Argentina, Leap into Darkness

The political turn in Argentina changes the data regarding the geopolitical balance in South America and the rest of the world. Javier Milei suddenly and almost cruelly intervenes in this balance and reverses the trend that has recently emerged at the local level.

The reasons for this turn are explained primarily by economic factors. The disproportionate rise in inflation, which reached more than 140% in 2023, has led to a sharp deterioration in the purchasing power of the population and, as a result, widespread impoverishment, which has deeply affected the morale of Argentines. Dissatisfaction was manifested primarily in relation to the policy that was deemed responsible for the current situation, namely Kirchnerism, that is, extensive state participation in the management of the national economy through restrictions that often affected trade exchanges or contributed to undermining the stability of the national currency, the Argentine peso.

The country now appears to have reached a radical turning point, where drastic measures seem to be the only remedy for a highly compromised situation, such as the current one. However, there is no certainty that these measures will actually lead to the desired effect. Milei faces a problem full of unknowns. The move towards significant economic liberalization could create a form of wild neo-capitalism, in which a few sharks win and the vast majority of the country’s population loses. In other words, it is true that attracting new foreign investment can revive an economy in recession (the International Monetary Fund predicts a 2.5% recession in 2023), but lack of discipline in managing such investment may encourage new cases of corruption and obstruct transparency in the economy. Abandoning the Argentine peso in favor of the US dollar would also represent a unique measure to reduce inflation, but it would expose the country to dangerous dependence on the United States of America, and the reduction of the black market would not be guaranteed, quite the contrary.

Today, Milei represents the discomfort of a country of 45 million people that occupies a crucial position in the southern part of the American continent and appears to be searching for a political identity after years of rule by Nestor Kirchner, Cristina Fernandez, Mauricio Macri, and Alberto Fernandez. Between right and left orientations, Argentina cannot forget the legacy of Juan Perón and his adaptation to the circumstances dictated by different periods of political life. But Peronism, despite everything, was a movement attentive to social problems and sensitive to the threat of a growing gap between the rich and poor classes. This sensitivity today does not seem to be a priority for the new ruling class, which is more interested in the rapid creation of wealth than in caring about guarantees of greater social justice.

However, Argentina’s stability has an important impact at the international level, both regionally and intercontinentally. The role of Buenos Aires in the MERCOSUR field is primarily important to avoid the failure of the single South American market project aimed at greater integration with other neighboring countries, integration that is becoming increasingly necessary in the face of increasing global competition. The relations with Luiz Ignacio Lula’s Brazil are very important in this sense, but it does not seem that a strong ideological and political understanding can be established between Milei and Lula. Perhaps pragmatism will prevail. At the intercontinental level, Argentina’s recent entry into the BRICS+ group (August 2023) marked an important step towards less wealthy and developing countries under the protection of China, Russia, Brazil, South Africa, and India. Therefore, in the context of new global competition between Western countries and BRICS+, Argentina’s step was especially significant, since it allowed it to contribute to the strengthening of the bloc of Western competitors and the consolidation of the South American wing of this bloc.

How will Milei behave now? Will this confirm Argentina’s position in BRICS+? Or will it have to deal with the United States of America, where the transition from the Argentine peso to the US dollar will lead to even greater dependence on the world’s largest economy? According to statements by Diana Mondino, the new next chancellor under Milei’s presidency, Argentina will not confirm its entry into BRICS+, and this decision will be made at the last minute, since Buenos Aires is scheduled to join BRICS+ starting January 1, 2024. If Argentina does not join BRICS+, it will mean that Buenos Aires is basing its recovery on renewed friendship with the United States and is now playing the card of solidarity with the West. Solidarity, which, however, seems to be dictated more by a very difficult economic situation, rather than complete harmony with Western diplomacy. Argentina has not, in fact, forgotten the 1982 conflict against the United Kingdom of Great Britain and Northern Ireland over the Malvinas Islands, nor the weight – sometimes unwieldy – of US policy in the South American region. But it is a country that must find, above all, convincing harmony with Europe in order to stimulate trade with countries such as Italy and Spain, also due to the large number of immigrants that these countries have offered to the Argentine economy for centuries. The agreement between the European Union and MERCOSUR on trade liberalization essentially comes into force again with Milei, and confirmation of this is expected after the entry of the new president into the Casa Rosada. Indeed, the election of the new president surprised many observers, as well as many Argentine citizens, who may have remembered the phrase of José Luis Borges: “Democracy is an abuse of statistics.”

The great unknown for the future of the country essentially concerns the conquest of power by a radical candidate, who may have been installed as president by a system that does not fully understand the risks associated with changes regarding his election.