Argentina’s Presidential Election of Javier Milei is a Turning Point for Democracy in South America

By: Roan Szucs

Edited by: Emilia MacDonald

November 19th marked the election of Argentina’s next president, Javier Milei, an anti-establishment, libertarian populist who stunned most political predictions when he came out on top of the PASO (primary) candidates with nearly 30% of the mandatory votes on August 13. 

Milei holds bold ambitions to demolish the state institutions responsible for Argentina’s inflation rate running at 140% and a three-year drought has led to a sharp fall in agricultural production. Two out of five Argentinians live in poverty and the currency has lost 90% of its value in four years. Milei has positioned himself as “the change candidate” through bold and extreme proposals such as dollarizing the economy and shutting down the central bank.

The implications of this election were inevitably drastic, with Milei’s former opponent, Sergio Massa (who was actually favoured to win this election) being the incumbent Minister of Economy, the Argentine citizenry was given a choice between a member of the current bureaucracy that assisted in bringing Argentina’s inflation rate from 54% in the year of their election (2019) to 140% currently. Or, in contrast, a libertarian who plans to abolish several corrupted or dysfunctional Argentine institutions, and effectively shrink (some of) the remainder, upholding the libertarian philosophy of shrinking government as much as you can before worsening the livelihood of the citizenry. 

So, Javier Milei it is. What are his plans? Will they be effective? How does this affect Argentine democracy, and South American democracy along with it? Let’s talk about it. 

Being a self-described “anarcho-capitalist”, Milei has promised a series of radical reforms, including slashing public spending by 15 percent, abolishing the central bank and switching the Argentinian peso to the United States dollar. The proposed 15% reduction in public spending addresses major concerns within Argentina such as their ever-rising inflation rate discussed earlier in this article, as well as Argentina’s US$44 billion debt to the International Monetary Fund. This is a conventional strategy for early attempts at getting a state out of economic pandemonium. 

The riskiness of Milei’s proposals lie in his promise to eliminate the Central Bank of Argentina and dollarize the economy (converting Argentina’s currency from the Argentine Peso to the U.S. Dollar). The potentiality of eliminating the Central Bank is compelling, as a dollarized Argentina would now have their monetary policy being set in Washington rather than Buenos Aires. The proposal to dollarize has some complications, first of which being where the Milei administration could retrieve enough USD to make a successful transition. The conventional strategy is turning toward the International Monetary Fund, but considering current Argentine debt with the IMF, approval seems questionable at the best. The alternative to dollarization is minimal, as a 140% inflation rate that is continually rising tends to be a death sentence for most currencies. Attaching the USD to Argentine economics could, ironically, keep more money in-country, as well as promote international investment, benefiting Argentina’s Foreign Direct Investment, domestic jobs, and more. If the Milei administration is able to successfully navigate a full-blown dollarization, it could spark drastic degrees of economic recovery.

The implications of the presidency of Javier Milei for both Argentina and all of South America exist mostly in the “grey area”. On one hand, Javier Milei is an evident enemy to current corrupt bureaucratic institutions within Argentina, with the goal of closing more than a dozen ministries and the central bank, and most policy ambitions alluding toward a functioning democracy with goals of jump-starting the economy. But there remains a “flip side”, with his highly questionable statements describing sex education as a Marxist plot to destroy the traditional family unit and has proposed a plebiscite to repeal abortion, which Argentina legalised in 2020. He also rejects the notion humans have a role in causing climate change. This level of sociopolitical polarization in an already distressed Argentina could have significant implications related to civil dissent and polarizing state sentiments. 

In summary, Javier Milei’s presidency can be understood as follows: he has economic pedigree that is held in the highest esteem within a state that is most certainly in need of such experience. His economic propositions are both radical and risky, but assuming the administration can successfully make them happen, it could further Argentina’s journey to economic stability and the promotion of domestic industry. Sociopolitically, Milei is a risk, with his blunt opinions on sex education, abortion, and climate change, putting Argentina at an increased risk of civil dissent. This should not be ignored, as the nation is already in a state of heightened stress and increased tensions. 

References

Aljazeera. (2023, November 20). Argentina elects outsider Javier Milei on platform of radical reformhttps://www.aljazeera.com/news/2023/11/20/argentina-elects-outsider-javier-milei-on-platform-of-radical-reform#

Dodman, B. (2023, November 20). ‘El loco’ at the helm: What next for Argentina under outsider president Javier Milei? France 24. https://www.france24.com/en/americas/20231120-el-loco-at-the-helm-what-next-for-argentina-under-outsider-president-javier-milei

Elliott, L. (2023, November 20). Would Javier Milei’s dollar plan for Argentina be an economic experiment too far? The Guardian. https://www.theguardian.com/world/2023/nov/20/javier-milei-dollar-plan-argentina-economy

Ferrerio, S. P. (2023, October 26). October Political Risk Report. BNamericas. https://app.bnamericas.com/report/section/all/content/xlyobpjg2-october-political-risk-report?source=HOME

Nessi, H., & Raszewski, E. (2023, November 20). Argentina’s next president Milei must tame inflation, turn around economy. Reuters. https://www.reuters.com/world/americas/argentinas-next-president-milei-must-tame-inflation-turn-around-economy-2023-11-20/#:~:text=Inflation%20is%20at%20143%25%2C%20net,sharp%20peso%20devaluation%20is%20likely

O’Neill, A. (2023, November 1). Inflation rate in Argentina from 2004 to 2028. Statista. https://www.statista.com/statistics/316750/inflation-rate-in-argentina/#:~:text=Inflation%20in%20Argentina%20was%2054,depression%20from%201998%20to%202002

Image citation:

Espana, V. (2022). Javier Milei VIVA22. Wikimedia Commons. https://commons.wikimedia.org/wiki/File:Javier_Milei_VIVA22_(2).jpg