A far-right libertarian candidate with credentials that elsewhere would make presidential hopefuls blush has burst out of nowhere to claim centre stage in Argentina. Javier Milei (52), a self-described ‘anarcho-capitalist’, wants to shutter the country’s inept central bank, replace the long-suffering peso with the US dollar, abolish all but a handful of government ministries, ditch nearly all social programmes, and privatise most of whatever is left.

Last Sunday, Mr Milei cruised to victory in the country’s open presidential primary election securing thirty percent of the vote. The upset caught pollsters, pundits, and nearly everyone else by surprise. Analysts had predicted that voters would be put off by Mr Milei’s ‘crackpot ideas’ and colourful character.

Sporting a smartly cut leather jacket, and with luxuriant sideburns and a bushy crop of hair that hasn’t been touched by a comb in almost forty years (by his own admission), Mr Milei strikes a remarkable pose. If anything, he is wildly eccentric and named the four English mastiffs that share his home after liberal economists: Milton (Friedman), Murray (Newton Rothbard), Robert (Patrick Murphy), and (Robert Emerson) Lucas. Through a medium he remains in touch with Conan, their deceased progenitor.

Bombastic

A one-time ‘tantric sex professor and a tv pundit/buffoon who became a fixture of the talk show circuit for his pronounced lack of modesty, baffling honesty, and bombastic demeanour, Mr Milei promotes an ultra-individualistic agenda that, he says, will empower citizens and free them of the stifling state rules and regulations that inhibit free enterprise and enable corruption. He campaigns like a rock star and has built a strong following amongst young voters frustrated with Argentina’s crisis-as-usual establishment.

Mr Milei blames a ‘depraved caste’ of politicians, administrators, and assorted rentiers for bleeding the country dry, fleecing its abundant natural resources for personal gain, and perpetuating its economic and social decline. On contemporary global issues, Mr Milei is no less outspoken. He calls China an ‘assassin state’, opposes the ‘cultural Marxism’ of feminism, the LGBTIQ+ movement and minority rights, and expresses an admiration for Donald Trump and former president Jair Bolsonaro of Brazil. He also holds the late Margaret Thatcher in high esteem.

In the 2021 legislative election, Mr Milei landed a seat in the lower house of congress. Here, he promptly laid siege to the ‘Kirchnerists’, an offshoot of the Peronist Party that has dominated Argentine politics for some twenty-odd years with a peculiar mix of clientelism, corporatism, and populism.

Mr Milei shelled the Kirchnerists with a suite of seemingly outlandish proposals ranging from ending compulsory education to outlawing abortion, slashing taxes, and axing state expenditure. He proudly assured voters that his ‘Chainsaw Plan’ would outdo whatever austerity the International Monetary Fund (IMF) seeks to impose on the country – by an order of magnitude. He promises to eliminate the budget deficit (-4.5% of GDP) ‘within months’ of getting elected.

However, Mr Milei is no admirer of the IMF and promises that he will not sign any deals with the fund nor accept its money: “The IMF is just a bunch of bureaucrats who know that a bank’s business is to charge interest. If I’m elected, it will be to solve Argentina’s problems.”

He also said that after disbursing 22 bailout packages, it has become ‘abundantly clear’ that the IMF is ‘clueless’ when it comes to fixing Argentina’s economy – and an ‘enabler’ of graft.

Alejandro Werner, a former IMF Western Hemisphere director, is particularly concerned over the plan to dollarise the country: “The Argentine economy is not closely linked to the US. This means that monetary policy decisions made in Washington will often not be appropriate for Argentina.”

Some analysts fear that Mr Milei’s libertarian ambitions may clash, possibly violently, with the dismal social and economic reality. Around forty percent of the population (approx 46 million) live in poverty and the net forex reserves of the country are an estimated $7 billion in the red. “To dollarise an economy that has no dollars is a problem, but we’re working on that,” says Darío Epstein who leads the candidate’s planning team.

Amongst Mr Milei’s more flamboyant views are his dismissal of climate change as a ‘socialist hoax’ and a proposal to legalise the harvesting and sale of human organs. However, after a few days, he dismissed the latter idea as unfortunate and thoughtless: “It was just an impromptu answer to a reporter’s question.”

Nutty Professor

It would probably be a mistake to dismiss the maverick libertarian as an oddball shooting nonsense from the hip. Mr Milei obtained a double PhD in Economics from the University of Belgrano and the University Torcuato de Tella.

For over twenty years he lectured in Argentina and abroad as a professor of Monetary Theory, Macroeconomics, and Econometrics. In that capacity, he developed a deep appreciation for the Austrian School (of economic thought) and its most revered exponent Friedrich Hayek (1899-1992).

Prof Hayek, recipient of the 1974 Nobel Memorial Prize of Economic Sciences, inspired neocons from Margaret Thatcher in the UK to Ronald Reagan in the US with his teachings, writings, and critiques (The Road to Serfdom) emphasising individualism and classic liberalism.

Even President Carlos Menem of Argentina, who passed in early 2021, became a Hayek-convert. In 1991, he bolted the national currency onto the US dollar, causing a brief interlude of strong growth and relative prosperity which ended in debt, deficits, and default (and tears) only ten years later.

Mr Milei thinks he can do better and expects the same policy to deliver a different outcome. The candidate looks to Ireland for a role model: “They did the reforms, and their per capita GDP has more than sextupled in the last 30 years. I want Argentina to be like Ireland.”

To get there, he wants to reduce the number of government ministries from 18 to 8, replace the public healthcare system with one based on vouchers, ‘blow up’ the central bank, and privatise the nation’s flagship carrier Aerolineas Argentinas and state oil company Yacimientos Petrolíferos Fiscales (YPF).

Market Upset

Markets reacted as if stung by a bee to Mr Milei’s surprise victory on Sunday. After the parallel (blue) market dollar rate jumped in early trading on Monday, widening the gap with the official exchange rate to almost 100%, the central bank was forced to devalue the peso by 18% and raise its benchmark interest rate to 118%. 

The Milei upset immediately hit voters in their wallet as prices of (imported) consumer goods rose by double digits overnight. On Tuesday, the government announced restrictions on beef exports to keep domestic prices in check, only to rescind the policy hours later in a sign of increasing desperation within the administration.

Inflation is now running at about one hundred percent annually. On this measure, Argentina is only ‘bested’ by Lebanon (269%), Venezuela (120-200%), and Zimbabwe (104%).

Economy minister Sergio Massa (51), also the Peronist candidate in the October presidential election, came in second on Sunday with 21% of the vote. He was trailed by Patricia Bullrich of the Together for Change (Juntos por el Cambio) coalition, a moderately conservative platform, who secured 17% of the vote.

Though nominally a free marketeer, Minister Massa has been unable to deliver on the promised reforms as he steers a precarious course through the minefield of Peronist politics. Curiously, his campaign promises more of the same: “We have a vision for this country, and we will win again at the polls… despite everything we may not have accomplished throughout these years.”

Cunning Plan

A cunning operator and hungry for power, Mr Massa tends to change tack frequently. He ran for president in 2015 when he promised to send the outgoing Cristina Fernández Kirchner, the current vice-president, with her cabal to prison for corruption only to become Mrs. Kirchner’s anointed candidate for the upcoming vote.

Minister Massa’s unenviable job is to avoid a collapse of the economy before the election. To do that, he has weaved a patchwork of short-term policies aimed mainly at pleasing the IMF, which ponders the disbursement of the next $7.5 billion tranche of its record-shattering 2022 $44.5 billion bailout package, and nursing whatever forex is left. A prolonged drought and its attendant crop failures have cost the country an estimated $20 billion in lost exports, compounding its woes.

However, on the IMF front big issues are not expected if only because Argentina is the fund’s largest debtor (by a considerable margin) which invokes the age-old cliché, ‘if you owe the bank a million dollars you have a problem; if you owe it $44 billion then the bank has a problem’.

Mr Massa hopes that the sudden surge in popularity of Javier Milei may be a passing fad – a momentary expression of discontent – and that voters are likely to see the error of their ways once the economy stabilises (a bit) and they learn more about the colourful life and character of Mr Milei.

However, the presidential primary signalled that Argentine voters are willing to contemplate a break with the past and seem primed for radical change – and are looking to the right to find it.

Cover photo: Javier Milei on the campaign trail.

---

© 2024 Photo by Letras Libres