Milley, 53, an economist who describes himself as an “anarcho-capitalist,” said in his victory speech on Sunday evening, “Today begins the end of decadence” and the “reconstruction of Argentina” begins, warning that there will be no “half-measures.”
The elected president will have to face record inflation and multiple economic difficulties, including issues of governance, social justice and peace.
Reforms are inevitable
Argentina “has been suffering from a significant budget deficit for decades: a culture of important social (aid) expectations, but with limited growth, spending becomes unfinanced,” according to historian Rui Hora of the Konest Research Center.
Milley proposed “shock therapy” to confront economic problems and restore balance to state accounts. He aims to reduce public spending by about 15 percent, and proceed with privatization operations to achieve a balance in the budget sought by the International Monetary Fund, which in 2018 granted Argentina a loan worth $44 billion. Buenos Aires is suffering. ers to repay it.
It also proposes ending subsidies in the areas of transportation and energy, liberalizing prices, and canceling taxes on exports. Milley warned that he might resort to a “much harsher amendment” than what the IMF wants.
Social pressure
This desire to reduce public spending raises concerns about its social impact in a country where 40 percent of the population lives below the poverty line and 51 percent receives some type of social aid or support.
Benjamin Ghaidan, a researcher specializing in Argentina at the American Wilson Center, warned that “the pain will be severe and widely felt if there is an actual plan to achieve stability,” and it is not certain that Argentines “see the good side” of it.
Gabriel Famaro, professor of political science at San Martin University, said that Milley “carries with him a component of political-social confrontation, sharp, hostile rhetoric, adjustments towards sectors such as the public service, which have a strong ability to mobilize” against him.
What dollar?
Dollarization of the economy, in light of the sharp and continuing decline in the value of the peso, is central to the new president’s program to “dry up” inflation. But how can we achieve dollarization in a country that is severely lacking in dollars?
For Milley’s team, the issue is easy: use the dollars that Argentines have saved over the years. It is estimated that Argentina is third in the world in terms of the amount of dollar banknotes available. Milley is counting on giving his citizens the confidence to use this money backed up outside the financial system.
But with an official exchange rate considered unrealistic (369 pesos to the dollar), the situation could get “out of control” between now and the official inauguration of the new president on December 10. According to analyst Ana Ibaraguirre, the country is now entering a “period of instability” that may be represented by a devaluation of the peso or severe inflation.
Any allies to rule?
Milli’s Libertad Avanza party entered parliament in 2021 with three deputies. It has become the third force in the House of Representatives with 38 members out of 257, where the Peronist bloc (centre-left) still has the preference (108 seats), but without an absolute majority.
It will be necessary for Milley to weave sustainable or temporary alliances, as with the right-wing bloc, Juntos Por El Cambio (93 deputies). But this bloc is closer to disintegration than ever before, after being sharply divided over whether or not to support Millie in the second round of elections.
Any friends abroad?
Milley will have to restore relations with countries that are pivotal to Argentina and have been subjected to harsh criticism, such as Brazil and China, the two most prominent trading partners of his country.
He said in previous statements, “I will not deal with communists. I am a defender of freedom, peace, and democracy,” stressing that his allies are “the United States, Israel, and the free world.”
On the other hand, Milley could present a new approach regarding the Malvinas (Falkland) Islands, which are disputed with Britain, as he confirmed his willingness to negotiate not about Argentine sovereignty over them, but about a long-term solution similar to what was adopted regarding returning Hong Kong to Chinese sovereignty in The year is 1997.
Legacy of dictatorship
For the first time in the democratic era that began forty years ago, the consensus regarding the years of dictatorship (1976-1983) was broken during the election campaign, with Milli denying the death toll and missing persons, from 30 thousand according to human rights bodies, to “eight thousand and 353” according to the president-elect.
He caused shock in Argentina when he adopted the term “war” between leftist organizations and the state instead of “dictatorship” to describe that era.
The legacy of the dictatorial era remains a highly sensitive topic, and has so far remained immune to political divisions. However, deviating from this consensus may in turn lead to mobilization against the new president.
Climate and energy
Milley’s reign will not be limited to challenges. It is expected that the year 2024 will end the period of drought that the country experienced between 2022 and 2023, which was the worst in a century, and is linked to the “La Niña” climate phenomenon. This deprived Argentina, which relies heavily on agricultural exports, of revenues amounting to $20 billion.
The country is also expected to save $10 billion annually in the cost of importing energy resources while enhancing the production capacity of the Vaca Muerta oil and gas field, which was inaugurated this year, according to economic researcher Elizabeth Bacigalupo.
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