In the Argentine context, deep economic instability, high inflation rates, unemployment, and increasing poverty have fuelled a widespread sense of indignation among the population. It is noteworthy that, amid these challenging conditions, candidates offering simplistic and inadequate solutions to complex problems often garner significant support, Boris Perius Zabolotsky writes.
Javier Milei was recently elected President of Argentina, having run with a campaign platform promising ultra-liberalisation of the economy, privatisation of major state-owned companies, closure of the Central Bank, and dollarisation of the economy. Such policies, and their outcomes, are not essentially new for Latin American countries. Similar experiences were fully implemented during the Washington Consensus in the 1990s, including in Argentina itself during Carlos Menem’s government. Nevertheless, Milei succeeded in orchestrating a campaign that resulted in his victory, emphasising the novelty of these measures and presenting them as the only possible means of overcoming the economic debacle that Argentina has been facing for decades. His approach reflects a new characteristic feature of the emerging global far-right: it aligns itself with the concept of the “outsider” and opposes traditional political elites as well as the political “system” itself.
Indeed, the Argentine landscape has been instrumental in propelling the “meteoric” ascent of Milei. Periods marked by severe economic and social crises possess the ability to crystallise public discontent, paving the way for leaders who position themselves as catalysts for radical transformation. In the Argentine context, deep economic instability, high inflation rates, unemployment, and increasing poverty have fuelled a widespread sense of indignation among the population.
The next President of Argentina views the State as “an enemy” and self-identifies as an anarcho-capitalist and a libertarian. Throughout the campaign, he went so far as to endorse the sale of human organs as a solution to the organ transplant waiting list issue. Milei’s campaign pledges might well resonate with the enthusiasm of Chile’s Chicago Boys and adherents of the Austrian School of economics.
The neoliberal experiment in Argentina is far from novel. Throughout the 1990s, Buenos Aires upheld “carnal relations” with the United States and the IMF. The complete prescription of the Washington Consensus was meticulously embraced by the Argentine leadership. The brief economic upswing in the 2000s proved inadequate to escape from the “debt trap” accumulated in preceding years. Indeed, the reliance on neoliberal structures appears to have not only colonised social and political dynamics but also the mindset of a substantial portion of the local elite.
The shock therapies of fiscal austerity left Argentine leaders ensnared in a relentless cycle of dependence on the international financial system. The resolution to this economic deadlock would involve securing lines of credit and financing from alternative sources; nevertheless, the options were constrained, and international creditors were hesitant to extend substantial loans to a nation already burdened with heavy debt. In 2018, former president Mauricio Macri once again sought economic assistance from the IMF. The fiscal “bomb” stemming from this loan was passed on to Fernández, making the control of this debt virtually insurmountable.
Alberto Fernández encountered a deadlock due to a shortfall in international reserves. The rise in social spending and government subsidies, aimed at easing the constraints imposed by the IMF and stimulating the economy, failed to yield the anticipated results amid macroeconomic controls mandated by the imperative to amortise external debt and the obligations to renegotiate debt with the Bretton Woods system. Consequently, the dollars generated from Argentine exports and its international reserves were funnelled into a seemingly unending abyss to meet debt interest payments.
The scarcity of international reserves, aside from deterring foreign investments, posed obstacles to exchange rate controls and the implementation of countercyclical policies, contributing to the devaluation of the local currency. As a result, the Argentine peso plunged into a “free fall” cycle, leading to an uncontrollable surge in inflation, thereby intensifying the economic challenges confronting the country.
Faced with the former Peronist government’s inability to renegotiate the debt and control the inflationary spiral, the selection of Sergio Massa, the current Minister of Economy in a struggling economy, as a presidential candidate, set the stage for Milei’s election. The recent endeavours of the Fernández government, such as initiatives to de-dollarise foreign trade with Brazil and China and Argentina’s accession to the BRICS+, appear to have been implemented belatedly in the face of Buenos Aires’ urgent fiscal needs.
Certainly, the New Development Bank (NDB) and the financing platforms of the BRICS+ appeared to present alternatives to fiscal austerity and the constraints imposed by the neoliberal financial framework. However, for Argentina, this remains an uncertain path that might not be pursued by the new administration. Milei has consistently expressed his intention to close the Central Bank and implement the dollarisation of the Argentine economy as the sole remedy for his country’s crisis. In a scenario where such measures are enacted, the plausible fiscal alternatives offered by the BRICS+ arrangements become unlikely, and thus, the role of the NDB would lose its raison d’être for Argentina.
The unfolding reality in this situation underscores the challenge of overcoming the legacy of the 1990s and the unfulfilled promises of globalisation and the free market. In Argentina, the emergence of the “Milei option” was a direct response to the inherent contradictions within the neoliberal model, whose influence has left a profound imprint on the country. The proposed solution to address economic challenges has transformed into a more profound resurgence of a radical version of neoliberalism, where Argentine and Latin American elites appear to have developed a “Stockholm Syndrome”.
Buenos Aires’ two main trading partners, China and Brazil, are founding members of the BRICS+, and Argentina maintains a trade surplus with them. These elements suggest that the anti-China and anti-Lula rhetoric which prominently featured in Milei’s campaign may imply a potential alignment of interests rather than a complete disengagement. The potential election of Trump in the US is also likely to trigger an internal rearrangement aiming to return Argentina to the bygone era of "carnal relations’’ with Washington. This would be the last note, envisioning a dramatic tango in economic and diplomatic terms, bringing the new administration of Casa Rosada back to the 1990s.