Source: Alejandro Pagni/AFP.
On Sunday, November 19, 2023, Argentina held the second round of its presidential elections. The winner was Javier Milei, a radical libertarian economist and first-term congressman from the La Libertad Avanza (LLA) coalition, who won an impressive 55.7 percent of the votes, regarded by many as a popular mandate. His opponent, the economy minister of the outgoing center-left Peronist government, was Sergio Massa, who gained 44.3 percent of the vote. The dust has yet to settle from Argentina’s presidential election, but it represents a major change for a pivotal country with implications for the Americas.
Who is Javier Milei?
The 53-year-old economist has described himself as an “anarcho-capitalist” with a strong conservative social outlook. He is opposed to abortion, regards sex education as a Marxist plot to destroy the family, and rejects that there is a human role in climate change. Milei has also been a former TV commentator, demonstrating a powerful ability to tap into public anger over the country’s economic woes and its ruling political caste. And there is decidedly an echo of former U.S. President Trump’s “Make America Great Again” slogan in his campaign, as he often wears hats with the words, “Make Argentina Great Again.”
Upon his victory, Milei was congratulated by former U.S. president Donald Trump, Brazil’s far-right former president Jair Bolsonaro, rightwing U.S. political commentator Tucker Carlson, and the leader of Spain’s far-right Vox party, Santiago Abascal. The U.S. government also congratulated Milei on his election as did the rest of Latin America, including center-left Chilean President Gabriel Boric and Honduran President Xiomara Castro.
What to Take of Milei’s Victory?
First and foremost, the results signal that a substantial number of Argentines are desperate for a change and tired of Peronist policies that have resulted in widespread corruption among the political class and a struggling economy. As of October 2023, the economy is marked by 142.7 percent inflation, high unemployment, a severe drought that has trimmed key agricultural exports, and a projected real GDP contraction of 2.5 percent for the year.
Second, Milei’s victory indicates that the streak of voting out incumbents in Latin America continues, like the last elections in Brazil, Chile and, Colombia. In this case, it was a center-left government being replaced by a populist right-wing candidate. There has been considerable discussion over the erosion of democracy in Latin America, with a deepening decay in the public trust in democratic systems to provide good governance. In Argentina’s case, the last two governments of center-right Mauricio Macri and center-left Alberto Fernández failed to cure the country’s problems, with economic deterioration painfully evident in that 40 percent of the population now live in poverty. This has left many Argentines willing to try something new, like Milei, who promises radical change.
Third, Milei’s victory further polarizes the Latin American geopolitical landscape. On the democratic left are Brazil, Bolivia, Colombia, and Mexico. At the same time, El Salvador fits into a rightist-populist mode, with more centrist-right governments in Uruguay, Paraguay, Ecuador, and the Dominican Republic. There is also a far-left authoritarian bloc that includes Cuba, Venezuela, and Nicaragua. The advent of the Milei government raises questions about how a new populist-right government will play out in matters such as MERCOSUR, regional unity efforts, Argentina’s membership in the BRICS, and the U.S.-China rivalry. Relations with Brazil could take a nosedive, with Milei having questioned his country’s relationship with its neighbor, calling President Luiz Inácio Lula da Silva an “angry communist” and having publicly criticized MERCOSUR, arguing that Argentina should “follow its own path.” Some indication that Argentina already started shifting its foreign policy is that Milei announced that his first trips overseas before his December 10 inauguration will be to the United States and Israel.
There has been no love lost from the Brazilian side. The official response from President Lula was notable, as he made no mention of Milei, stating: “I wish good luck and success to the new government. Argentina is a great country and deserves all our respect. Brazil will always be available to work together with our Argentine neighbors.”
Fourth and closely related to the third point is that Milei’s victory raises major questions about Argentina’s relations with China. During his campaign, Milei threatened to freeze ties with China, stating that he would “not negotiate with Communists.” China is one of Argentina’s largest trade partners, has provided financial support to the country to help cushion the depletion of foreign exchange reserves, and has been a major investor in everything from hydroelectric generation to the development of the lithium sector. Like Brazil’s former president Bolsonaro, Milei may have to walk back a hard line on China due to the size and scale of China’s role in his country’s economy.
What Comes Next?
Milei, the candidate, is now President-Elect Milei. His agenda is radical, to put it mildly. He has already stated in his victory speech that there is “no space for gradualism.” Among his campaign proposals, some that are likely to be dominant in the shorter-term include taking a “chainsaw” to the state (to cut public spending by up to 15 percent of GDP) and eliminating the central bank (to stop the printing of money which the outgoing Fernández relied upon). Additionally, Milei has promised to privatize the state-owned oil company and media outlets, to dollarize the economy, and to trim his cabinet down to eight ministers (getting rid of the Ministries of Health and Education among several others).
Milei’s victory ushers in a new period for Argentina. The country’s politics have been largely dominated by the Peronist movement since it returned to democracy in 1983. The results have been a doubling of the size of the public sector, tight (some would argue choking) regulation of economic activity, expensive subsidies (beyond what the country can afford), one of Latin America’s largest debt defaults, and painfully high inflation. Corruption has also hurt the faith in democratic institutions, with Argentina ranking 94th among 180 countries in Transparency International’s 2022 Corruption Perceptions Index, which falls under a peer group that includes Brazil, Ethiopia, Morocco, and Tanzania. All of this makes one wonder: can Milei turn this around? Will the shock treatment he proposes work, or will the country take yet another step into its developmental cul-de-sac?
It is easy to take Milei’s election as a potential disaster for Argentina, and some of his stances are—if nothing else—intended to shock. However, the President-Elect is inheriting a chaotic economy, almost nonexistent foreign exchange reserves, and a population whipsawed by economic events. Milei was elected for a reason: all the other items on the menu were perceived as failures, namely the Peronist state-dominated model and the gradual reformism of the non-Peronist Macri administration (2015-2019).
Milei faces a daunting political landscape. His coalition, La Libertad Avanza (LLA), has little representation in the National Congress, holding only seven of 72 seats in the senate and 40 of the 257 in the lower house. Although currently strong with the public, Milei will have to make alliances in Congress to pass laws, which could moderate some of his more radical proposals. Additionally, his reforms may be popular with foreign investors, but shock therapy could quickly erode popular support. Can Milei navigate between external debt payments and shock economic measures that could be deflationary, and still maintain public support? Dollarization is a big gamble. He certainly does not want to relive what happened to President Fernando de la Rúa, who, faced with economic failure and riots, fled the presidential palace by helicopter.
Milei has yet to take office, but the outlines of his administration will become more apparent in the appointment of a cabinet and how closely he keeps to his campaign rhetoric. If nothing else, his first 100 days will be a bellwether for this important Latin American country, impacting well beyond its borders.
Scott B. MacDonald is Chief Economist at Smith’s Research & Gradings, Research Fellow at Global Americans, and Founding Member of the Caribbean Policy Consortium. His latest book, The New Cold War, China and the Caribbean, was recently published by Palgrave Macmillan.
Global Americans takes pride in serving as a platform that offers in-depth analyses on various political, economic, environmental, and foreign affairs issues in the Western Hemisphere. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Global Americans or anyone associated with it, and publication by Global Americans does not constitute an endorsement of all or any part of the views expressed.
