Pundits have pointed out the obvious: With no real party, legislative majority or administrative experience, Milei will be forced to compromise to get anything done. But it’s mainly precedent, not pragmatism, that threatens his success. His program has been tried at least twice before, with terrible costs for Argentina. To prevail this time, Milei will have to defeat history itself.
Clairvoyance is by definition a hard, if not impossible, task. In the case of a Milei presidency, it’s even harder. For long stretches of his political campaign, Milei was prone to violent outbursts and didn’t shy from extreme libertarian proposals, such as legalizing free markets in human organs or firearms.
For many, Argentina is as confounding as its president-elect. Foreign visitors tend to find it inexplicable that a country rich in natural and human resources would suffer cyclical crises. Attempting to solve this puzzle, many observers in the international press blame “populism.” Experts at the International Monetary Fund (to which Argentina owes $31 billion) stick to arithmetic: The country spends more money than it has, they thunder, and its cardinal sin is to recklessly ride the fluctuations of international commodity markets, thoughtlessly enjoying the upswings but never saving or preparing for the downturns. Most Argentines have adapted to this roller coaster by embracing a widespread fatalism: Everything will eventually go to hell. It’s a fatalism punctuated by brief periods of what turns out to be deceptive hope.
Is Milei one such pipe dream? Like almost every other Argentine president, he is promising he’s different — that he will be the decisive turn in national history. In his version of this history, Argentina was the richest country in the world at the end of the 19th century, only to be knocked down by interventionist policies. The state has been the problem. Freeing markets is the solution.
As much as Milei likes to think otherwise, his views are not original. The last Argentine military dictatorship came to power with the slogan “Downsizing the state is making the nation bigger.” Its minister of economy, José Alfredo Martinez de Hoz, was a pre-Thatcher neoliberal who tried to deregulate the economy only for it to end up in disaster. In the 1990s, President Carlos Menem tried the same using a different political formula: He forced his own movement, Peronism, to embrace its historical nemesis, neoliberalism. His longest-serving minister of economy, Domingo Cavallo, deregulated the economy, while pegging the Argentine peso to the U.S. dollar to tame inflation. These policies resulted in the dramatic crisis of 2001-2002, with private savings frozen, the peso devalued and more than half the country living under the poverty line.
Even if they ended in total failure, those experiments bore short-term success. Menem was even reelected; he just bequeathed the problems to the next administration, which eventually crumbled under the burden. But both Menem and Martinez de Hoz had two key resources in their favor: strong political backing and access to necessary funding. Martinez de Hoz had a military dictatorship behind him and took on massive debt from international banks to keep his policies afloat — in the end, to no avail. Menem, meanwhile, was leading the most popular political force in the history of the country. His minister Cavallo financed his neoliberal policies with massive external debt, as Martinez de Hoz did, to which he added the selling off of state-owned companies. (The impossibility of paying those external debts decisively contributed to the fall of the military regime in the first case and led to Argentina’s 2001 default in the other.)
Milei’s solution for the crisis — as far as he has revealed — is some version of neoliberal shock therapy, with deregulation and draconian cuts to public spending. As noted, this has all been done before: Milei admires the Menem-Cavallo administration above all others. But he can’t ask for international loans to finance those reforms. Argentina is still barely making payments to the IMF, and no bank will lend the country a dollar. So Milei, like Menem-Cavallo, wants to sell off the few state-owned companies still standing. This, however, will take time — time that the crisis might not give him.
And Milei is politically far weaker. Yes, like those two predecessors, he has come to power in the wake of a terrible economic crisis, with high inflation and soaring poverty. But he lacks the political strength that helped them overcome social resistance. His coalition, La Libertad Avanza (LLA, Freedom Advances), obtained just 30 percent of the national vote in the first round of the presidential election. Milei reached 56 percent in the runoff, but the voters behind those additional 26 points were rejecting the alternative, not necessarily choosing him. Polls have consistently shown that many of his voters don’t share his views or believe in his proposals. It’s no wonder he has already made a veiled threat to respond to protest with violence.
In the National Congress, he will be able to count on fewer than 40 LLA lower-chamber seats out of 257, and seven senators out of 72. Partisan lines aside, provincial governors usually play a crucial role in parliamentary negotiations by offering the votes of their representatives in exchange for federal subsidies or public works benefiting their districts. Milei’s coalition has no governors, and he has repeatedly said he wants to eliminate those handouts and stop all public works.
That said, Milei is more than capable of compromise. No matter the “madman” persona he adopted during the campaign, he has been shrewd enough to outmaneuver the two main political forces in the country with almost no party infrastructure and scant resources. When the governing center-left Peronism financed him to divide the opposition, Milei had no qualms about using that support to elbow out his competitors in the conservative Juntos por el Cambio (JxC) coalition. And when the defeated JxC leaders he had vilified offered their allegiance in the runoff, Milei embraced them to secure victory, even retreating on some of his more unpopular proposals, including eliminating public education and health insurance.
Equipped with little more than his cunning, Milei will try again to apply a program that has failed twice before. But in a country that does not shy away from toppling presidents for not delivering, I wonder if both the new president and the old program can survive together — or if one of them will have to go.
