Following the resurgence of the political left in Latin America in recent years (Mexico, Chile, Brazil), Javier Milei’s election victory is a desperate cry for change from the people and a leap into the unknown. The left-wing Peronism that had ruled Argentina until then left behind an economic fiasco. For example, an annual inflation rate of over 100 percent and a unique dependence on multilateral financial organizations, above all the IMF.
Economist and “anarcho-capitalist”
The economist Milei and his “anarcho-capitalists”, libertarian and ultra-right, are obsessively pursuing a single political goal: the total and final destruction of Kirchnerism, the progressive wing of (left-wing) Peronism. Their brazen style and penchant for conspiracy theories show remarkable parallels with Donald J. Trump. Milei took office on December 10 without governors or parliamentary majorities and with broad sectors opposed to his policies. Before the election, he affirmed that he would break off relations with “communist” Brazil and China as soon as he became president. Even the Pope is a communist in his view.
China is Argentina’s most important trading partner, ahead of the USA and Brazil. In the meantime, however, the economic realities with Lula and Xi Jinping have led to a cuddly course again. The Managing Director of the IMF, Kristalina Georgieva, congratulated Milei and told him that she expected to work with his government on “a solid plan to ensure Argentina’s economic stability”. The president-elect confirmed that he had already had his first meeting with the organization and that the dialogue had been going on since August.
Milei‘s Cabinet
Economist Luis Caputo will head the Ministry of Finance and Economy. The 58-year-old, who has worked in the banking and financial sector for many years (including at Deutsche Bank), was Finance Minister for one year under Mauricio Macri (2015-2019) and briefly President of the Central Bank. Milei justified his choice with his expertise in financial reforms. Caputo is not actually considered unorthodox.
Economist Diana Mondino becomes the new foreign minister. She has already given assurances that Argentina will not join the Brics group (Brazil, Russia, India, China, South Africa). And Milei has already said in advance that he would try to leave the Southern Common Market (Mercado Común del Sur, Mercosur), which is “useless” for Argentina, and that he would act quickly to deregulate the commodity markets.
Milei’s further program
He pledged to “dissolve” the central bank and prohibit the use of bank deposits for lending. On the other hand, and to reassure all foreign creditors, he assured them that he would do everything in his power to avoid a default on government debt. He has created the illusion among voters that (adventurous) dollarization can generate high incomes and stabilize the economy. In view of the lack of foreign currency reserves, however, complete dollarization is not feasible for the time being.
His plans also include a tough budget adjustment (cutting spending by at least 13% of gross domestic product by mid-2025). Public works, the number of ministries and subsidies are to be drastically reduced, as are capital restrictions. He also promised to privatize the education and healthcare systems, liberalize the organ trade, end social programmes and reduce wages. He also opposes sex education and abortion, denies climate change and aims to solve the problem of insecurity with the free bearing of arms. He offered pardons to the military. In anticipatory honesty, Milei also prepared “his people” for the fact that Argentina would experience “stagflation” (estanflación) as a result of his fiscal and financial policy measures, with “negative effects on the economy”.
Neither traditional party nor ideological base behind Milei
With his ultra-right messages, Milei is channeling fatigue and frustration in the face of the disaster the country is facing. He is unpredictable, singular, and relies neither on a traditional party like Donald Trump, nor on an ideological-social base like Chile’s José Kast or an evangelical-military one like Brazil’s Jair Bolsonaro. He pursues an ultra-reactionary discourse and captivates his followers with public gestures (chainsaw) and verbal outbursts. And he likes to appear like a rock star in a leather jacket and with a wild mane.
Difficult government work without a coalition
As a former management consultant and tantra teacher, Milei has no experience in government (nor do his closest supporters), and his own party has just ten percent in the Chamber of Deputies and 15 percent in the Senate of the National Congress. Governing without coalitions will be awkward. And from this point of view, his radical plans are difficult, if not impossible, to implement.
However, Milei has already announced that he will “work” with referendums and by decree if there is no parliamentary support for his ideas. However, this is likely to lead to widespread protests in parliament and from social movements. So winds of change with the new President Milei? Yes, but not quite as stormy as announced and partly in a teacup.
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