Javier Milei's first months: The chainsaw continues to roar

His election victory surprised millions: now Argentina's President Javier Milei has to defend his first reforms. Despite protests, he can show his first economic successes. By Wolfgang Bendel.

It was “the last piece of a heroic effort” – that’s how Argentina’s President Javier Milei tried to calm the minds of the population. The resident of the Casa Rosada, the presidential palace in Buenos Aires, who has been in office for four months, defended the most profound economic policy cuts in decades in a televised speech. Contrary to many expectations, Argentina achieved a budget surplus in the first quarter of 2024 for the first time in decades. “The chainsaw was followed by the economic miracle,” explained Milei.

Many people are feeling the effect of the chainsaw with which the self-proclaimed anarcho-capitalist promoted his state restructuring during the campaign. Less than a day after the speech, more than 150,000 people took to the streets of the Argentine capital to protest against austerity measures in the higher education sector. “We can only maintain operations for another two to three months,” complained the rector of the prestigious Buenos Aires University, Ricardo Gelpi.

Despite annual inflation of 287 percent, the budget of state universities should remain the same for the current year. Milei allowed himself few compromises - and a few days earlier had described state universities as "hoards of dubious business and indoctrination".

Milei is fighting hard against hard currency debts
The 53-year-old never made a secret of his radicalism. With him, the Argentinians elected a libertarian head of state for the first time in the world. One of his first measures was the abolition of half of 18 federal ministries. Only the departments considered necessary remained, including foreign affairs, defense, economics, infrastructure and justice. The tasks of the dissolved ministries, for example for women, gender and diversity as well as for environment and development, were integrated into the remaining ones. In addition, a few days after taking office in December, the politician issued a “mega-decree” containing 366 deregulation and austerity measures.

The situation in the Argentine economy still remains tense. According to World Bank estimates, gross domestic product (GDP) is expected to decline by 2.8 percent by the end of 2024. At the same time, the institution forecasts growth of five percent for the following year - and monthly inflation fell from 20.6 percent in January to 11 percent in March. “There is no alternative to austerity,” said World Bank Chief Latin America Economist William Maloney. The South American country has been heavily indebted for a long time. Its national debt ratio was most recently 154 percent of GDP. Buenos Aires has to pay off more than two thirds of the claims in foreign currencies.

Left-wing state institutions should be closed
The conditions in the institute against discrimination, xenophobia and racism (Inadi) show how Milei's predecessors managed their business. A report from the Ministry of Justice states, among other things: “The institute had a superstructure that did not ensure the efficiency of its work. There were 7,000 unprocessed files.” This is in stark contrast to the large number of employees who are formally employed there. Most recently, Inadi expanded to a total of 44 branches and had to process 2,500 discrimination complaints annually.

This should now come to an end, as presidential spokesman Manuel Adorni announced in February. The government will close various institutes that either functioned as “huge political bribe funds” or created jobs for political activists. “We must finally abolish everything that does not bring benefits for Argentines,” he added.

Dollarization and invective against leftists are part of the agenda
This should also apply to the peso. Before the election, Milei had promised to introduce the US dollar instead of Argentina's national currency and to move to free competition. But the politician had to cut back a bit. “Dollarization is the final step of a whole process that begins with the reorganization of the Argentine Central Bank, then moves to reforming the financial system and finally liquidating it,” he said in an interview with journalist Ivan Shargorodsky. First, Milei wants to create an anti-corruption bank. “Once this is completed, one can move to a free banking system,” he explained. The conditions for this will only be in place next year.

However, the president was able to set clear accents in foreign policy. He caused a stir through his consistent support of Israel in the conflict with Hamas. Milei also prominently criticized left-leaning Latin American counterparts, including Brazil's Lula da Silva and Colombia's Gustavo Petro. In the latter case, diplomatic rifts even broke out after Milei called the former guerrilla leader a “terrorist murderer.” Petro responded by expelling some Argentine diplomats.

Milei's actions force his opponents to rethink
Milei also angered many compatriots with his actions. “Not even the military dictatorship went this far,” complained one protester in December. But the president can still rely on the trust of large parts of the population. According to a study by the Atlas Intel Institute, the same number of respondents (48 percent) rated Milei's previous work positively and negatively. He received clearly positive marks for his previous actions against corruption and crime. According to the respondents' impression, these phenomena have decreased since December.

This forces many of Milei's opponents to rethink their approach. Among them is the social democrat Cristina Kirchner, who was Argentine president from 2007 to 2015. “This experience should make us analyze what we have done and rethink strategies for the present and future,” she addressed her followers during an interview.

Source: Junge Freiheit