For the elected President of Argentina, Javier Milei, a transition full of obstacles began this Monday. He barely managed to name some of his future ministers and interrupted the agreed meeting with President Alberto Fernández because he was dissatisfied with details such as the location and guests for the photo. But he has already pushed forward some of his first measures. Once Milei takes office on December 10, he will launch a wave of privatizations starting with the oil company YPF, the energy company Enarsa and the public media conglomerate.
The leader of Argentina’s new far-right has three weeks to put together his cabinet, but he doesn’t have enough staff. His party La Libertad Avanza lacks enough personalities to fill the highest positions in the government; It depends on those who can provide the strength of former President Mauricio Macri, his new ally.
Milei also fears that the outgoing government will take actions that will harm him as he prepares for his inauguration. He has reasons for it. His rival in the second round, Sergio Massa, who is also economy minister, warned him on the night of the defeat that it was now his responsibility to keep inflation in check, which today stands at 142% year-on-year. Massa even hinted that he was ready to resign now that his work as a ministerial candidate is now over.
Milei made little progress on management issues but was rich in political definitions. On Monday morning he toured the local radio stations and repeated one after another his first government measures: privatizations, control of social protest and dollarization. “Anything that can fall into the hands of the private sector will also be in the hands of the private sector,” he said. This is not the first time that Argentina has launched a wave of privatization: in the 1990s, the liberal Peronist Carlos Menem left no public company unsold, in a long process that he crowned with the oil company YPF, just days away from handing it over was seizure of power in 1999. In 2012, the government of Cristina Kirchner renationalized the company, which was in the hands of Repsol. Milei took aim at YPF, which he promised to use “as a bridge for rebalancing the energy system,” and Enarsa. “The transition will take about two years,” a longer period than he envisages for the dollarization of the economy, his banner in the fight against inflation. “This can be done in a year once the laws are passed,” he said.
The depth of Milei’s proposed changes is already reminiscent of the “surgery without anesthesia” that Menem used when hyperinflation devastated the country in 1990. At the time, many of the measures sparked social discontent with protests and strikes. Milei noted this experience and warned that he was ready to stand up to those “who resist change to defend their privileges.” He was not referring to “the political caste,” which he promised to fight during the election campaign, but to the employees and civil servants who could become unemployed. The president-elect announced that he had already contacted the elected mayor of the city of Buenos Aires, Jorge Macri, to “maintain order on the streets.” “If there is crime, it will be suppressed. Within the law everything, outside the law nothing. Whoever makes them pays for them,” he said. The changes would be “drastic,” he warned, and excesses would not be tolerated.
Containing possible protests will be just one of the challenges the new government will face. Milei must expedite a political gathering that feeds the muscle of governance. It will only have 38 deputies out of 257 and needs the thirty that former President Macri can provide to be competitive. Before him he will meet the 108 deputies of Peronism, the party that, in addition to the opposition, will also have control of the Senate. Despite the electoral defeat, Kirchnerism will be able to block or pass laws and ratify presidential decrees. The Ultra will have no choice but to negotiate any law with leaders they have been calling “filth,” “thieves,” and “shitty leftists” for months.
Milei will also have no political support in the territories: his party will not have a single provincial governor, in a map dominated by Peronists, radicals (social democrats) and local forces who usually need to sell their votes to the highest bidder. This dispersal of opposition will complicate agreements by a leader who has shown no signs of willingness to negotiate.
War against inflation
However, the economy is the biggest problem Milei will have to contend with. He also has little time for trial and error. Monday was a holiday in Argentina and there was no foreign exchange market. This Tuesday it will be known how local investors are reacting to the change in leadership. The focus will be on the price of the blue dollar, which rises and falls freely depending on supply and demand. On Friday, it closed at around 1,000 pesos per unit; The biggest challenge during the transition will be keeping it under control. If Minister Massa finally decides to resign, the economy will spiral out of control. Milei did not take the current minister’s warnings so well that he ultimately decided to postpone the meeting with President Fernández in order to expedite the transition. “Let them take responsibility until the end of the mandate, December 10,” Milei said.
At least on the outside, his victory was well received. Shares of Argentine companies listed on Wall Street rose between 4% and 36%, with particular interest in those linked to the energy and banking sectors. The oil company YPF, which is now for sale, benefited the most. Argentine government bonds also rose between three and six points. On the political front, regional far-right leaders welcomed Milei, whom they see as spearheading a resurgence of the conservative wave once led by Donald Trump in the United States and Jair Bolsonaro in Brazil. It was precisely Bolsonaro who showed the greatest enthusiasm for disseminating on the networks the communication that he had had with the Argentine via video call. The Brazilian accepted Milei’s invitation to his investiture. “It’s perfect, it’s a half-court goal,” said the Argentine, who considers President Luiz Inácio Lula da Silva to be a representative of “international communism”.
Milei’s victory over Massa by more than 10 percentage points did not just mobilize the extreme right. Defeated Peronism is now in intensive care, forced to rearm after the inevitable demise of Cristina Kirchner, the movement’s leader. The vice president has not spoken since her candidate’s defeat. The focus is on the governor of Buenos Aires province, Axel Kicillof, the Peronist with the most powerful position after the president. Kicillof is a leader in his early 50s who is second to Kirchner but is seeking a flight of his own now that Massa is seriously injured. Its bastion is the largest, richest and most populous in the country, an ideal territory to begin the process of political reconstruction.