A Sharp Right Turn for Argentina?

Argentina is in deep crisis. Inflation is running at over 100 percent, behind only Lebanon, Syria and Zimbabwe. The official poverty rate is almost 40 percent. The exchange rate on the street is almost double the official rate. Central Bank reserves are dangerously low. Anxiety is growing over organized crime.

As the country prepares for national elections in October, with primaries in August, President Alberto Fernández is in survival mode. His finance minister, Sergio Massa, an influential Peronist, has kept markets calm and assured flexibility in the International Monetary Fund’s approach to Argentina, the Fund’s biggest borrower. But his job is getting more difficult; Fernández finds himself under pressure to increase spending, given worsening social conditions and electoral considerations.

It doesn’t help that Fernández’s Frente de Todos coalition is hopelessly divided. Though Fernández has announced his interest in a second term, supporters of the vice president, Cristina Kirchner, who served as president from 2007 to 2015, are urging her to run instead.

The opposition Juntos por el Cambio coalition is in a far stronger position heading into the elections, following a strong showing in the 2021 midterms. But it is similarly struggling to choose a candidate. It has spent the last year pulled apart by tensions between Buenos Aires Mayor Horacio Rodríguez Larreta and the president of the coalition’s biggest party, Patricia Bullrich. Rodríguez Larreta has adopted center-right positions and emphasized the importance of negotiating with moderate Peronists. Bullrich, by contrast, takes hard-right positions on economic and security issues and vilifies the government.

From the Fringe

But perhaps the biggest threat to the opposition is the rise of Javier Milei, a libertarian lawmaker whose presidential campaign assails both coalitions as exemplars of a perfidious political “caste.” As Argentina’s economy flounders, polls have shown increasing support for Milei. It is conceivable that he could deprive the opposition of a first-round victory – to avoid a run-off, the top candidate needs at least 45 percent of votes or 40 percent and a 10-percentage point lead on the second-place candidate – and advance to an unpredictable ballotage.

The biggest threat to the opposition is the rise of Javier Milei, a libertarian lawmaker whose presidential campaign assails both coalitions as exemplars of a perfidious political ‘caste.’”

A Milei victory would be a plunge into the unknown for South America’s second-largest economy. A conservative economist and radio personality, Milei has little political experience. He describes himself as a libertarian and “anarcho-capitalist;” he favors a “watchman” state that limits its functions primarily to national defense and police services. Milei is influenced by the Austrian school of economics, with its emphasis on individual choice, and says he would “blow up” Argentina’s central bank and dollarize the volatile economy.

During the campaign, Milei has adopted a variety of extreme positions, including the freedom for individuals to sell their organs and unrestricted gun ownership. He opposes abortion, which Argentine lawmakers decriminalized in 2020. He says little about foreign affairs, though he has spoken admiringly of former U.S. President Donald Trump and former Brazilian President Jair Bolsonaro.

But Milei’s popularity is unrelated to his platform. Indeed, his ultra-libertarian views have few historic roots in Argentina. Rather, young, male and low-income voters are enchanted by his showmanship and rage against the machine. With a mop of uncombed hair and a penchant for leather jackets, he denounces what he describes as a corrupt, parasitical “caste” that governs the country. His remedy is a “chainsaw plan” of massive spending cuts. To demonstrate frugality, he raffles off his congressional salary.

Milei has weaknesses, too; he is an undisciplined campaigner and lacks a professional team of advisers, relying heavily on his sister. A former aide described his party as a “messianic” cult of personality. As the election nears, it is not clear how Milei will handle increased scrutiny.

To the Right

Either way, Milei has already impacted the race. Bullrich, the more conventional conservative candidate, is calling for “shock therapy,” including rapid spending reductions and other controversial measures such as a sharp devaluation. The proposals make economic sense, but since the era of Juan Perón, Argentines have grown accustomed to high levels of state support. Massive layoffs of public employees and a dramatic drop in welfare spending would no doubt provoke opposition from the country’s strong labor unions and social groups capable of mobilizing large crowds and tying Buenos Aires in knots.

Milei has already impacted the race.”

Rodríguez Larreta has so far avoided commitments to dramatic economic policy measures. But as he prepares to battle it out with Bullrich in the opposition primary, and takes fire from both Bullrich and Milei for supposed political timidity, the Buenos Aires mayor is under increasing pressure to adopt a more conservative and confrontational posture.

Of late, Latin American voters have shown themselves willing to pick “outsiders” of both the right (such as El Salvador’s Nayib Bukele) and the left (such as Chile’s Gabriel Boric). With Argentina’s economic and social crises showing no signs of easing, such an outcome, while not probable, is by no means unthinkable.