The Milei Milestone: A Tango of Triumph and Tribulation in Argentina

Summary

When Javier Milei, a libertarian economist with a mane that makes Simba look like a balding suburban dad, roared to victory in Argentina on November 19th, the world stopped for a moment and blinked. It wasn't disbelief per se –stranger things have happened in politics, but perhaps more of a “hmmm” with an arched eyebrow.

Milei, a man who treats traditional economic policies like a matador treats a bull – with a flamboyant disdain– has become the new face of Argentina's latest political tango. And what a chainsaw-wielding dance he has previewed. The left foot of socialism stepping on the right foot of capitalism, and vice versa, in a rhythm only Argentinians and their forlorn economists could find danceable. And Milei wants to show he is clearly the lead. But eliminating everything that he could be a leader of?

His victory is on trend, a bull charging into the china shop of Argentina's politics, which, to be fair, already had more than quite a few cracks. Milei's personal brand and interpretation of libertarianism – a special, 2023 Argentine version of Locro stew of free markets, limited government, and the kind of individual freedoms that would make John Stuart Mill twist in his grave – portends a radical departure from Argentina's political norm.

In a country where economic stability often seems as elusive as a quiet conversation at a raucous Carnavale parade, Milei's promises of a laissez-faire paradise have seduced voters like an insistent yet sultry tango melody. His approach though is simple: cut the government down to size, let the market do its magic, and watch Argentina transform from an economic ugly duckling to a swan that even Nordic countries would envy.

But let's not kid ourselves. Argentina's economic problems are more tangled than a plate of spaghetti. Inflation rates that make Bitcoin look stable, a public debt that seems to grow faster than a teenager on steroids, and a history of economic policies that range from the unorthodox to the utterly baffling. Can Milei untangle and cut through this perpetual South American economic knot? Or will he, like so many before him, find that the scissors of reality are blunt? Already we have seen him tap conservative ex-rival Patricia Bullrich on the shoulder as his security tsar, signaling a moderating approach.

International observers - states and institutions alike - are watching with a mix of curiosity and caution. Argentina is the land of beef, tango, and economic experiments that often end with the grace of a penguin on roller skates. Will Milei's libertarianism be the solution, or will it add another chapter to Argentina's economic rollercoaster?

Before Milei really puts his chainsaw to work, will he or his advisers (does he actually have any?) find any utility in first tackling the less-exciting, but important unfinished business of fiscal discipline, monetary policy reform, recapturing investor confidence, and diversification of economic sectors? Argentina has never fully dollarized its economy, opting for a currency peg, which provided some stability but ultimately was not sustainable in the long term. And speaking of Dollarization…

Another consideration is the presence and interaction with a China. The prominent security impact of the enforcing the “9-Dash Line” generates headlines, but there is no doubt that China is increasingly interested and involved in South America. In Argentina alone, “China has invested billions in the country, in everything from lithium and solar power plants in the north, to a space station in the southern Patagonia region. The ties have become even stronger in recent years, with Argentina joining Xi Jinping's signature Belt and Road initiative in 2022.” according to Bloomberg. But undoubtedly to the PRC’s Ministry of Foreign Affairs’ chagrin, China’s recent bet on presidential hopeful Sergio Massa turned out to be a big dud. Will their $6.5 billion loan to Argentina make a difference now, in gaining a footprint in what could be a key battleground for Chinese financial and security influence vis a vis the US? The evidence for Chinese boots on the ground anytime soon are not evident.

Milei's victory is not just a political upset; in some ways, it's a narrative shift. A shift from the traditional left-right split to something that feels like a political modernist painting – confusing, colorful, and open to interpretation. Whether this shift will lead Argentina to prosperity or further into the economic wilderness, only time will tell. But one thing is for sure – it's going to be an interesting ride.

Argentina’s Election Isn’t Just High Stakes for Argentina — But for China, Too
https://www.bloomberg.com/news/articles/2023-11-14/argentina-s-presidential-election-2024-will-impact-china-s-latin-america-reach

Argentina's Milei taps conservative ex-rival Bullrich as security tsar
https://www.reuters.com/world/americas/argentinas-milei-taps-conservative-ex-rival-bullrich-security-tsar-2023-12-01/