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Future President: Milei wants to transform Argentina
Javier Milei is the new president of Argentina. photo
© Natacha Pisarenko/AP/dpa
The self-proclaimed “anarcho-capitalist” wants to radically change South America’s second-largest economy: He is planning to introduce the dollar and implement social cuts.
After his clear victory in the presidential election in In Argentina, the ultra-liberal populist Javier Milei has announced a radical turnaround in the South American country. “The reconstruction of Argentina begins today. There is no room for partial steps, lukewarmness or half measures,” said the self-proclaimed “anarcho-capitalist.” “If we don’t make rapid progress with structural changes, we are heading straight for the worst crisis in our history.”
After the runoff vote, the candidate from the La Libertad Avanza (Freedom Advances) party was well ahead of Economy Minister Sergio Massa from the left-wing Unión por la Patria (Union for the Fatherland) with 55.69 percent, as the electoral office announced . He will take up his new position on December 10th. Above all, the frustration of many Argentines over the ongoing crisis and anger at the political establishment may have helped the outsider Milei win the election.
Abolish ministries, cut social spending
In the midst of a severe economic crisis, he promises a change of course: He wants to introduce the US dollar as legal tender, abolish the central bank and many ministries and cut social spending. “No one with such extreme views on economic issues has ever been elected president of a South American country,” said economist Mark Weisbrot of the US research institute Center for Economic and Policy Research. “It barely recognizes a legitimate role for government in some of the most important policy areas that most people see as necessary for a democratic, humane and stable society.”
On Monday, Milei announced the privatization of state-owned companies. “Anything that can be in the hands of the private sector will be in the hands of the private sector,” he said. Among other things, Milei wants to privatize the state energy company YPF, public television and radio and the official news agency Télam.
This is how the stock market reacts
“The first announcements of Milei’s policy will please markets, with aggressive fiscal consolidation and the removal of foreign exchange and capital controls being the biggest priorities,” said portfolio manager at Swiss asset manager Vontobel, Thierry Larose. In fact, the financial markets reacted positively to the election result. The shares of Argentine companies on the New York Stock Exchange have now risen by 23 percent, and government bonds by 6 percent.
Milei is considered an eccentric who has shaken up Argentine politics: He wants to liberalize gun ownership, is against the right to abortion, does not believe in man-made climate change and calls the Argentine Pope Francis a communist. Like former US President Donald Trump and former Brazilian head of state Jair Bolsonaro, he uses anti-system rhetoric, but unlike his role models, he refrains from right-wing extremism and supports, for example, same-sex marriage.
His future vice-president Victoria Villarruel, on the other hand, serves the conservative clientele, maintains contacts with right-wing groups around the world and repeatedly provokes people with statements about the military junta (1976-1983). The daughter of an officer casts doubt on the death toll estimated by human rights organizations at 30,000 during the dictatorship and, for her part, insists on greater recognition for the victims of left-wing guerrilla groups.
Inflation rate over 140 percent
South America’s second largest economy is in a deep economic crisis. The inflation rate is over 140 percent, and around 40 percent of people in the once rich country live below the poverty line. Argentina suffers from a bloated state apparatus, low industrial productivity and a large shadow economy that deprives the state of much tax revenue. The national currency, the peso, continues to lose value against the US dollar and the mountain of debt is constantly growing.
The election victory of the internationally inexperienced Milei is likely to initially cause uncertainty on the global stage. During the election campaign, he announced that he wanted to break off relations with the two most important trading partners, China and Brazil, for ideological reasons. China, of all places, has now reached out to him. “China has always attached great importance to the development of China-Argentine relations from a strategic and long-term perspective,” said Foreign Office spokeswoman Mao Ning. China is ready to revive the win-win cooperation between the two countries.
However, after Milei’s election victory, Federal Agriculture Minister Cem Özdemir saw difficulties for the trade agreement between the EU and the South American economic alliance Mercosur. “It’s not getting any easier, the environment is getting more difficult,” said the Green politician in Brussels. The election shows that we have to hurry, populism is becoming stronger “there as well as here”.
Despite all the radical rhetoric, many observers assume that Milei will not be able to fully implement many of his demands. He does not have a majority in parliament, his camp does not have a single provincial governor, and he lacks qualified personnel to fill important key positions. Recently he has moderated his tone somewhat and contacted the traditional conservative forces in the country in order to fill the gaps.
If he really puts an ax to the social programs on which many Argentines depend, his political opponent can make life really difficult for him: the left-wing Peronists are well organized through trade unions, social movements and party structures down to the smallest communities and are able to do so at any time , to paralyze Argentina with protests against the new government.