Argentina Politics Update - 23 August 2023
Milei's relationship with the US, expectations of IMF approval of a $7.5 billion disbursement, implementation of short-term price controls
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Politics
Two’s grieta, three’s a crowd (Buenos Aires Times)
Michael Soltys outlines three potential reasons for libertarian Javier Milei’s unexpected PASO primary performance: (1) voters who dream of earning in dollars without understanding the implications of such a radical policy change, (2) Milei’s lack of connection with either of the traditional political coalitions who have not been able to get Argentina out of its seemingly-constant economic slump, and (3) the impact of the Covid-19 pandemic lockdown
Greater Buenos Aires (Buenos Aires City + Buenos Aires Province) has historically been touted as “the mother of all battles,” as presidential candidates who win GBA in the PASO then tend to win the general elections; Milei’s PASO showing, winning 16 out of the country’s 24 provinces, may be the beginning of the end of that trend (opposition coalition Juntos por el Cambio won in the city, while ruling coalition Unión por la Patria won in the province)
Sixty days, as long as eternity (La Nación)
Some Kirchneristas are touting the far-fetched conspiracy that Javier Milei and Juntos por el Cambio (JxC) opposition coalition candidate Patricia Bullrich are behind the attacks on businesses across the country, as a result of the grocery and fuel price freezes (more below)
Anything can happen in Argentina over the next 60 days as presidential candidates renew their campaign strategies ahead of the October 22 elections and the peso continues to plummet
Patricia Bullrich: ‘Some Juntos por el Cambio voters switched to Milei, but they’ll be back’ (Buenos Aires Times)
In an interview with Perfil, JxC candidate Patricia Bullrich argued that this year’s unusually competitive PASO primaries led to libertarian candidate Javier Milei earning 30% of votes, but that his higher-than-expected showing would not guarantee him the presidency
Bullrich congratulated Milei on winning the most votes in the primary, though she claimed that “only Massa and I won because we competed whereas he [Milei] did not.”
Massa prepares a ‘two-measures-per-day’ plan to win over voters (Buenos Aires Times)
For seven consecutive days, beginning either Thursday (tomorrow) or Friday, Economy Minister and Unión por la Patria (UxP) ruling coalition candidate Sergio Massa will announce two new policy changes per day
Measures include “fixed quotas and lump sum payments for employees,” in addition to grocery and fuel price freezes
Despite financial turmoil, Massa says he won’t resign as Economy Minister (Buenos Aires Herald)
Massa said he won’t resign from his cabinet position to campaign, believing his resignation “would greatly harm the stability of Argentina’s economy.”
“Massa is the most trustworthy Peronist for the Biden government because he understands that Washington wants to listen” (La Política Online)
The traditional opposition, with Patricia Bullrich at the helm, is also poised to have a great relationship with Washington, should she win the presidency
Washington is wary about a Milei presidency primarily due to their lack of knowledge and relationship with the libertarian’s platform
This Politician Just Won Argentina’s Primary. His Hair Is Baffling the World. (Wall Street Journal)
“Political experts see Milei’s hair as a reflection of his nonconformist campaign”
“This deliberate rejection of traditional hairstyles has become a common political trick in the last decade, particularly from right-leaning politicians with populist aims. Scruffy hair can send a calculated, man-of-the-people message.”
Milei and reaping what you sowed (Buenos Aires Times)
Voter turnout in the PASO primaries was historically low, with at least an additional 1.2 million voters who may show up to vote on October 22
“According to a poll put together by CB Consultora, 51.1 percent of those who submitted blank votes or didn’t cast a vote could choose Milei, compared to 37.9 percent for Bullrich and 25.7 percent for Massa”
Javier Milei, the libertarian who speaks to the dead, has already won (Buenos Aires Times)
Milei, with little to no political experience and whose La Libertad Avanza (LAA) party is barely two years old, has managed to entirely shift Argentina’s political discourse during the country’s election season
Argentina’s front-runner Milei wants closer ties with U.S. but attacks President Biden | Opinion (Miami Herald)
“If Milei wins in Argentina, it’s hard to believe that Biden would invite him to the White House anytime soon, and draw public attention to a foreign leader who supports Trump,” writes Andres Oppenheimer
Javier Milei wants to appoint Mauricio Macri as Argentina’s overseas ambassador (Buenos Aires Times)
If elected in October, Milei would create the role of “plenipotentiary ambassador” for former president Mauricio Macri to represent Argentina abroad
Macri is the head of the JxC opposition coalition, though in recent weeks he has been seen as growing closer to Milei’s campaign; Milei’s announcement is likely to add more fuel to the fire between JxC and Milei’s LAA party
Prominent leader within the JxC opposition coalition Elisa Carrió resigned over the weekend, in part in protest over Macri’s increased approximation to Milei
Myriam Bregman: Lawyer. Activist. Feminist. Leftist alternative? (Buenos Aires Herald)
Buenos Aires City Deputy Myriam Bregman was the first woman to lead a presidential ticket for the left-wing Frente de Izquierda (FIT) coalition. FIT was the only leftist party that was able to surpass the 1.5% mandated vote percentage in the PASO primaries to compete in the October general election (they obtained 1.8%)
Bregman is a strong supporter of the Ni Una Menos feminist movement, and supports a total break with the IMF
Economics
Argentina Expects IMF to Approve $7.5 Billion Disbursement (Bloomberg, Buenos Aires Herald)
The country also expects another disbursement of $2.75 billion in November, regardless of the election outcomes (the election’s first round is scheduled for October 22)
There is also an additional $1.3 billion expected from the World Bank and the Inter-American Development Bank before the end of the year
Massa is currently in Washington, DC, meeting with representatives from the IMF, World Bank, US Treasury, and US Department of State, among others
Argentines rush to dollar safety as election uncertainty looms (Reuters)
Last week, the blue market peso rate fell to 780 pesos per dollar, and the Central Bank carried out an 18% devaluation
“Future wholesale peso prices, a reflection of market expectations about its likely price trajectory, show 460 pesos per dollar for October, 629 by year-end and 890 by July 2024.”
Argentina sets grocery price controls for 90 days to tame inflation (Reuters, Reuters, Buenos Aires Times)
Supermarkets will be allowed to increase prices only 5% per month, during a period of 90 days
Fuel prices are also set to be frozen until October 31, with the price of oil fixed to $56 a barrel, as an additional measure to help combat inflation
The government and the fuel industry agreed that the administration would cut taxes in exchange for company price freezes
The Hottest Jobs in Argentina Are the Ones That Pay in Dollars (Bloomberg)
More and more companies, particularly in the tech space, are acquiescing to demands from their employees to be paid at least partially in dollars, as a hedge to ever-increasing inflation and the peso’s plummeting value
The Argentine peso has fallen 23% in the past month, and 91% over the past 5 years
Argentina’s Future Is With the Dollar (Bloomberg)
Tyler Cowen argues in favor of Argentina’s dollarization, explaining that the country’s governments - in various capacities over the past 40 years - have not been able to provide monetary stability nor fiscal responsibility
Brazil's Lula in favor of Argentina joining BRICS bloc (Reuters)
During the Brazil, Russia, India, China, South Africa (BRICS) trade bloc summit this week, Brazilian president Lula da Silva reiterated Brazil’s desire for Argentina to join the group of countries that seek to boost economic and trade cooperation
Argentina has previously announced its desire to join BRICS
Lithium + Energy
Argentina wary of neighbors’ lithium regulations affecting bid to supply world demand (Fastmarkets)
Argentina is not likely to nationalize its lithium industry; most of the northern provinces - where the natural resource is found - prefer to maintain the current provincial model of resource exploitation
Argentina does not have a free trade agreement with the US, something its neighbor and lithium competitor Chile does have, making it more difficult to benefit from the US Inflation Reduction Act
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