Milei wants to step on the accelerator

The pact with the center-right of Mauricio Macri has resulted in a resounding victory for the far-right libertarian Javier Milei in last Sunday's presidential elections.

Oliver Thansan
Oliver Thansan
20 November 2023 Monday 03:21
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Milei wants to step on the accelerator

The pact with the center-right of Mauricio Macri has resulted in a resounding victory for the far-right libertarian Javier Milei in last Sunday's presidential elections. With almost 56% of the votes, Milei beat the current Minister of Economy, Sergio Massa, by a wide margin of almost twelve points. Thousands of voters throughout the country, from the Andes to Patagonia, with the sole exception of Buenos Aires, elected the histrionic economist with radical ideas who calls himself an anarcho-capitalist and whose meteoric career to presidential power began just two years ago. Massa – after his surprising victory in the first round – only reached 44% of the votes.

The incorporation of Macri, and the defeated conservative candidate, Patricia Bullrich, agreed two weeks ago, had convinced many analysts that the chainsaw politician can moderate his program, especially the controversial idea of ​​dollarizing the economy.

But, after the election result, Milei has shown signs of wanting to step on the accelerator. “There is no place for gradualism” or “lukewarmness and half measures,” she announced. “Today the end of Argentine decline begins, we begin to turn the page,” Milei said in her speech. “The model of the State as loot is over (...), the idea that the perpetrators are the victims is over.”

The first measures announced yesterday Monday were the privatization of the YPF oil company, public television and the state news agency. This has a double message, according to analysts. YPF was nationalized by the government of Cristina Kirchner, which expropriated the Spanish company Repsol in 2012. Milei aims to regain investor confidence.

Likewise, in Milei's ultra-libertarian discourse, public media are defenders of the vested interests of a socialist State. This will surely open the first front of battle with public worker unions for a president-elect who has warned that he will apply a heavy hand to protests against his program. “The public television unions are going to take to the streets, for sure,” said the host of a private radio station.

Milei has committed to implementing a gigantic budget adjustment even tougher than that demanded by the International Monetary Fund. According to his electoral program, he intends to throw hundreds of thousands of civil servants onto the streets and dollarize the economy, which – according to most economists – could control inflation, but with an enormous sacrifice in economic activity and employment.

In Buenos Aires – where support for Milei is much lower than in the rest of the country – anxiety was palpable. “I am worried because if Milei touches on labor reform and education, this is going to explode, it will be worse than in 2001,” said a waiter at the historic 36 Billares cafeteria.

Milei began paving the way for adjustments in his speech on Sunday. “They are leaving us with a destroyed economy,” she added in reference to the legacy of the Government of Alberto Fernández. The inflation rate is over 140%, and the external debt is unpayable. But the situation is not much worse than what Alberto Fernández inherited from Mauricio Macri's government in 2020.

The 20-day transition can be a period of great turbulence. Milei's economic dollarization plans create the possibility of a massive conversion of savings into dollars. Yesterday the banks were closed because it was a holiday. But there are indications that they will not reopen due to fear of what Argentinians call a bank run.

As if that were not enough, the Fernández Government seems to be abandoning the ship before it sinks. Massa requested permission to be absent from the transition period. “Sergio (...) does not want to take charge of the disaster that may come to him,” a government source told the Clarín newspaper. At the time of going to press, Fernández had not made any public statements.

Since Massa had assumed the reins of an economy that is bordering on hyperinflation (more than 500%), the news of the de facto boycott of the transition fell like a bomb in Milei's post-election bunker. “It is irresponsible,” said the president-elect.

Milei's overwhelming victory is a political earthquake in the Latin American region, in which the political cycle seemed favorable to progressive parties. It is further proof that the political pendulum in times of extreme polarization is extremely volatile.

The libertarian economist has implausibly managed to mix an image of a punk rocker with a black leather jacket and sideburns, practicing tantra sex, with winks to the most conservative sectors of Argentine power, including soldiers convicted of crimes against humanity who admire his denialism regarding to the number of victims of the extermination of the military junta in the seventies.

The new vice president-elect, Victoria Villarruel, has defended soldiers convicted for their participation in the torture of opponents during the dictatorship. Milei and Villarruel defend the prohibition of abortion and the restriction of the rights of minorities. Villarruel is a close ally of the Spanish far-right party Vox, and Milei met with Santiago Abascal, the leader and founder of Vox, in Buenos Aires last month.

There will be geopolitical repercussions. Milei opposes the Mercosur regional trade agreement and has proposed breaking diplomatic relations with China and Brazil, Argentina's two most important trading partners, which Milei considers communist. “He will be a geopolitical ally for the United States, and even more so if Trump wins next year,” said a former minister of the Government of Alberto Fernández y Massa. Milei announced yesterday that he will invite Jair Bolsonaro, the far-right former Brazilian president. It is not known if she has invited the current president, Luiz Inácio Lula da Silva.