The Election of Javier Milei in Argentina: Context, Ambition, and Impact

INTRODUCTION

The election, on November 19, 2023, of the libertarian candidate, Javier Milei, as President of Argentina, represented a major shakeup of the political system of that country, with potential significant impacts at regional and international levels. When he announced his run for the presidency earlier in 2023, Milei was expected to do well on the back of protest votes. In fact, he not only exceeded by far those expectations, but also became the president elected by the largest margin since the reestablishment of democracy in Argentina, a little over 40 years ago.

The stunning performance of such a newcomer to Argentina’s politics underlines the disaffection that has affected the political system and the political class of that country. It also is the prelude to an unprecedented moment in the political history of the country, replete with risks and surprises: the country faces one of its worst economic crises, with almost unprecedented levels of poverty and rarely seen rates of inflation. President Milei has, ever since he was a TV pundit, accused abuses on the part of what he calls the “political caste” of the last 100 years for causing the long Argentine decay. He intends to face down that caste and defeat it in order to ‘make Argentina great again’.

This paper discusses how Argentina got to where it is now, and how President Milei obtained the largest margin of victory of a presidential candidate since the return of democracy in 1983. How does he intend to deal with this inheritance? What are his chances of success and what will be the impacts of his victory and presidency in Latin America and the Western Hemisphere more broadly?

THE SITUATION IN 2023, AND THE CONTEXT FOR MILEI’S RISE

Argentina is currently going through a major economic crisis, the sixteenth in 160 years. The crisis has increased poverty while inflation is the highest in the world. At the end of 2023, approximately 40% of Argentinians were living in poverty, and 10% in a state of indigence. Meanwhile, the inflation rate reached 138% in a year. This is to underline that, although some of the measures taken by the recently-elected Milei government have certainly increased the poverty level and accelerated inflation, as we will discuss below, the Argentinian economy was in crisis long before Milei reached power. In fact, it can be said that the economic crisis was one of the reasons for his electoral success.

Argentina resorted to the International Monetary Fund (IMF) in 2020 to seek support. The lifeline extended by the IMF, as usual with that institution, came with conditionalities, which Argentina struggled to meet very early on. The appointment of Eduardo Massa as head of a large ministry that included the economy in July 2022 by President Alberto Fernandez was an attempt to place a politician with a good reputation and high level of credibility in the market at the helm of the national economy, and to try to save the agreement with the IMF. But Massa only partly succeeded in that mission, and the IMF became increasingly unwilling to extend further support to Argentina, unless it engaged in further deficit- reduction policies.

The 2023 presidential election took place in that context: increasingly wider budget deficits, accelerating inflation, and increasing and widespread poverty. The Peronists/Justicialists (which will be presented later) desperately tried to remain in power while defending an underwhelming if not disastrous economic performance (which partly explains why President Fernandez did not run for re-election). Meanwhile, the traditional opposition to the Peronists, under the leadership of former President Mauricio Macri, was trying to return to power. Javier Milei, an economist and former TV pundit, who was elected to his first mandate as a representative in the lower national legislative chamber in 2021, also declared his run for the presidency. Although he was expected to capitalize on the protest vote, very few, including opinion polls, forecasted him early on as a contender for the presidency1. Other candidates did compete, but they were more in the also-run category than serious contenders for the presidency.

The result of the primaries (PASO; see footnote 1) astonished the political world in Argentina: Javier Milei won the primaries and easily came in first place. Eduardo Massa came second and became the Peronist candidate in national elections. The former minister of security in the government of Mauricio Macri, Patricia Bullrich, came in a disappointing third position. Her supporters had hoped she would reproduce the achievements of Mauricio Macri in the two preceding presidential elections. Indeed, back then, Macri managed to initially forge and then confirm an alliance between his political party, Propuesta Republicana, and the traditional Union Civica Radical (UCR)2. Ms. Bullrich campaigned on the growing widespread feeling of insecurity of Argentinians and relied on her past as minister of security to proclaim her ability to reestablish order and safety in the streets of Argentina.

Very shortly after the primaries/PASO, it became clear that the presidential campaign was going to consist of who was going to face Milei in the presidential election runoff. Milei became the leading candidate in opinion polls, hence the person to beat, while polls showed either Bullrich or Massa in a position to go into the runoff and face Milei. The Peronists used their hold on the executive to extend benefits to the electorate, which, paradoxically, made achieving budget deficit targets that had been agreed upon with the IMF very unlikely. Still, the competitiveness of Massa in the elections, despite the dismal economic performance of the government he was representing, was a testimony to the strength of Peronism in the country. That strength was confirmed by the results of the first round of the Presidential elections: Massa came in a comfortable—and relatively surprising—first position, whereas Milei, who had been forecasted by almost all opinion polls as the leading candidate, came in a disappointing second place.

Nevertheless, Milei had secured the most essential part, which was to compete in the runoff. For that new election round, both candidates sought to attract Bullrich’s voters. Her support consisted of traditional UCR electors, whose emblematic figures quickly decided to distance themselves from Milei’s agenda (which will be detailed next), and new Macri electors, more to the right on several issues, and notably more worried about traditional values as well as law and order. Many of the traditional UCR politicians reluctantly declared their support for Massa in the runoff elections, or that they would abstain, while Macri and Bullrich both quickly and forcefully declared their support for Milei. Their objective through that early support for Milei was to try to bring to bear some influence in the event of Milei’s election, since, unlike him, they have substantial support in both chambers of Congress, which Milei would need to rely on to pass reforms. The runoff elections confirmed what had been becoming increasingly evident since the results of the PASO: Javier Milei—and his coalition La Libertad Avanza—won an undisputable and clear victory (55.69% of the votes), forcing his counterpart, Eduardo Massa—and his own coalition, Union por la Patria—who received 44.3% of the votes, to concede defeat very early on in the election night.

In order to explain Milei’s impressive victory, one needs to take a step back and take into consideration the political, economic, and social history of Argentina, which provides the context for Milei’s campaign against what he refers to as the “caste”—la casta.

HOW DID ARGENTINA GET THERE?

Javier Milei, the pundit turned deputy turned President of the Republic, has used a very skewed and particular narrative about the history of Argentia to justify his discourse about what he calls the ‘caste’. In his narrative, Argentina’s decline has a birth date: 1916, the first elections organized after the adoption in 1912 of the Saens Peña law, which established the mandatory vote through secret ballots for all males aged 18 and above3. From Milei’s point of view, the evolution of the Argentine political system into a democratic one was the start of increasing doses of what he calls “socialism” in the country. In his narrative, Peronism, which surged three decades later, represented a deepening of something that had started already with the Saens Peña’s electoral law and the presidential elections of 1916. Through this indirect critique of liberal, electoral democracy, which had replaced a traditional and conservative political order with one based on political parties that compete for power through open and democratic elections, Milei argued that Argentina had lost its splendor and started its decline from a world-class economy to a middle-income one. This negative critical narrative of the impact of democracy in Argentina is not necessarily new, since it was made during the last military dictatorship in the country, but its novelty is that it has gained popular acceptance and adherence through Milei and his electoral followers (Perochena, 2023).

So, if Argentina was a top-ranked world economy at the beginning of the twentieth century, how did it become this middle-income one? It can be argued that a conjunction of economic and political factors played different roles and had different weights in that decay. Politically, a good place to start is to remember that between 1930 and 1976, Argentina experienced no fewer than eight coup attempts, six of which were successful, and most of which were led by the military, revealing a very high level of political instability, and undermining the confidence of foreign investors.

Another major political and economic development of that period was the rise and eventual fall of Juan Domingo Perón as a dominant figure in the country, a figure survived by the establishment of a political and social movement called Peronism. Perón, who first ruled Argentina between 1946 and 1955, and who later returned to the presidency between 1973 and 1974, was part of the military movement that took power through a coup in 1943. After the 1943 coup, and as Secretary of Labor, he brought major improvements to the lives of workers: he established paid vacations, social security (through which retirement was established), and established labor courts. Those reforms gained him the trust and the support of labor unions and gave him the popularity that allowed him to win the 1946 elections. His philosophy? Encourage industry, and the national industry in particular, create jobs, improve infrastructure, and provide the poor, the elderly, and children with social programs, housing, schools, and healthcare. Women also gained the right to vote under his presidency. These major reforms resulted in substantial improvements to the standards of living of the poor and the needy, and created a movement characterized by the favoring of economic nationalism and a strong public sector, and which relied to a large extent on the strong support of unions and unionized workers. When Perón and the Peronists returned to power in 1973, there were very high expectations for the future, but these were disappointed because of the international economic crisis that resulted from the first oil crisis, and because of dissent within the Peronist movement. After his death in 1974, Perón’s wife Isabel replaced him, but she also did not manage to bring about the changes that were needed, and she was kicked out of power by the military dictatorship (Donghi, 2013; Rapoport, 2000).

With Peronism, another major tendency in Argentinian politics and the economy was established: anti-Peronism. Several sectors were harmed by Perón and aimed to get rid of him, as they did in 1955 through a military coup (Donghi, 2013). Business leaders and the agricultural sector were strongly alienated by his policies. So sometimes, they allied with the military and supported their coups. At other times, such as right after the military dictatorship or during the long presidency of Carlos Menem, they engaged in politics and supported UCR leaders (Raul Alfonsin in the first case, and Fernando de la Rua in the second). More recently, Mauricio Macri, who allied with UCR, became the spokesperson of that group and the President of Argentina. Three remarks are necessary here:

• Anti-Peronists have usually reached power after traumatic experiences: Alfonsin won the first elections after the end of the military dictatorship, de la Rua was elected President after the long and at the end truly chaotic presidency of Carlos Menem, and Macri closed the long reign of the Kirchners (Cristina and before her, her husband Nestor).

• With the exception of Macri, the two other Presidents saw their mandates cut short due to social unrest that resulted from reforms they wanted to implement and that were rejected by trade unions, and ultimately, by Peronists and Peronism. Indeed, both Alfonsin and de la Rua hastily left the presidency as they became considerably unpopular and mobilized different sectors of society against them. They came as saviors, but left an aura of incompetence behind them and were replaced by Peronists, which says a lot about the resilience of Peronism in the country.

• The last remark is more of a clarification: Carlos Menem was elected on a Peronist agenda but as soon as he became President, he adopted the so-called neoliberal economic agenda. Indeed, Argentina was in the midst of a hyperinflation crisis, and he adopted the neoliberal recipe to face it, with privatizations and what was referred to as convertibility, as he established an exchange rate of 1 peso for $1.

This is why it is not absurd to wonder whether Milei will be successful where Alfonsin, de la Rua—and to a certain extent, Macri—failed, and more specifically, whether he will manage to resist the pressure of the street and of the unions and establish his economic agenda. International precedents do exist (one could think of Margaret Thatcher in Britain, for instance), but will he be able to do so? It is this tremendous challenge that faces Milei and his government. In the next two parts, Milei’s plans and their chance of success are presented and evaluated.

WHAT DOES MILEI INTEND TO DO ABOUT IT?

President Milei has a very ambitious and multifaceted plan to transform Argentina, which can be summarized as: less state, more freedoms, and historical revisionism. Less state is evident in his economic agenda. President Milei wants to slash the state budget and expenditures, including state subsidies to all, from industries to the poor, and from ailing companies to institutions in civil society that support the needy. Besides reducing expenditure, he intends to privatize public-owned companies as extensively as possible, including some of the country’s flagship companies, such as the national oil company Yacimientos Petrolíferos Fiscales (YPF)4 and the national airline (Aerolineas Argentinas). Less state also means that he wants to reduce the size of the state and of public administration, as shown, for instance, by his combining of the education and health portfolios under a single ministry of human capital. One of his most shocking and significant commitments is to shut the Argentine Central Bank and to eventually dollarize the economy. With these commitments, and unlike many traditional politicians, during the electoral campaign, Milei did not hide that his economic measures were going to hurt a lot before they start reaping the benefits they are intended to bring.

As for more freedoms, on social issues, Milei’s libertarian outlook translates into privileging market logic in issues as distinct as his defense of free trade in guns and human organs. He also affirmed his opposition to social justice programs and to abortion, and his attachment to traditional family values.

As for revisionism, during his years as pundit and his short tenure as a deputy, Milei also supported conspiracy theories and questioned the reality of climate change, just like his alter egos Jair Bolsonaro in Brazil and Donald Trump in the U.S. He supported the theses of voter fraud in the U.S. and Brazilian presidential elections, and was concerned about it in Argentina too, although he tuned that narrative down after his landslide electoral victory. He also repeatedly reiterated his denial of climate change as he committed to withdraw from the 2015 Paris Agreement.

One of his most troubling revisionist positions regards his defense of the last Argentinian military dictatorship. Not only does he—baselessly—deny the number of victims of the military dictatorship, but he also portrays repression by the military and their crimes as a war in which he only admits to “excesses” committed by the military. This revisionism of Argentinian history not only is totally out of sync with the national consensus established since the 1980s about the military period, but it is also baseless, as historians from all political sides and with diverse political agendas have found no reasons to doubt the numbers of victims, or the weakness of the guerillas, which means that the reference to a ‘war’ instead of a repression under the military dictatorship is a total mischaracterization of the events of that period.

WHAT HAS MILEI ACHIEVED IN HIS FIRST 100 DAYS IN POWER?

In order to face the challenges mentioned earlier and to execute his very ambitious reform plans, President Milei faces serious political hurdles. For a start, his party has a very small number of deputies and senators, and he is very far from a majority in any of the chambers of Argentina’s parliament. He can attract support from other groups and parties (and that is the opportunity for influence that Macri and Bullrich attempted to seize after the elimination of the latter in the first round of the presidential election, and their immediate rallying to Milei), which means that he might need to make concessions and negotiate compromises. President Milei’s party also has no elected provincial governors or mayors, which means that he cannot count on regional/provincial leaders to influence the deputies from their provinces to vote one way or another. The absence of trusted allies such as governors and mayors forces the President into further negotiations and concessions. Having said that, the President can show he has considerable support in order to try to convince deputies, senators, and governors to go the way he wants: in the presidential election, he won in 23 out of the country’s 26 provinces. His support in opinion polls has also remained solid, showing that the population at large is giving him time to implement his reforms and will judge him on results rather than on intentions.

With that equation in mind, President Milei has presented two key proposals to Congress for eventual approval. The first was done by resorting to a DNU (Decreto de Necessidades y Urgencia, or Decree of Necessities and Urgency), while the other was a mega-reform bill, officially called the ‘Ley de Bases y Puntos de Partida para la Libertad de los Argentinos’, or law of foundations and launching pads for the freedom of the Argentinians, more commonly referred to as the Omnibus Bill due to its size (664 articles). DNUs allow the executive power to legislate without going through the traditional legislative process. These decrees become laws eight days after they are published in the Official Gazette (Boletin Oficial), and both chambers of Congress must reject them in order to annul them.

In the DNU he decreed, President Milei reformed 300 norms which canceled regulations, authorized privatizations of publicly owned companies, and initiated the flexibilization of labor laws and of the healthcare system, not to mention currency exchange operations. The constitutionality of DNUs has usually to be verified by a legislative commission, but after that, unless it is voted down by both chambers, it continues to be the law of the land. On March 14, in a move of the Vice President of Milei -who leads the Senate- that has been judged treacherous by Milei’s political allies, the Senate ended up voting down the DNU, but as long as the lower chamber has not voted it down, it remains the law of the land. However, it is relevant to note that a labor court has suspended the part of the decree that referred to labor law after an action was brought by a labor union.

As for the Omnibus Bill, the 664 articles cover also privatizations (although in this case, it explicitly mentions the 41 public companies to be privatized), introduction of a general export tax of 15%, and introduction of incentives for Argentinians to repatriate their undeclared assets abroad. Politically, it eliminates the PASO, modifies the proportional representation in the country and most polemically, calls on the legislature to cede some legislative power to the President until December 31, 2025, with an option of extending that for two more years.

Following the regular legislative process, and after some concessions made by President Milei which ended up reducing the bill from 664 articles to 382, the Omnibus Bill was approved in its general terms on Friday, February 2, with 144 votes in favor and 109 against. But when it reached the votes on amendments stage, the widespread resistance and the ample risk of modifications pushed the government to withdraw it on February 6. That was a serious setback to the President, since the whole package will need to restart in the legislative process from the very beginning, which will cause a substantial delay to his agenda of reform, which the President needs to bring to fruition as quickly as possible to shorten the period of sacrifices and start an eventual new and virtual cycle of growth.

ne element that shows the paradoxes of the start of the Milei presidency is that in the same week that the Minister of Economics declared that for the first time in a decade, the Argentinian government had a $589 million surplus in its budget in January 2024, a very well respected center of analysis (Observatório de la Deuda Social or Observatory of the Social Debt of the Catholic University of Argentina) reported that poverty had reached almost unprecedented levels in the country (27 million people out of 44 million Argentinians), and that the number had passed from 49.5% of the total population of the country in December 2023 to 57.4% in January 2024. This was a reflection of the slashing of government subsidies decided by the Milei government—which has certainly contributed to the budget surplus—and was on track to equal the worst crisis of Argentina, that of 2004. In sum, if the Milei government manages, through its reforms, to control inflation and gain the support of the IMF, in a relatively short time, it can count on popular support for the continuation of its reforms. Otherwise, the general discontent will tend to grow and the government can find itself paralyzed (see O Globo, March 3, 2024, and La Nacion February 18, 2024).

President Milei has also accumulated clashes with his potential allies (the province governors for instance) and adversaries (labor unions, which have declared their first general strike of his presidency and have paralyzed several sectors of the economy with strikes, although the population at large has, through opinion polls, expressed its lack of support for the strikes). There have also been tensions with his Vice President, who Milei does not seem to trust (See O Globo, March 1, 2024)

BEYOND ARGENTINA, WHAT ARE THE IMPACTS OF MILEI’S PRESIDENCY ON SOUTH AMERICA AND THE WORLD?

International relations bring opportunities as well as challenges for the agenda of President Milei. From the standpoint of opportunities, Milei’s Argentina owes some $40 Billion to the IMF. By slashing expenses and obtaining a budget surplus, the Argentinian President hopes to gain the trust and the support of the IMF for his reform agenda. Of course, for that to happen, he needs quick and positive results, which is what he is working hard at. Similarly, the U.S. is the most influential player at the IMF, and President Milei has been keen on confirming his clear inclination towards the U.S. by criticizing both China and Russia, and most significantly and symbolically, by pulling Argentina from its adherence process to the BRICS. Mr. Milei, who, as previously mentioned, supported President Trump’s conspiracy theory about voter fraud in U.S. elections, does not hide his sympathy for the former President, while working on strengthening his links to the current one. Still internationally, Mr. Milei has also declared his support for Israel and has visited that country in one of his first international trips, to express support for its fight against Hamas. However, if the European Union’s recent history with Brazil’s Bolsonaro is of any indication, the EU will not maintain warm relations with Argentina if Mr. Milei persists in his thesis of climate-change denial. On a parallel note, it is also possible to note that Mr. Milei is the new ‘darling’ of the right in the world, as shown, for instance, by Elon Musk’s re-tweet of President Milei’s speech at the World Economic Forum in February 2024 in Davos, in which he blasted social justice as being unjust since it takes away from one to give to the other (see New York Times, February 25, 2024)

Regionally, many challenges await Milei. Argentina’s main partner is Brazil, and Mercosur plays a key role in that partnership. However, Milei has, for a long time, been a harsh critique of Mercosur, which he considers too subsidies-heavy and too reliant on public support to exist. The expectation is that as President, Milei cannot simply withdraw from Mercosur—although he would love to—but that that institution will not have the same weight or the same level of priority as it had under all his democratically elected predecessors. If diplomatic hints can be trusted, it should be mentioned that Brazil’s President’s congratulatory message to President Milei did not mention him by name at any moment, and President Lula did not attend Milei’s inauguration ceremony. Diplomats from both countries insist that the partnership between them is too important and will survive the current crisis, but it is clear that the relationship is going through a moment of crisis.

As for Morocco, Argentina’s relative isolation on its subcontinent, and its need to diversify partnerships around the world, make it open to intensify relations. Argentina’s declared alignment with the West also means it shares Morocco’s foreign policy sympathies. In South America, these similarities have played favorably in Morocco’s interests, as when pro- Western right-wing governments ruled Chile, Colombia, and Mexico. Of course, Morocco has been a staunch supporter of measures to protect the Earth from climate change, but President Milei shares a similar position on this issue to former Brazilian President Bolsonaro, and that difference did not stop Morocco from making headway with Brazil under Bolsonaro’s presidency. More significantly, Milei and King Mohammed VI seem to share a common vision on the importance of human capital, which is the name of one of the most important ministries created by Mr. Milei, and which was a flagship initiative undertaken by King Mohammed VI, which he launched in a major discourse in July 2018. These similarities can play an important role in bringing Morocco and Argentina closer over the next few years.

FINAL REMARKS

President Milei has a very ambitious reform agenda for Argentina, based on a libertarian view of the world. His chances of success depend on how quickly, if at all, he can start to reap the fruits of the reforms he proposes. If he manages to control the budget, bring inflation under control, and garner the support of the IMF in a relatively short period of time, that will embolden him in facing his other challenges, which are substantial. Otherwise, the fact that he has no majority in Congress and no allies as governors of the provinces will make it difficult for him to advance his reforms and be successful in the face of resistance. The multiple social movements that have already started acting against him will only intensify with time. So, the question is: will he face the same future as former Presidents Alfonsin and de la Rua, who were kicked out of power before the end of their mandates because of their failure to show success in the reforms they wanted to make, or will he at least repeat the feat of former President Macri, who managed to finish his mandate but did not manage to be re-elected. Or will he exceed all these expectations and leave a long-lasting mark on Argentina’s history by becoming the counterpart of Perón and a leader of a movement on his own?

BIBLIOGRAPHY

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