By Juan Manuel Harán
After almost six months of electoral process, the Argentine voters finally decided that Javier Milei, candidate of the young party La Libertad Avanza, will be the new President of Argentina as from December 10.
The libertarian candidate defeated the current Minister of Economy, Sergio Massa, with 55% of the votes, thus dethroning a government whose economic performance went from bad to worse, reaching last Sunday’s elections with a year-on-year inflation of 142%, a Central Bank without reserves, an exchange rate cap, limits to imports and a macroeconomy without direction.
With a refreshing discourse for the suffering masses, especially the youth, Milei managed to win his place within Argentine national politics in only 2 years. His anti-caste message, the way he found to refer to politicians entrenched in power for decades, penetrated sectors of society that in other times voted for Peronism or the Radical Civic Union, the two most important parties in Argentine history. Key to this was the support of PRO, the political party led by former President Mauricio Macri, who after the general elections and seeing the end of their own possibility to reach power, did not hesitate to support the libertarian candidate.
His main proposals are a mix of liberal economic ideas with conservative social dyes. This is how the proposal to dollarize the Argentine economy, closing the Central Bank, coexists with the idea of reversing the law that allows the interruption of pregnancy. In fact, his international alliances prove it: from Donald Trump (who has already congratulated him on his triumph), to Jair Bolsonaro (who will participate in his inauguration, where Lula Da Silva will probably not be present), including the conservative José Antonio Kast from Chile and the VOX party in Spain.
At the same time, a minor issue during the campaign is the controversy unleashed by his vice-president, Victoria Villarruel, who has been a defense lawyer of military officers accused of torture and disappearances of people during the period 1976-1983.
Part of Sergio Massa’s campaign was precisely to try to “terrify” the electorate with what Milei-Villarruel would mean as leaders of the country, but as local political analysts have pointed out, the anger for the economic situation was stronger than the fear for what may come.
Who is Javier Milei
Born on February 22, 1970 in Buenos Aires, Argentina, Milei has become a prominent public figure due to his bold political and economic views and provocative style. He graduated with a degree in Economics from the University of Belgrano and went on to earn a master’s degree and a PhD in Economics and Political Science from ESEADE, a private academic institution in Argentina known for its focus on classical liberalism and Austrian economics.
During his years of academic training, Milei delved into the ideas of economists such as Friedrich Hayek, Ludwig von Mises and Milton Friedman, which significantly influenced his economic thinking.
His professional career includes academic positions, where he taught at several Argentine universities, as well as in the private sector, where he worked mainly at Corporación América. Founded by Argentine businessman of Armenian origin Eduardo Eurnekian, the holding company Corporación América has its main business in airport operations, with investments in Uruguay, Brazil and Ecuador, as well as in Europe, with companies in Italy and Armenia.
What distinguishes Milei is his passionate defense of classical liberalism and free markets, as well as his fierce criticism of state interventionism and economic policies that he considers detrimental to Argentina. He has been noted for his aggressive and polemical rhetorical style, which often includes colorful and provocative terms to describe his opponents and critics.
In 2021, Javier Milei took an important step in his political career by running as a candidate for national deputy representing the City of Buenos Aires in the Argentine legislative elections. Through his political party, La Libertad Avanza, he managed to obtain a prominent seat in the Chamber of Deputies, consolidating his presence in the Argentine political arena.
Since then, his figure has not stopped growing, not without being exempt from controversy. The year 2023 found him in a good position to participate in the national elections for president, but the final result, probably, he himself would not have guessed.
Javier Milei’s economic proposals
Faced with a very delicate economic condition of Argentina, Milei’s proposal seeks to put the country on track to “become a world power again, as it was at the beginning of the 20th century”, as he points out every time he has a microphone in front of him. In concrete terms, he embraces liberal ideas, many already applied in Argentina during Carlos Menem’s presidency, with great support from the United States, and an end that triggered the country’s worst economic crisis in 2001.
Milei’s ideas promise to go faster and deeper than those applied by Menem’s neoliberalism, and even by the now partner, Mauricio Macri, whose government failed to rearrange Argentina’s economic back-and-forth and ended up taking on a historic debt with the International Monetary Fund.
What are these reforms? Basically, they can be summarized in six points:
-Reducing public spending
-Privatization of public enterprises
-Dollarization
-Closure of the Central Bank
-Elimination and reduction of taxes for production and exports
-Flexibilization of labor laws
According to Milei, the adjustment would be paid by “politics” and not by the citizens. Of course, it cannot be done all at once. That is why the platform of La Libertad Avanza proposes three generations of reforms that will lead Argentina to “be a power in 35 years”, as the President-elect said in his triumphal speech.
The “first generation reforms” include: a reform of the State; reduction of public spending; tax reform; tax cuts; labor market flexibilization “going forward” and deregulation of the financial system, among others.
The “second generation” includes a reform of the pension system; a voluntary retirement program for public employees; elimination of social plans “once the beneficiaries no longer need them” and the “liquidation” of the Central Bank. And the “third generation” would involve a reform of the health system, the education system, and the elimination of co-participation.
Being a new political party, it does not have a very favorable political situation. In fact, there are neither governors nor mayors of the same party in the whole country. In both the Senate and the Chamber of Deputies, it will have to make political alliances to be able to implement its deep reforms, since it does not have a majority, nor is it close to achieving it.
In this sense, Milei’s vision of the country will clash with the limitations of politics and republican institutions. It will require a lot of talent and agreements to gain support.
How Javier Milei’s government fits into today’s geopolitics
“If I am president, my allies are the United States and Israel. I consider Israel such an ally that I have said that I will move the embassy from Tel Aviv to Jerusalem”, remarked Javier Milei on several occasions. He also made unkind references to the governments of Brazil and China and, logically, to the possibility of joining the BRICS.
All of these are still unknowns.
Regarding the deep alliance with Benjamin Netanyahu’s government, the change of the Embassy headquarters was not requested from Israel, far from it. He is motivated by his own impulse and closeness to the study of the Torah, in spite of being a Catholic.
On one hand, it would be necessary to think about possible reprisals from the Arab world at a time of conflict, remembering that during the 90s in Argentina, one of the main Jewish diasporas outside Israel, there were two attacks on Jewish entities in the City of Buenos Aires. On the other hand, what does it imply in economic terms, for example, in trade with Indonesia (one of Argentina’s five main partners), or with Saudi Arabia. It is not yet clear in that sense what will happen.
Regarding the alliance with the United States so much touted by the President-elect, it is necessary to understand how his fanaticism for Trump fits in with the Democratic administration of Joe Biden. He will surely receive support from the United States, but to what extent?
In Brazil, the political situation is similar to that of the United States. The ideological closeness with former President Jair Bolsonaro may affect the relationship with the country’s main trading partner. Lula’s pragmatism may help to iron out differences and work together, especially on trade and regional issues.
As for China, Argentina cannot afford to cut relations with the Asian country, the second largest trading partner of the nation. It would imply for the government to clash with part of its own electoral base: agricultural producers and exporters. Beyond Milei’s own statements during the campaign, the relationship with China should not change much, except in financial matters such as the swap or financing of public works.
What will surely happen is a break with the BRICS. It does not affect either the immediate future of the country or of the bloc itself. An Argentina that proclaims its closeness to Israel and the United States cannot share a bloc with countries such as Iran and Russia.
A few days separate Javier Milei from his taking office as President of the Argentine Republic, this is undoubtedly an exceptional case for the country’s own history and for the modern world. The challenges are not simple, in economic terms he must rearrange an economy completely in crisis, and doing so implies deepening social conflicts in one way or another.
The author is Argentinian Journalist & Entrepreneur specializing in Asia – LATAM relations and CoFounder of ReporteAsia.com.