With just 384,600 residents and little industry beyond walnuts and olives, La Rioja received more discretionary federal funds last year than any other country except Buenos Aires, which has 17.6 million people. Yet the province’s poverty rate is above 66 percent — the result, critics say, of a patronage system long used to appease special interests at the expense of efficiency.
While Miley’s reforms forced other provinces to tighten their belts and lay off thousands of workers, Governor Ricardo Quintile — an ambitious power broker in Argentina’s long-dominant Peronist movement and one of Millie’s fiercest critics — refused to absorb the austerity drive.
“I’m not going to take food from the people of La Rioja to pay the debt the government owes us,” Quintela told The Associated Press, portraying his chacho-print plan as a bold stand against 10 months of crumbling wages, rising unemployment and mounting misery under Milei.
La Rioja defaulted on its debts in February and August. A federal judge in New York ordered the province in September to pay nearly $40 million in damages to U.S. and British bondholders. Argentina’s Supreme Court is hearing the case over the province’s refusal to charge consumers skyrocketing electricity prices after Millie withdrew subsidies.
“There is an alternative path to the brutality of the policies the president is pursuing,” Quiniela said.
He seemed confident, speaking as Millie’s approval ratings fell below 50 percent for the first time since the radical economist took power.
But as Millie and his allies tell it, Quiniela’s alternative offers little more than a return to Argentina’s usual Peronist domain of reckless spending — and insolvency — that precipitated the unmitigated crisis his government inherited.
“You used to have your tie tied for you and your shoes shined, but now you have to make the decisions yourself,” Eduardo Serenellini, press officer for Millie’s office, snapped at La Rioja business leaders during a recent visit to the province. “If you run out of money, you run out of money.”
Serenellini picked up a chacho note and brushed it away like lint.
Governor Quiniela’s move in the remote province has had little effect on Argentina’s federal finances, but that could change if more cash-strapped provinces catch on, as happened during Argentina’s terrible financial crisis in 2001, when a similarly brutal austerity plan prompted more than a dozen provinces to print their own parallel currencies.
Unlike two decades ago, when former President Nestor Kirchner, a Peronist, ended the chaos by exchanging “paracones,” “ceca cores,” and “boncanfores” for pesos, President Millie has ruled out a bailout for La Rioja.
“We will not be complicit with irresponsible people,” Milei warned in a recent interview with Argentine television channel Todo Noticias. But the libertarian purist added that he could not stop La Rioja from doing what it wanted, since the Argentine constitution allows for such desperate financial solutions.
The chaos spilled onto the streets in August after La Rioja’s legislature approved plans to use $22.5 billion pesos worth of the currency to cover up to 30% of public sector salaries.
With La Rioja’s average income falling below $200 a month and shops closing due to lack of business, authorities handed out 8.4 billion pesos worth of scrip in monthly bonuses in August and September, an attempt to help workers cope with Argentina’s 230% annual inflation and boost the stricken local economy.
To encourage the use of the chicha, authorities are promising to pay 17% interest on notes held until the December 31 expiration date.
“The closer we get to the expiration date, the more we will see public confidence in the chacho increase,” said provincial treasurer-advisor Carlos Nardillo Giraud.
Most state employees interviewed last month in the many rows of chochos that covered the sidewalks of La Rioja said they wanted to get rid of the notes as soon as possible.
“Now the chacho is an alternative, an option for people who can’t make it to the end of the month,” said 30-year-old physics teacher Daniela Parra, who climbed onto her boyfriend’s motorbike with her arms full of chachos, ready to spend them all at once in the supermarket. “Who knows what it will be next month?”
On the street, merchants said they felt stuck.
Rejecting chachos meant turning away customers with new purchasing power in a deep recession. But accepting chachos meant filling cash registers with money that is worthless to foreign suppliers and that was already changing hands on the street at a discount to pesos.
“They have created a system where you are forced to depend on the state for everything,” said Juan Keulen, the director of the Center for Commerce and Industry in La Rioja. “There is no choice in a place like this.”