Javier Milei, President-Elect of Argentina - 20 November 2023
Milei wins runoff election with 55.7% of the vote, compared to Massa's 44.3%
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Libertarian political outsider Javier Milei of the La Libertad Avanza (LLA) party was elected to be the next president of Argentina. Milei defeated current Economy Minister Sergio Massa by 55.7% to 44.3%, and is set to take his place in the Casa Rosada on December 10. With 76% voter participation rate, Milei and LLA won in 21 out of the country’s 24 provinces, obtaining over 6 million votes more than he had earned during the general election. The votes of Córdoba, Mendoza, and Santa Fe in particular helped push Milei over the edge, while Massa was only able to claim victory in Formosa, Santiago del Estero, and Buenos Aires Province. Milei came close to flipping the Peronist stronghold of Buenos Aires Province, though Massa ultimately claimed the win.
The almost 12 point difference between the two candidates does not necessarily reflect support for Milei. Massa, who oversaw the economy’s inflation rate rise to over 140%, was a deeply unpopular candidate whose Peronist party backing was unable to garner enough outside support for him to reach the presidency.
Milei’s conservative proposals - including deregulating the sale of organs, banning abortions, supporting the right to bear arms, and the privatization of local soccer clubs - do not actually reflect the average wishes of many of those who voted for him. Milei’s victory shows a resounding rejection of Peronism, rather than actual support for the candidate himself.
Milei is a social conservative and economic libertarian in a country that is trending socially liberal and likes government spending, reflecting voters’ desire for change rather than actual policy support. Milei will have a short window of opportunity to try and get the economy on track, before the public tires of his policies and he loses the momentum he currently has.
A key difference between Milei and other far right leaders he has been compared to, including Trump, Bolsonaro, and Orban, is that the latter are economic populists who are not afraid to spend government money when it helps them, especially on policies that help them retain control (democratically or not). On the other hand, Milei is a libertarian committed to slashing government spending as much as possible, even if it weakens the state and the government’s control over people in the process. This morning, Milei announced he would privatize various state-run entities, likely heading towards mass privatizations and fairly libertarian policies.
Despite his presidential victory, Milei will still hold a Congressional minority, meaning it will be difficult for him to find legislative support for his policy proposals. The alliance with former president Mauricio Macri’s Juntos por el Cambio (JxC) may provide Milei with additional legislative backing, though it still will not be enough for him to reach quorum. As a reminder, in the Chamber of Deputies, current ruling party Unión por la Patria (UxP) will have 108 seats, followed by JxC with 93 and LLA with 37, of a total of 257 seats. In the Senate, UxP will have 34 seats, followed by JxC with 24 and the inaugural LLA bloc with 8, of a total 72.
Market Reaction
Today is a public holiday in Argentina, meaning there is no activity in the local market nor an updated price of the country’s parallel exchange rate, the dollar blue. Milei’s plans for dollarization will likely reflect a weakened peso when the local market reopens on Tuesday; the peso dropped 8% from Friday to Sunday on cryptocurrency exchanges, which operate 24 hours.
On Wall Street, Argentine firms holding bonds in the US market shot up to 13% in the pre-market, a reflection of what could occur tomorrow in Argentina’s market as local investors root for Milei.
Milei has not yet announced his pick for Economy Minister, though La Nación profiles his current team of economic advisors, some of whom may be in consideration for the top job. His eventual pick will ultimately also impact market reactions, once announced.
In his victory speech, Milei notably didn’t mention dollarization nor the closing of the Central Bank, instead saying he would “fix problems at the Central Bank” and would seek to balance the country’s budget.
Future Foreign Relations
Internationally, Milei has received support and congratulations from leaders across the region. Brazil’s current president, Lula da Silva, did not directly name Milei in his congratulatory post, instead wishing “good luck and success to the new government,” a sentiment echoed by the leaders of Chile, Uruguay, Ecuador, Paraguay, and Panama, among others. Colombian president Gustavo Petro notably wrote that “The extreme right has won in Argentina… Sad for Latin America,” though he promised the relationship between the countries would maintain “mutual respect.” US Secretary of State Antony Blinken also congratulated the president-elect, praising “strong turnout and peaceful conduct of the vote” as he said the US was looking forward to “working with President-elect Milei and his government on shared priorities.”
Former right-wing leaders also praised Milei, including Donald Trump, who wrote that Milei would “make Argentina great again,” and Jair Bolsonaro, who wished "honesty, progress and freedom return." American multibillionaire Elon Musk publicized his support for Milei, writing “Prosperity is ahead for Argentina” in a post on X (formerly Twitter). With Musk as the owner of Tesla and Argentina sitting on vast resources of lithium necessary for making electric vehicles, it will not be surprising if Musk and Milei hold a meeting in the coming months to discuss potential partnerships.
Argentina’s economic relationships with Brazil and China will be on high alert, as Milei has promised to no longer engage with “communist” administrations and has repeatedly claimed he would weaken economic ties with those countries. He has vowed to be a friend to “America and Israel,” though it is still unclear what kind of welcome he will receive in Washington.
Special thanks to Boz for offering comments for this week’s newsletter!
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