Argentina Elects Right-Wing, Pro-U.S. Milei in Surprise Presidential Election Upset

If there is one thing the two candidates who ran against each other in yesterday’s presidential elections can agree on, it is that Argentina’s economy is a mess.

It has total debt of U.S. $323 billion, which is equivalent to 90% of its entire Gross Domestic Product (GDP).

Its currency, the Argentine Peso, is decelerating in value at an inflation rate of 142.70% for the month of October. That is up from 2021’s already disastrous 48.41% inflation value as well as 2022’s 72.43%, with no sign of heading in the right direction. In Latin America, it is second only to Venezuela’s 317.60% -- which that country hit in September 2023 – for the highest inflation in the region.

The combined debt and inflationary loads have left 40% of the country’s total population of 45 million forced to survive under the poverty level. Most of the remaining 60% are not doing much better.

Argentina's decades of financial problems are all related to previous governments and the corruption and criminality of the political class, aided and abetted by the international banksters. 

With such serious inflation problems and much of Argentina’s debt denominated in foreign currency, relying on the local economy to bail it out of its debt crisis is impossible. It will take big favors such as ones granted in the past by China, which is helping bankroll the country’s idiotic conversion to nuclear power, and the U.S.-controlled International Monetary Fund (IMF), which is currently renegotiating the $44 billion in debt it is owed by Argentina, just to avoid going under.

The election pitted Peronist Party candidate and current failed Economy Minister Sergio Massa, representing the team which is being held responsible for leading the country into its current state of chaos, against Javier Milei, the candidate of the Libertarian Party and currently serving as a national deputy representing the city of Buenos Aires, on behalf of the La Libertad Avanza political alliance.

Massa, the establishment candidate, mostly pledged business as usual for the country. That included growing closer with China, its strongest international partner in helping keeping banks from going under, as well as supporting a transition which had been under way to use the Chinese yuan in much of domestic commerce, including both in banks and in purchasing of components and subsystems even for factories from American-based companies, such as Whirlpool Corporation, which has a major appliance manufacturing hub in Argentina. It also involved partnering more closely with other left-leaning countries within South America, such as Brazil, with the continent’s biggest economy in terms of GDP, Bolivia, and Venezuela.

Massa also pledged to proceed with the de-dollarization reforms that Argentina effectively has bought into, consistent with the country being invited in as a new member of the BRICS consortium, which currently consists just of Brazil, Russia, India, China, and South Africa, and at least gradual abandonment of the dollar in trade between member states being one of the pillars the group agreed on in the past year.

The Peronist candidate also was very much against continuing negotiations with the International Monetary Fund to settle the substantial debt with that multilateral bank, based on both terms and current insistence on dollar-based settlement arrangements.

Massa did have more substantive proposals to offer designed to support business with infrastructure and new jobs. He planned to proceed with:

A substantial revisioning of the tax system, to better support the needs of the poor by shifting tax burdens to the wealthy.

Force by law the mergers of certain public companies, to minimize what Massa saw as inefficiency created by competition.

Create a Special Customs Zone in the province of Misiones. The purpose was to provide a locale with special tax exemptions in this very poor region, to assist Argentina in being more competitive with similar operations in Uruguay and Paraguay.

As a means of stimulating employment in entry level positions in technology companies based in the country, to call for the central government to contribute as much as 50% of the salaries younger employees might draw.

Build a new 500KV energy transmission line that would connect the central part of the country, the Alto Uruguay zone in its eastern part, and in Oberá. The purpose would be to electrify areas which have been lacking in adequate power, and to stimulate job creation as a result.

Javier Milei, who describes himself as an “anarcho-capitalist”, campaigned vigorously for the presidency on a populist platform which would upend many of the fundamental pillars which had guided the Argentine state for years.

While traveling around the country to plead the case for why he should be the next president, Milei told his audiences that if elected, he would:

Abolish the country’s central bank. Milei claims, based on his past experience as an economist, author of multiple books on the subject, and extensive background as an educator in business theory, that the Argentine bank has proven of little value and has made broad-based economic reform impossible.

Drastically cutting central government spending. This would mean not just smaller budgets for government agencies, but dissolving many government agencies which the candidate believes just waste money. It is this “slash and burn” approach to government reform that was behind Milei’s trademark carrying of a chainsaw – or images of one – with him at every stop on his campaign grail.

Among the agencies he has promised to shut down almost the moment he takes office are the Ministry of Sports and Tourism; the Ministry of Culture; the Ministry of Environment and Sustainable Development; the Ministry of Women, Genders, and Diversity; the Ministry of Public Works; the Ministry of Science, Technology, and Innovation; the Ministry of Labor, Employment, and Social Security; the Ministry of Education; the Ministry of Transport; the Ministry of Health; and the Ministry of Social Development.

As a framework for how Milei feels about the dismantling of so much of government during his campaigning, he said in a televised account that wants his presidency to be one in which “the thievery of politics is over”. And while one can question what will happen to the country if all these entities cease to exist from day one of his presidency, it is understandable how a country with 40% of the electorate below the poverty level could support a candidate willing to cut spending in so many places so quickly.

Solve the currency inflation problem by dumping the Argentine peso entirely and replace it with the U.S. dollar instead. This policy, which Milei refers to as “dollarization”, is completely counter to the goals already set in motion for BRICS member states and will put it on a collision course with that group when Argentina joins it on January 1. However, it is perhaps the only option and it is what saved Venezuela, although the dollarization of its economy was unofficial. Panama tie the value of their currency to the dollar and Ecuador actually uses the dollar as its currency. Even Bermuda ties its currency to the U.S. dollar. 

Back out of the agreement to join the BRICS alliance. Milei wants to make this change immediately, as it would automatically happen on January 1 if nothing is done. His position on adopting the U.S. dollar as the country’s currency is a dominant reason since BRICS currently has as a guiding precept that it will conduct trade among member states via their own national currencies and without the U.S. dollar involved.

Move the country economically and politically further away from Brazil and China. Milei says he does not like “dealing with communists”, by which he primarily means China, but he also has implied that he also does not support President Lula da Silva of Brazil’s extreme socialist leanings.

Loosen the country’s currently tight gun control laws. Milei did back down from this somewhat as election day grew nearer, because polls showed Massa’s claims that making gun ownership too easy could destabilize the country were gaining traction.

Privatize education and health care throughout the nation, arguing that the government was not very good at managing either function. These proposals were also watered down somewhat as voting day drew near. Massa was able to convince some voters who had been leaning toward Milei that he might be directing too many changes, too fast, for the country to survive.

The Massa-Milei political battle leading up to yesterday’s runoff election was, despite some fuzziness in how it might achieve some of the campaign pledges each has made, very much a choice between “business as usual” and the “burn-it-all-down-and-rebuild” approach espoused by Milei.

When the final votes were counted, Milei won that battle conclusively. After 95% of the votes were counted, Milei held 55.8% of the grand total and Massa came in with just 44.2%. It was a bigger lead than any polls had predicted prior to Sunday. It was also the widest such lead in Argentina since the 1980s.

Massa conceded well before the night was out on November 19.

The people of Argentina, he said, “chose another path”.

“Starting tomorrow… guaranteeing the political, social, and economic functions is the responsibility of the new president,” Massa told his supports. “I hope he does.”

As Milei took to the podium surrounded by his supporters after that, he declared to all that the “reconstruction of Argentina begins today”.

“Argentina’s situation is critical,” he said, describing the obvious in this economically troubled nation, but by doing so reminding all that the steps his new administration would be taking would be both critical and country-altering. “The changes our country needs are drastic. There is no room for gradualism, no room for lukewarm measures.”

Pundits reviewing Milei’s win have been quick to caution that the victory appears far more about the need for change than about any faith in the new president’s ability to pull off what he has proposed.

After all, Milei has limited governmental leadership experience, most of which was only in the last few years and only regional in scope, but that could be a good thing. It is also a massive leap from his early beginnings as a television and later radio show host where he denounced what he referred to as the “political caste” as abhorrent. He will now be one of them, with much to accomplish in a very short time and with much at risk if it fails.

Javier Milei takes office as President of Argentina on December 10, 2023, less than three weeks from now.