Javier Milei won the primaries in Argentina on August 13th. Leads voting intention polls for the first round on October 22nd. The numbers so far say he would win in the second round.
Milei seems crazy, just like the government program he announced up until his victory in the primaries. The Argentine economy would officially be dollarized. The central bank would be closed.
There would be a “chainsaw plan” to downsize the government, starting with the always demagogic story of reducing the number of ministries. Argentina would leave Mercosur. It would not join the Brics states.
Milei looked like a video game character or an action figure from a comic book from liberal and libertarian institutes like those in Brazil, but disturbed and even more caricatured.
Since the end of August and especially in September, key spokespeople and advisors have been saying that “that’s not quite the case.” Furthermore, they insinuate that they are talking to Macristas (supporters of Maurício Macri, Argentine President from December 2015 to December 2019).
In recent days, Macri has had to say that he does not have two candidates he belongs to the rightwing political coalition of Patricia Bullrich, which is now competing for second place in the polls with the PeronistKirchnerist and Economy Minister Sergio Massa).
The Argentine right is closing in on Milei. Macri, darling of the Liberals, has once again ruined the country by enabling another cycle of rapid and colossal external debt.
Think of the speech by Diana Mondino, who might become chancellor of a Milei government. Mondino sits on the board of several Argentine companies, comes from a banking family, is a finance professor at a private university and a friend or acquaintance of the business world who welcomes the socalled “moderate” conversation of the senior economist.
Dollarization would not occur immediately, which was obvious as it would lead to a spectacular collapse even by Argentine standards. “The economy is dollarizing,” Mondino said, citing the widespread setting of prices and contracts in the American currency. If Argentina’s economy were more productive, flexible and competitive, dollarization might not even be necessary. But there would be a referendum on dollarization (and another on abortion). It should be noted that if elected, Milei would not have a majority in Congress.
Darío Epstein, an economic adviser to Milei, says there is no possibility of dollarization if there are no dollars. The “libertarian” team does not even know when it will lift the various capital controls (input and output of resources, dollars, from the country) or unify the many Argentine exchange rates.
The central bank’s accounts also need to be cleaned up, say Milei’s advisers. The BC has almost no reserves, mainly because it has a lot of liabilities. If BC needs to be fixed so quickly, at least it wouldn’t die out (laugh, laugh, laugh).
It would not be possible to make significant cuts to public spending immediately because there is a lot of compulsory spending, most of which comes from Argentina’s INSS (bidu), these people from Milei say. But they promise “zero deficit.”
The way would be to cut subsidies (almost 18% of expenses, depending on the account) and curb salary increases (given Argentina’s inflation, the cut could happen quickly). In theory, there would be riots because a lot of money goes into charging for public services. But come on.
Mercosur? It must be “revived” and “strengthened” through new negotiations between the four partners and new agreements with the world.
The Argentine right is on the move and in flux. Partly like the Brazilian did when he took over from Bolsonaro at the end of 2017.