The ultra Javier Milei will take power on December 10 in an Argentina that needs shock treatment to revive the economy. He has warned that his prescriptions will not be lukewarm or gradual: a tough fiscal adjustment is coming, involving the paralysis of public works, the privatization of state-owned companies and whatever is necessary to achieve fiscal balance in 2024. For the year 2027, when his term ends, the president-elect imagines that there will be no inflation – today it is 142% – and citizens will have abandoned the national currency, the peso, to fall into the arms of the powerful dollar to fall. If their program is fulfilled, education and public health will be reformed and the legislation will not provide for legal abortion or gender policies.
Recent Argentine leaders have failed in the fight against inflation, and economists around the world are warning about the impracticality of dollarizing a country that has negative central bank reserves. However, admirer of economist Milton Friedman is convinced that it is possible. He even sets a deadline for the country’s recovery: “The transition will take about two years.”
“What they have to cut will be cut,” Milei warned in an interview days ago. His comments put civil servants on alert: the new president had just announced on television that the additional half-pay required by law for almost 80 years was not guaranteed for December. A day later he corrected his speech: “You don’t touch people; The adjustment will cover the costs incurred by politicians.” It did not calm the situation: fear had spread like wildfire throughout the country.
A week has passed since the extreme right won the election against Peronist Sergio Massa, but uncertainty remains. His program includes “the total paralysis of state public works,” and the threat is beginning to be felt in a sector that employs around 400,000 people. Some projects were stopped because of fears that the government funds necessary for their implementation would no longer be received, as is the case with the housing project in the province of Catamarca, in the north of the country. According to the public works portfolio, 2,329 construction works are in progress and 676 projects are in the assessment and approval process.
Milei wants to apply the Chilean concession model to private companies in Argentina. Guillermo Ferraro, a businessman and former Peronist fighter, will be responsible for its implementation at the head of the Ministry of Infrastructure. Ferraro plans to appoint Eduardo Rodríguez Chirillo, an expert on privatization, as energy minister, another Milei frontrunner. The sale of state-owned companies begins with the oil company YPF, the energy company Enarsa and the public media group. “Everything that can get into the hands of the private sector will also be in the hands of the private sector,” summarizes the president-elect.
His proposal is reminiscent of the Argentine “surgery without anesthesia” used by the government of the neoliberal Peronist Carlos Menem, which left no public company unsold. YPF passed into the hands of Repsol in 1999, but Cristina Kirchner nationalized it again in 2012. The announcement of renewed privatization sent the Argentine oil company’s shares soaring nearly 40% within a day of the election results. Behind this lies the big business of the Vaca Muerta field, which has the world’s second largest reserves of unconventional gas and lithium in the northwest of the country and is crucial to the global transport revolution.
Argentines are somewhat familiar with Milei’s economic plan, but have doubts about how he will implement it. Many of his voters are convinced that he cannot deliver everything he promised. To achieve this, it needs parliamentary majorities, which it lacks. Milei’s party La Libertad Avanza (LLA) has only 15% of deputies in the Chamber of Deputies and 10% in the Senate. The alliance with Propuesta Republicana (PRO), the conservative party of former President Mauricio Macri, brings the group to 79 out of 256 deputies and 16 out of 72 senators. In both cases, below the numbers required to start a session and also below a Peronism that, if it remains united, will have 104 deputies and 32 senators.
The lack of parliamentary support has meant that structural reforms such as labor market reform – which Milei wants to make more flexible – as well as reforms in public education and healthcare were no longer included in the original plan. They are all part of an agenda poised to deal the final blow to a welfare state that is struggling but persisting.
In the long term, the struggle is cultural. This crusade, led by its vice president Victoria Villarruel, seeks a radical conservative turn in a country that is at the forefront of social rights in Latin America. The new government wants to repeal the legalization of abortion, comprehensive sex education in schools and all measures related to gender equality. “The gender gap does not exist,” says Milei, who also does not believe that climate change is due to human activity. Statistics that say otherwise don’t seem to matter. “Argentina has a future and that future is liberal,” he repeats again and again. If his plan comes true, he asserts, Argentina will be the United States in 35 years.