2023-11-20 05:57:17
The fan of Trump and Bolsonaro wins clearly and promises a drastic change in course. He wants to reduce the mountain of debt and replace the Argentine peso with the US dollar. There is a risk of massive upward price jumps as early as Monday.
Argentina has decided on a historic change. With a much larger lead than all pollsters predicted, Javier Milei won the runoff election for the presidency of the country of 47 million. The self-proclaimed “liberal-libertarian” economist will take over the country, which has been hit hard economically, from December 10th.
After an eight-month election campaign that divided society, the candidate from the party “La Libertad Avanza,” which was founded just two years ago, achieved a victory by almost twelve percentage points. It was a quick decision by Argentine standards. At around 8 p.m., the opposing candidate, the previous Finance Minister Sergio Massa, declared his defeat and congratulated Milei, whom he has known for many years.
For Massa’s supporters, election night was a bitter disappointment. APA / AFP / Juan Mabromata
Moderate victory speech: “Free trade respected”
At 9:54 p.m. local time, Milei gave his first speech as president-elect, which he delivered in a moderate choice of words. He spoke for 17 minutes but said little in concrete terms. “Today the reconstruction of Argentina begins, it is a historic night. I want a government that honors its obligations, that respects private property and free trade,” Milei said, inviting other forces and leaders to join his project. “The situation in the country is dramatic, there is no room for gradualism, for half steps,” said the election winner. For him, combating inflation, poverty and insecurity are the most urgent challenges. “Argentina has a future and it is liberal,” said Milei, who promised that the country would be “a world power” in 35 years. He concluded his speech by shouting “Long live freedom” and “God bless the Argentines.”
In fact, Milei won a landslide victory. In several important inland provinces he achieved majorities beyond the two-thirds mark. In Córdoba, the heart of the country, it reached almost 75 percent, in the Andean province of Mendoza, also one of the important economic provinces, it reached more than 71 percent. Overall, Massa was only able to win in three of the 24 provinces, a dramatic contrast to the first round of voting four weeks earlier. On October 22nd, Massa had reached first place with 37 percent.
There was great celebration among Milei’s supporters in the capital Buenos Aires. Archyde.com / Adriano Machado
Pact between the defeated candidates and Milei
Milei benefited from the fact that almost all voters who had voted for centrist parties in the first round now voted for him. This was the result of a pact that the defeated center-right candidate Patricia Bullrich and ex-President Mauricio Macri made with Milei. Election workers from Macri’s PRO party guarded the Milei ballot papers in thousands of polling stations. After the previous two rounds of voting, Milei complained several times regarding irregularities following voting.
Milei’s triumph raises a number of questions. During the election campaign he presented a number of controversial proposals. He wants to reduce the burden on the state budget by 15 percent of the gross domestic product, significantly reduce the size and scope of the state, privatize state-owned companies and introduce the US dollar instead of the consumptive peso. He also spoke out in favor of liberalizing the arms and organ trade and downplayed the atrocities of the last military dictatorship as “excesses in the war once morest subversion”. Milei is often described as a right-wing extremist abroad, primarily because of the relativization of human rights violations by the junta and his very active contacts with the Spanish right-wing party Vox. Milei has repeatedly expressed his respect for Brazil’s former president Jair Bolsonaro and especially for Donald Trump. The former US President and Republican frontrunner before the election a year from now warmly congratulated Milei on his victory on election night.
In three weeks, Milei will take over Argentina, but until then, bad things can happen to the country, because already on Tuesday, following a long weekend, tens of thousands of products in supermarkets will see a price jump following being kept artificially cheap by Finance Minister Sergio Massa until election day . Prices for energy, transport, health insurance and telecommunications will also rise, all of which were artificially depressed by Massa in order to maintain his electoral chances.
Central bank no longer has liquid foreign exchange reserves
Milei made it clear that he expected the current government to begin picking up the pieces it left behind. This is likely to include a significant devaluation of the official exchange rate of the peso to the dollar. Likewise, opening the books of a financial administration that leaves behind nothing but debts. Importers have $20 billion in liabilities to foreign suppliers, the central bank no longer has any liquid foreign exchange reserves and is also $13 billion in debt. Neither the International Monetary Fund nor China were willing to lend money to Argentina.
Sergio Massa, the minister who had primary responsibility for the economy last year and who tried to win the election with unaffordable tax gifts, announced his resignation from politics on election night. He also took vacation until the day of the change of government. His top officials will be responsible for handing over his government to Javier Milei’s team.
New President Milei occupies eight ministries
So far, Milei has only hinted at who should head the eight ministries that he wants to keep. Under Alberto Fernández there were 18 ministries, each with thousands of employees. Apparently, ex-President Mauricio Macri has called for several departments for representatives of his PRO party as part of the electoral pact, particularly the Foreign Ministry and the Justice Department.
Milei will have to make significant concessions to Macri because his young movement only has 38 seats in the 259-seat Congress. And in the Senate, things look even bleaker for Milei’s group: “La Libertad Avanza” only represents eight of 72 senators. In order to push through his massive reforms, Milei will need the support of the traditional right, but probably also help from the Peronist camp. This might become possible if Milei enters into political deals with Peronist governors. But such arrangements are neither cheap nor permanent.
Milei has kept the most exciting personnel decision to himself: the name of the future Minister of Economics and Finance. But this will be announced in the coming days in order to calm the markets, which were already nervous on election night.
Reactions
The former US President Trump congratulated Milei. “Congratulations to Javier Milei on a great race for president of Argentina,” he wrote on the platform he co-founded, Truth Social. “I’m very proud of her. You will transform your country and truly make Argentina great once more.”
Without directly mentioning his future colleague, the left-wing Brazilian President Luiz Inácio wrote Lula da Silva on X: “I wish the new government good luck and success. Argentina is a big country and deserves all our respect. Brazil will always be ready to work with our Argentine brothers and sisters.”
The left-wing Colombian head of state Gustavo Petro chose harsher words. “In Argentina the extreme right has won, that is the decision of society. Sad for Latin America: neoliberalism no longer has any proposal for society, it cannot respond to the current problems of humanity.”
Milei, however, received support from Europe. “Congratulations, dear Milei, on your great victory in the Argentine presidential elections,” wrote the leader of the right-wing populist Spanish party Vox, Santiago Abascalon X. “Long live Spain, long live Argentina, sovereign and free from socialism.”
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