It takes two to tango, unless you invoke Article 99
Observatorio argentino 55: Argentine presidents have incredible powers to act without Congress or the courts
Javier Milei has shown few coattails until the PASO, and even now they are weak. Even if he wins the October election, he has no chance of getting a working majority in Congress. So what will he do when Congress says no to dollarization?
Well, what he says he will do is call a referendum. Article 40 of the Constitution allows Congress to call a referendum.1 Except that, well ... if he can get Congress to call a referendum then he can get Congress to pass a law.
If Congress won’t play ball, then Article 40 also allows the President to call a non-binding referendum. But the result be non-binding. Maybe Congress would bow down before the expression of the people’s will? It’s not impossible.
Is there a Plan C? Well, Milei has mentioned his actual plan C in various contexts. TLDR: use the astonishing legislative power of the Argentine presidency to bypass Congress.
But before we explore how he can do that, let’s ask a basic question: Why does Argentina have a president who can wave laws into being without the legislature?
A history of the Argentine executive
The Constitution of 1853 created a limited presidency. Continuing instability and high corruption meant that presidents didn’t always bother with legal authorization. But officially they had little more power than their American equivalents.2
That changed in 1930, when General José Félix Uriburu marched a small group of soldiers into the capital, occupied the Casa Rosada, and sent a note to the Supreme Court announcing that he had created a provisional government.
The Supreme Court could have rejected the coup. But instead it recognized the junta. The text of the recognition has to be read to be believed:
The provisional government that was just established in this country is, well, a de facto government whose legitimacy cannot be legally disputed as long as the people carrying out its administrative and political functions derive their authority from the possession of force as a means to impose order and social security.
That said, should the situation normalize, and if the officials comprising the de facto government should in the course of their actions prove to be unaware of the guarantees of individual liberty or property ensured by the Constitution, then the judicial authorities in charge of enforcement would reinstate them under the same conditions and with the same scope as they would have done under a lawful executive authority.3
Translation: “These guys have guns. We can’t get them to put down their guns. But if we recognize them as the government, then maybe they’ll listen to us if we tell them that, you know, they’re violating other parts of the Constitution.”4 The junta turned power back over to a “civilian” government in 1932. In 1935, however, the Supreme Court declared in Internal Tax Administration v. Malmonge it had been totally okay for the junta to decree a hike in tobacco taxes in 1931, even though Congress never approved it.5
In 1943 a second coup overthrew the civilian government. In 1947, with Perón in power, the Court tried to overturn a “decree-law” that had been issued by provisional military government ... at which point President Perón impeached all but one of the justices. You won’t be shocked to find that the restaffed Court ruled in Ziella v. Smiriglio:
The decree-laws issued by the de facto government are valued by reason of their origin and since they have the force of law they continue in force even though they have not been ratified by Congress as long as they are not repealed in the only manner in which they may be so, that it is to say, by other laws.
Still, only 15 decree-laws were issued between 1930 and 1982. When democracy returned for good in 1982, President Raúl Alfonsín used the power ten more times, mostly small-bore stuff. But he did replace the peso with the austral without Congressional approval.
Carlos Menem succeeded Alfonsín. Menem liked executive power. He started by increasing the size of the Supreme Court from five to nine. He then issued a decree that seized most bank accounts and replaced them with government bonds. People sued.
But the packed court ruled in Peralta et al. v. National Government that during an economic emergency President Menem was entirely within his rights as long as Congress did not explicitly repeal the decree with another law.6
There was more than a little discomfort with the way presidents had accrued sweeping legislative authority since 1930. So when the country adopted a package of constitutional amendments in 1994, one of them created a new Article 99, Section 3, which reads:
The Executive Power cannot under any circumstances issue provisions of a legislative nature, which shall be absolutely and irreparably null and void. Only when exception circumstances make it impossible to follow the ordinary Constitutional procedures for passing laws, and when they do not refer to criminal issues, taxation, electoral matters, or the system of political parties, may it issue decrees on grounds of necessity and urgency, which shall be decided by the general agreement of cabinet ministers who shall countersign them together with the Chief of Cabinet.
Within the term of ten days, the Chief of Cabinet shall personally submit the decision to the consideration of the Joint Standing Committee of Congress, which shall be composed in proportion to the political representation of the parties in each Chamber. Within the term of ten days, this committee shall submit its report to the plenary meeting of each Chamber for its specific consideration and it shall be immediately discussed by both Chambers. A special law enacted with the absolute majority of all the members of each Chamber shall regulate the procedure and scope of Congress’s participation.
Exceptional circumstances are not defined, and every president since 1994 has interpreted the clause to mean that they can make legislative changes to anything they want whenever they want. (Menem would go on to issue 300 decrees under the clause.) In theory, the joint standing committee has ten days to vote and then Congress can reject the “decree of necessity and urgency” (DNU).7 In practice, the committee often stonewalls or deadlocks and then the decree just goes ahead and becomes law, poof, just like that.
So far, DNUs have danced up to the border of erasing Congress’s authority. President Cristina Fernández came close: in 2008, she used Article 99 to increase the budget by US$11.6 billion, claiming that the spending was urgent and couldn’t wait for Congress. In 2010, she used a DNU to push out the head of the Central Bank. Still, in both cases, she eventually got Congress to ratify her actions.
President Alberto Fernández (no relation to Cristina) used Article 99 for Covid responses, but he also used it also to declare a national holiday to celebrate the country’s World Cup victory and leave the country without Congressional authorization. Congress would have approved the Covid stuff and the other two actions aren’t really important.
Perhaps the closest Argentina has come to having the executive just overrule Congressional desires was in 2018, President Macri used a DNU to change immigration law in ways that probably would not have passed.
The fierce (necessity and) urgency of (dollarizing) now?
So Milei could use Article 99 to issue a DNU and push through dollarization. There would be two barriers: the Standing Committee and the courts.
The Standing Committee: If the primary election results hold, then Milei’s Liberty Party will hold 2 of the 16 seats on the Standing Committee, with seven going to the conservative JXC, six to the Peronist Fatherland Front, and one to a coalition of conservative Peronists.
But since its creation in ‘94, the Standing Committee has never overturned a decree! President Macri managed to neuter the Committee even when he lacked a Congressional majority.
Would the conservatives in the new Congress really want to accept responsibility for stopping dollarization? It seems as likely that they would stand aside, letting Milei taking the blame if it doesn’t work. And if it did work, well, then the legislators could switch over the Liberty Party and share in the glow of success—party-switching is not uncommon in Argentina (see page 8).
The Courts: The courts could rule, I suppose, that Milei doesn’t have the right to dollarize, or abolish the BCRA, or whatever it is that he tries to do. But let’s be frank: what happens will depend on the political balance, not the legal arguments.
Milei might decide that it is too politically risky to ram dollarization through by decree. But that is not the same thing as saying that he won’t have the power to do so.
That said, there are two other big actors who will get a say in dollarization: the International Monetary Fund and the People’s Bank of China. We will talk about them in the next post.
For procedural pedants: any referendum bills must originate in the lower house.
Some have written that the Constitution of 1853 granted decree power. But this is wrong. The original Article 83 read as follows: “Issue such regulations and instructions as are necessary to carry out of the laws of the Confederation, taking care as to not alter their intention with regulatory exceptions.”
The “well” is actually in the document. The whole thing is written in a tortured turgid prose that is almost impossible to translate.
Maybe it sort of worked? General Uruburu stage-managed a fradulent election in 1931, which handed the presidency over to General Agustín Justo. And Congress remained in session. It wasn’t completely lawless, unlike the military governments of the 1970s.
The Argentine justices explicitly cited Home Bldg. & Loan Association v. Blaisdell (1934) as a justification for the decision. That decision declared the economic emergency created by the Great Depression meant that the Minnesota legislature could pass a law granting temporary mortgage forbearance, even if the law’s terms technically violated Article 1, Section 10 of the federal Constitution. Argentine courts cite a lot of American precedents, the logic being that the writers of the 1853 constitution explicitly based the document on the U.S. Constitution of 1787.
“Civilian” is in scare quotes because the winner of the November 1931 special elections was a member of the junta that had overthrown the civilian government in 1930.
The term DNU is used to separate Article 99 legislative decrees from ordinary presidential “decrees” issued under Article 100, which gives the President and the Chief of Staff the joint power “to approve decrees establishing implementing regulations for laws.” These decrees are exactly like the regulations issued by federal agencies in the United States and do not have any special significance.