Senator Miguel Pichetto. Photo via La Nacion.

President Mauricio Macri assured in a press conference yesterday that the government considers it has left behind the economic turbulence from the past weeks. But now it will have to immediately shift – rather, return to – to another political and economic battlefield: Congress.

Leader of the Partido Justicialista’s (PJ) caucus in the Upper House, Miguel Ángel Pichetto, set a deadline for the government to present a ‘reasonable’ alternative to the opposition bill aimed at capping utility hikes yesterday. Otherwise, he said, he will instruct the senators who answer to him to vote in its favor. And considering the PJ caucus in practically always ends up swaying votes in the Upper House – taking into account that Cambiemos and Unidad Ciudadana’s senators only agree on the fact that they never agree – this would mean passing the bill.

However, and same as every time where government officials were consulted about the possibility of mitigating the hikes, Macri rejected the idea in the press conference from yesterday. “If there were an alternative, I would have been the first one to take it. But this is what energy costs,” said Macri. “We can’t move forward with a bill that destroys the budget that has been approved,” he added, thus confirming he would veto it.

Senators began debating the bill passed by its lower counterpart in commission yesterday. This is the previous step laws have to go through before reaching the floor. But after two hours of debate, the session ended abruptly after the PJ and Cambiemos agreed to take a break until next Tuesday at 11 AM, something that caused criticism from their Unidad Ciudadana colleagues, who accused them of stalling to give the government a break.

Meanwhile, approximately 1,253 kilometers north – yes, I Googled the distance – another event that will have repercussions in the government’s policies was taking place. Several governors – mostly Peronists – gathered in the Tucumán Province in the context of a summit of the “Zona de Integración Centro Oeste de America del Sur,” where they met with governors from other neighboring countries.

There, the Argentine provincial leaders predictably seized the time to convey a unified message regarding the main issues currently dominating the public agenda. Córdoba Province Governor Juan Schiaretti, who usually speaks on behalf of the group that has been labeled by the press as “League of Governors,” said they respect the Macri administration’s decision to negotiate with the IMF, and that it’s the government, not Congress, who has the ability to set the price of utilities. However, he said, they are not willing to have their own administrations implement austerity measures in their provinces to reduce the fiscal deficit.

Photo via Clarín
Photo via Clarín

“We have to be very clear about this. Provinces have a very small fiscal deficit. The federal government’s is of six percent of the GDP, while the provinces’ is about 0.5 percent. We have to reduce the deficit, but we have to start with the national one, eliminating the privileges the City and Province of Buenos Aires still have,” he added.

Schiaretti illustrated his argument by saying that, for example, the federal government dedicates more subsidies in energy and water, as well as transportation fares, to these districts. “If the national state transfers the cost of these services and subsidies, like it should, given the federal character of this country, to the City and Province of Buenos Aires, the fiscal deficit will surely be reduced very quickly,” he argued.

Regarding the bill capping hikes in utilities, he called the Senate to not pass it, saying that “first, it is not Congress that has to set the prices.” “Second, because if passed as it is currently written, the bill would again benefit the City and Province of Buenos Aires, and third, because we have to be pragmatic, the national government has already said it will veto it,” he added.

This statement could in fact have practical effects on the voting in the Upper House, considering that many senators answer to the interests of their provinces, in contrast with its lower counterpart, where political parties wield more influence. If several governments instruct their province’s senators to vote against the bill despite Pichetto’s threat, it might not even make it to Macri’s desk.

We will have to wait until Tuesday for the next episode. Stay tuned.