle.
In May, Milei implored business leaders in Los Angeles to “help make Argentina the new Rome of the 21st century.”
It is perhaps a grandiose comparison – few investors anticipate that Argentina will become a sprawling, centuries-long empire. But, then again, Rome was not built in a day.
Milei has taken more trips abroad in his first six months than any previous holder of Argentina’s presidency - not without some controversy - in a schedule that has included major international conferences and meetings (and selfies) with executives of the world’s largest and fastest growing tech companies, such as OpenAI’s Sam Altman, Apple’s Tim Cook and Google’s Sundar Pichai, among others.
Those encounters reflect another branch of Milei’s vision for Argentina: to position his country as - in his own words - “the world’s fourth AI hub;” a major technology industry node competing with the United States, China and Europe in the global AI industry.
A recent visit to the G7 in Italy offered Milei a chance to repeat his rallying cry for the technology’s rapid development and minimal regulation, at an AI-focused session featuring fellow Argentinian Pope Francis and attended by several of the world’s most powerful leaders.
Milei’s ambition here is not entirely unfounded: Latin America has proven to be fertile ground for tech. The region and its entrepreneurs have spawned several so-called ‘unicorns’ – start-up firms exceeding a US$1Bn valuation - including Brazilian fintech Nubank; Colombian ‘super-app’ Rappi; and Duolingo, a language-learning platform co-founded by a Guatemalan software developer.
In Argentina, multinational software giant Globant and e-commerce marketplace Mercado Libre are just the tip of the iceberg of a dynamic tech start-up sector.
Notably, those two firms, and other success stories, sprouted around one of the country’s most painful moments: the infamous 2001 Argentinazo, which culminated in protests, bank runs, and a turnover of five presidents in two weeks.
The ripples of that meltdown – such as a deep distrust in banks and, it could be argued, a culture of grassroots innovation – coupled with Argentina’s strong public education system, continue to drive entrepreneurship and growth in Argentine fintechs like Ualá and Mercado Pago.
Moreover, the country has emerged as an attractive destination for digital services outsourcing. In the wake of the Covid-19 pandemic, Buenos Aires has become a hub for digital nomads, further bolstering its young, creative and intelligent population.
And indeed, it seems Milei’s big tech hopes might, just, be starting to bear fruit…
Electric vehicle manufacturer Tesla is reportedly seeking to tap into Argentina’s lithium reserves for its battery production; and its CEO Elon Musk has personally endorsed the country’s investment potential, to an (often rapt) audience on (his own) social media platform, X:
Elon Musk, CEO of Tesla. Posted on 07/05/2023. Source: X.
Not quite.
Although now through past its greatest hurdle, the business-friendly Ley de Bases, the cornerstone of Milei’s economic mission, still faces criticism from all sides.
From investors and advocates for private capital, the bill’s diluted state fails to surmount the caution many still take on investing in Argentina’s beleaguered economy.
Despite introducing an offer of tax, customs and currency exchange incentives for businesses investing large sums, alongside guaranteeing long-term stability and legal certainty – known as the Incentive Regime for Large Investments (RIGI) – many initially excited investors may be left feeling spurned following the axing of many proposed privatisations from the bill, for example.
An especially controversial measure, the declaration of a one-year state of emergency, will allow the president to bypass congress to approve laws on energy, financial, and economic matters.
Though by no means the first Argentine president to do so – previous examples including deregulator Carlos Menem and recent Peronist leader Alberto Fernández – Milei’s new powers have raised hairs due to his charged-up rhetoric to, in his own words, “be the mole who destroys the State from within”.
Indeed, grievances from labour unions erupted into mass demonstrations in the streets of Buenos Aires during the law’s Senate debate.
At their core was a condemnation of labour reforms which, protestors fear, will heighten unemployment and precarity during what remains Argentina’s worst economic crisis in 20 years.
Additionally, in seeking to reduce costs in his “chainsaw” austerity programme, Milei could diminish the power of Argentina’s public education system to build the country’s next generation of talent, for tech and other sectors.
Indeed, he faced further mass protests against educational cuts in April, and has drawn strident rebuke from CONICET, Argentina’s National Council for Scientific and Technical Research.
Besides Elon Musk, has the business community, whom Milei has spent such effort courting, returned Argentina’s president’s trademark “double thumbs-up” with the same eagerness?
The mammoth, six-month effort spent securing the passage of the Ley de Bases, for it to arrive watered-down and amidst mass protest, does not paint a hugely optimistic picture for investors.
Moreover, some critics contend that a sudden influx of multinationals – Tesla, Google, AI leaders like OpenAI – could in fact stifle Argentina’s small and medium enterprises (SMEs) – which make up 99% of Argentina’s companies and employ 64% of the workforce and are, naturally, the basis for any future Argentine ‘unicorns.’
Those considering long-term projects will likely be also wondering about the prospects for 2025’s mid-term elections, or indeed Milei’s possible bid for 2027 re-election, and what they might imply in Argentina’s history of pendulum politics.
In the search for sustainable prosperity in Argentina, such issues are, clearly, incredibly finely balanced. Whether the Ley de Bases is the first step in Argentina’s rise from the depths of economic crisis, perhaps even on its journey to global tech ascendancy, remains to be seen.
What is certain, though, is that Milei is now out of the starting blocks as president.
His enthusiasm for tech comes amidst a period of especially rapid growth for AI technology, which among other success stories has seen Nvidia, the leading supplier of the chips powering AI models, briefly become the world’s most valuable company.
Argentina is a country brimming with talent, resources and pre-existing examples of success. That makes it, in those ways, a potentially attractive destination for investment from big tech firms, lending some credence to Milei’s big-picture mission.
If he is to achieve his target, perhaps now is the moment.
Freddy is Canning House’s Press and Communications Manager. He joined the organisation in 2019. His Master’s thesis, ‘A Cuban E-volution, for Business?’ (2023), examined the Cuban private sector’s use of the internet and digital tools, for his MSc in Globalisation and Latin American Studies from UCL.
Clorrie joined Canning House in 2023, having graduated with an MPhil in Latin American Studies from the University of Oxford in 2022. Clorrie previously worked as a Research Assistant at the Oxford Department of International Development and interned at LatinNews, where she conducted political and security analysis on Central America and the Southern Cone.
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