Argentina Politics Update - 16 August 2023
Devaluation of the peso, Bullrich's next steps as JxC candidate, market impact of Milei's PASO victo
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Argentina's PASO primary elections were held on Sunday, resulting in an essential three-way tie among parties (La Libertad Avanza, Juntos por el Cambio, and Unión por la Patria). For more in-depth PASO results and analysis, be sure to check out Monday’s special edition of Road to the Casa Rosada, found here.
Politics
Patricia Bullrich Prepares Her Next Move (Americas Quarterly)
Juntos por el Cambio’s (JxC) official presidential candidate Patricia Bullrich’s political career can be interpreted as a “constant pilgrimage across the political spectrum”
Pablo Touzon, a Buenos Aires-based political analyst, said that Bullrich “...has to signal order. The guy who is going to destroy the system already exists.”
Even before Bullrich won the JxC coalition’s nomination, she had expressed the possibility of working with libertarian candidate Javier Milei and his team on “deep structural changes,” should she win the presidency
Towards a new political order (Buenos Aires Times)
Milei can no longer be considered a political outsider, and his views can no longer be considered marginal; the PASO results demonstrated that Milei’s stances resonate with a significant part of the Argentine electorate, especially the youth
REACTION: Javier Milei Surprises in Argentina Primary Election (Americas Quarterly)
“Milei’s main challenge will be to consolidate the votes he won in the primaries,” as well as “avoid many of the unforced errors (e.g. controversial statements) that have damaged his image in the past,” opines Juan Cruz Diaz
Brian Winter writes, “Analysts aren’t really supposed to say this, but: I don’t know what this result means. Especially for Argentina’s future, and the key question of governability.”
Many of Milei’s voters took the opportunity to issue a “protest vote” in the PASO primaries, knowing that the vote didn’t really matter; what will happen next is unclear
The election “was a major blow for Argentina’s partisan establishment,” said Ignacio Labaqui, as voters soundly rejected both the ruling Unión por la Patria (UxP) coalition and the opposition JxC coalition
In Argentina, a new Trump rises (Washington Post)
“Ultimately, his allure has little to do with specific policy proposals and more a broader anti-system pitch, a rejection of a depressing status quo in favor of myths of a more glorious past,” writes Ishaan Tharoor
Far-Right Libertarian Wins Argentina’s Presidential Primary (New York Times)
Milei’s overperformance in the PASO primaries show that he is no longer a mere “protest candidate,” but in fact has consolidated support into the election’s front-runner
If elected, Milei is likely to have less institutional support than other far-right candidates who have been elected in other countries in the past decade, including Donald Trump in the US and Jair Bolsonaro in Brazil, who counted upon on the existing structures of the Republican Party and the army, respectively
Libertarian shift – the 16 provinces where Javier Milei triumphed (Buenos Aires Times)
Milei claimed victory in 16 of the country’s 24 provinces, compared to UxP who won in 5 and JxC who won in 3
In all five provinces where the Peronist UxP coalition came in first, Milei finished in second
The serpent’s egg (Buenos Aires Times)
The PASO proved that Argentines, fed up with the political establishment, voted for Milei in a clear dismissal of the current political system
“Until now the PASO primary winner has always reached the Presidency (Cristina Kirchner and Alberto Fernández) or at least the run-off (Daniel Scioli).”
Will Patricia Bullrich adopt a more right-wing rhetoric to appeal to Milei’s voters, or will she take a more centrist approach to capture votes from internal JxC centrist rival Horacio Rodríguez Larreta?
Patricia Bullrich: 'La Piba' faces one more battle on road to Casa Rosada (Buenos Aires Times)
Giselle Leclercq provides an overview of Patricia Bullrich’s past, from her aristocratic family upbringing to her “rebellion” in the 1970s joining the leftist Juventud Peronista movement, before reverting back to conservative politics and joining Mauricio Macri’s cabinet in 2015
Economics
Argentina Devalues Peso, Hikes Rates in Bid to Curb Market Chaos After Milei Upset (Bloomberg)
In a surprise move, the government devalued the peso’s official exchange rate as much as 18% (to approximately 350 pesos per dollar), which then caused the parallel “blue dollar” rate to jump to 715 pesos per dollar
The Central Bank also hiked its key interest rate by 21 points, reaching 118%
“‘Investors like Milei’s economic message, but fear the execution and institutional risk, considering his lack of power in congress and aggressive style,’ said Alejo Costa, the chief Argentina strategist at BTG Pactual in Buenos Aires”
IMF sets date for Argentina disbursements, backs devaluation (Buenos Aires Times)
A new meeting between the IMF and Argentine economic representatives will take place on August 23 to discuss a new disbursement under the existing $44 billion debt program
The IMF said recent measures to devalue the currency and hike interest rates will serve to ““safeguard stability, rebuild reserves and enhance fiscal order” in Argentina
First contact: IMF to have meetings with Bullrich, Milei (Buenos Aires Herald)
The IMF has contacted the teams of both Bullrich and Milei to set up meetings with the presidential hopefuls, “to better understand key aspects of potential future economic policies.”
Both candidates have proven willing to work with the multilateral institution if elected
What Is Libertarian Candidate Javier Milei’s Plan for Argentina’s Economy? (Bloomberg Línea, Bloomberg, Financial Times)
Milei’s economic reforms include drastic cuts in government spending, the privatization of deficit-making public companies, increasing private investment, an overhaul of Argentina’s public health care system, cutting labor taxes, and eliminating tariffs on imports of strategic inputs and capital goods, among other proposals
Argentina Vote Shock Leaves Investors Dreading the Next Default (Bloomberg)
Milei’s unexpected PASO victory, combined with his unclear governance proposals, are causing investors to reexamine Argentina’s potential for default in the coming months
“Debt woes shouldn’t come as any surprise for longtime investors in Argentina, who have been bracing for the country’s 10th default from the moment it exited its ninth,” writes Scott Squires
Lithium + Energy
Lithium: giant petrochemical begins selling key input for the white gold industry in Argentina (Cronista)
Brazilian petrochemical giant Unipar began to sell hydrochloric acid to satisfy demand from Argentina’s lithium industry
In a few years, Argentina will displace Chile as the world’s third largest lithium producer (Télam)
Argentina’s lithium exploration and production projects have the country on track to become one of the world’s most important lithium providers
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