Argentina Politics Update - 6 December 2023
Milei backpedals on campaign promises, future Cabinet begins to take shape, November inflation predicted at over 11%
Javier Milei has officially completed his “Road to the Casa Rosada,” and will be inaugurated this Sunday, December 10. Next week’s newsletter will be the final edition of Road to Casa Rosada, with updates of Milei’s assumption of the presidency and final economic news.
Thank you all so much for reading and supporting this newsletter over the past few months. I hope it helped provide insight to the ever-changing dynamics of Argentina’s political landscape.
Stay in touch!
Politics
Argentina Notes - December 2023 (Latin America Risk Report)
Boz outlines the many policies Milei has announced but has no strategy for, including spending cuts, dollarization, and debt repayment
“He could do everything correctly and fail or do everything wrong and succeed in spite of himself because of all the factors outside of his control.”
‘El Loco’ Won the Argentina Election Last Month With Outlandish Ideas. Now He’s Backpedaling. (Wall Street Journal)
Milei has significantly toned down his rhetoric in recent days, no longer putting dollarization or the abolishment of the central bank at the top of his “chainsaw” agenda, and has even named more moderate politicians and economists to his cabinet
Milei has also used more conciliatory language regarding Argentina’s ties to both China and Brazil, two important trading partners Milei had previously hailed as “communist” and “corrupt”
Milei’s Cabinet begins to take shape (Buenos Aires Times)
Confirmed cabinet positions include:
Cabinet chief: Nicolás Posse
Economy Minister: Luis “Toto” Caputo
Interior Minister: Guillermo Francos
Minister of Human Capital: Sandra Pettovello
The Human Capital Superministry will combine Health, Education, Labor, and Social Development
Foreign Minister: Diana Mondino
Defense Minister: Luis Petri
Security Minister: Patricia Bullrich
Justice Minister: Mariano Cúneo Libarona
Infrastructure Minister: Guillermo Ferraro
Energy Secretary: Eduardo Rodríguez Chirillo
Other confirmed positions include:
Spokesperson: Manuel Adorni
Ambassador to the US: Gerardo Werthein
Milei has not yet confirmed who will lead the Central Bank
Milei picks Rodolfo Barra, ex-justice minister and former pro-Nazi youth, for top legal post (Buenos Aires Times)
Rodolfo Barra ha been named as the attorney general of the Treasury
Barra was a former government official in the Menem government, having served both on the Supreme Court and Justice Minister, but was forced to resign following investigations revealing his ties to pro-Nazi groups and antisemitic statements
“If as a youth I was a Nazi, I am sorry,” said Barra in 1996
Argentina Won’t Join BRICS Bloc Under Milei, Adviser Says (Bloomberg)
Milei’s pick for Foreign Minister, Diana Mondino, confirmed that Argentina would not join the BRICS trade bloc on January 1, despite an invitation from the group to do so
Refusing to join BRICS signals a policy shift towards the US and away from China
Brazil's Lula snubs Milei's invite to presidential inauguration in Argentina (La Nación, Buenos Aires Times)
Brazilian president Luiz Inacio Lula da Silva will not attend Milei’s inauguration on December 10
Milei had previously called Lula “communist” and “corrupt,” though in recent weeks has been attempting to tone down his rhetoric
Other attendees will include former Brazilian president Jair Bolsonaro, Hungarian president Viktor Orban, and potentially former US president Donald Trump
The presidents of Uruguay, Paraguay, and Ecuador will also attend
Despite Milei having extended an invitation, the leaders of Venezuela, Cuba, and Nicaragua will not attend his inauguration
Argentina says conditions not in place to sign Mercosur-EU agreement (Buenos Aires Times)
Outgoing president Alberto Fernández and Foreign Minister Santiago Cafiero said that Argentina would not sign the current version of the free-trade agreement between Mercosur and the European Union, under discussion this week, with Fernández claiming that "certain conditions must be established that allow us to sustain and grow our industries.”
Milei is in favor of closing the deal
Poverty in Argentina reaches 45%, according to UCA observatory (Buenos Aires Herald)
The Argentine Catholic University found that poverty has reached 44.7%, with 9.6% of Argentines qualifying as “destitute”
YPF expropriation case: Preska grants stay extension to Argentina (Buenos Aires Herald)
Argentina was granted an extension of the final ruling of the YPF expropriation case, with the deadline for the country to “pledge certain assets as a condition to postpone the enforcement of the lawsuit” moved from December 5 to January 30, allowing time for the incoming Milei administration to review the details of the case
Economics
Milei Plans Labor, Tax Reform in ‘Shock’ Package, La Nacion Says (Bloomberg)
Milei, who takes office on December 10, plans to immediately introduce a “shock” reform package which includes changes to tax and labor laws, political processes, and potential privatizations
Analysts foresee strong drop in economic activity in first half of 2024 (Buenos Aires Herald)
President-elect Milei has announced that Argentina would experience a period of stagflation in 2024, meaning economic activity will drop but inflation will remain high
Milei predicted it would take 18-24 months to end inflation
Consumption, job creation, and investment are all expected to fall within the first months of the year
Bolivia and Ecuador now have higher risk than Argentina (Bloomberg Línea)
Argentina’s risk dropped below 2,000 points following the election of libertarian Javier Milei, placing it below Bolivia and Ecuador
Record money-printing: Alberto Fernández leaves government with 9.439 billion banknotes in circulation (Buenos Aires Times)
The number of banknotes in circulation by the end of Alberto Fernández’ term was 80% more than at the end of Mauricio Macri’s term in 2019
9.4393 billion banknotes are currently in circulation, an average of 2,050 banknotes pero inhabitant
Analysts project inflation over 11% in November (Buenos Aires Herald)
Analysts estimate November inflation to fall between 11.5% and 13.4%
Consulting firm Fundación Capital assessed that the change in prices following the November 19 runoff election served “as a hedge against the uncertainty about replacement costs.”
Lithium + Energy
Copper’s potential (Página 12)
A recent analysis estimates that Argentina could resume copper exports in 2026 and reach $10 billion in exports of the mineral beginning in 2030
Hxagon provides risk analysis and bespoke investigations in emerging and frontier markets, primarily in Latin America. If you are interested in our work or acquiring our services, do not hesitate to contact us!
Contact: info@hxagon.com
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Please don't stop this Substack!! It's super useful, my colleagues and I share it around. Would love to know what Milei's first year looks like.