Argentina’s newly elected and polarizing President Javier Gerardo Milei has wasted no time in unveiling his sweeping economic agenda for the nation and putting into action pledges he made throughout his campaign. However, his extensive economic reform and deregulation have ignited widespread opposition and protests.
Throughout December, the streets of Buenos Aires became a battleground of dissent, with protestors vehemently denouncing proposed measures such as the devaluation of the Argentinian Peso and significant cuts to public spending, particularly in crucial sectors like energy and transportation. Despite the mounting resistance, Milei has remained resolute, unwavering in his commitment to reshape Argentina’s future according to his divisive and contentious vision.
Argentina’s powerful labor unions took to the streets to defy the country’s new far-right administration’s crackdown on demonstrations and accused Milei’s government of “breaking the social contract”. Led by labor union activists, the protesters railed against the Decree of Necessity and Urgency 70/2023. While the president’s supporters argue the plan is needed to buoy the country’s moribund economy, critics say the directive eviscerates workers’ rights while dangerously accelerating economic deregulation.
President Javier Gerardo Milei also known as “El Loco” (the crazy one), a nickname he earned at school due to his eccentric personality. The 53-year-old economist-turned-politician describes himself as an anarcho-capitalist, and a “minarchist,” a form of libertarianism that advocates for a minimal state and free markets. An admirer of former US President Donald Trump, Milei says that climate change is a ‘socialist lie’ and seeks policy advice from his cloned dogs — pledged to take a “chainsaw” to social programs.
Rise of the ‘crazy outsider‘
As the final step of the general election in Argentina was held on the 23rd of October last year, two completely different visions of the future of Argentina were confronted. On a side, there was Sergio Massa, leader of the center-left coalition, Unión por la Patria (Union for the Homeland). On the other side, Javier Gerardo Milei, leader of a relatively new libertarian party La Libertad Avanza (Freedom Advances), surprisingly arrived second at the “first round” of the election, between the leaders running for president.
In the Argentine political system, a candidate can win the presidency in a single round by either winning over 45% of the vote or if they win 40% of the vote while finishing more than 10% points ahead of the second-place candidate. If no candidate meets either threshold, a runoff takes place between the top two candidates. So, the first step was easy for Massa, as he was the only leader of the center-left coalition, endorsed by ex-President Fernández (in office between 2019 and 2023), of which he was the Minister of Economy.
The real battle was only in the center-right political sector: specifically, between the ultra-libertarian semi-unknown Milei, and the leader of the center-right coalition Juntos por el cambio (Together for Change), running with former Minister of Security Patricia Bulrrich, endorsed by the ex-President of Argentine, Mauricio Macri (in place from 2015 to 2019). The more Bulrrich presented herself as the one close to the traditional conservative values, the more Milei was representing himself as a tipping point of Argentine politics.
Finally, on 13 August, the result of the first round of the general elections showed Massa first with 36.78% of votes, while Milei was positioned second with 29.99% and Bulrrich third with only 23.81% of votes. Although Massa was way ahead with the votes, but in an unexpected turn of events Bullrich endorsed Milei for the runoff vote.
In November, Milei won a resounding victory in Argentina’s presidential election, swinging the country to the right by securing about 55.7% votes with Massa registering about 44.3%. It is the highest percentage that a presidential candidate has received since the South American country’s return to democracy in 1983. During his campaign, Milei pushed his “crazy” persona onto the stage, proposing disruptive measures to a population heavily burdened with huge inflation and rising poverty. He vowed to abolish the central bank and dollarize the economy to overcome financial instability and slowdown.
While it was a massive shock for the center-left coalition in power, Milei, on his part, started with the announcement of big changes for Argentine that were announced during his campaign. After taking office on December 10, Milei devalued the country’s currency by 50%, cut transport and energy subsidies, said his government won’t renew contracts for more than 5,000 recently hired state employees, and proposed repealing or modifying about 300 laws.
The right-wing president also said he wants to transform Argentina’s economy and reduce the size of its state to address rising poverty and annual inflation expected to reach 200% by the end of the year. Furthermore, the new government announced that police would crack down on anyone who organizes or participates in protests that block roads.
Following the announcement, thousands of Argentines took to the streets of Buenos Aires at the behest of labor unions to protest the decree and demanded the courts intervene to invalidate the announced devaluation of the Argentinian Peso and a big cut to public spending – in particular on energy and transport.
Despite the protest, Milei was not about to change his mind. He also announced in a late interview, his third round of reforms to drastically transform Argentina: among others, he spoke about privatizing state-owned companies, deregulating the mining sector, scrapping export limits, and reducing protections for people and leasehold businesses (the big state companies).
The ambitious project of law, officially titled the “base for the freedom of the Argentinians” (“Ley Ómnibus”), contains about 664 articles; it has several economic, tax, energy, criminal, and electoral reforms. Milei is asking the Parliament to declare a “State of Emergency” – suspension of constitutional protections and checks and balances – until the end of 2025 (extendible by two more years), to give more power to the government and himself for the whole time of his presidency.
The law, if approved, will suspend the adjustment of wages to the cost of living, and will privatize a few of the biggest public companies of Argentina – such as the national airlines and the banking sector, including the central bank. Further, it will also change the electoral system. Importantly, this law will be also a threat to civil liberties never seen before in the Argentine democratic system (apart from the military dictatorship, between 1976 and 1983): in particular, the Right to Assembly and Right to Freedom of Expression. That is, it will make it obligatory for citizens to ask for authorization for meetings in which more than three people participate.
Milei knows that he needs to do something big to face these challenges and he needs to do it quickly, ideally without mass protest. As planned on the one hand he reduced his government from 18 to just 9 ministers, to have more freedom to act, and on the other hand, during his interviews, he kept the same tone of the electoral campaign: ‘Aborting is a murder, Pope Francis is stupid, to allow selling organs on a legal market, Trump was defrauded at the last elections,’ and so on.
Doubling down policy changes
Those observers who believed that once he won the election he would change his way of speaking and act publicly, have been seemingly proved wrong. The protests of the left parties, trade unions, and workers have been unsuccessful in changing his position. He has already said that in case the Parliament does not approve this law, he will declare a referendum where all the Argentinians could give him the power he wants.
It might seem strange that Milei wants a referendum but this is his way of dealing with voters: he always represented himself as far away from the classical politician, far away from the slowness of any political system. His tone of voice and his words remained the same as during the electoral campaign. Now he is saying congressman, in order the approve the Ley Ómnibus, is waiting for bribes and he is not willing to give any. He didn’t name any member of the parliament as he knew that he needed to make a deal with the other parties of his majority.
This is one of the biggest problems he is facing. His party, La Libertad Avanza (The Freedom Advances), doesn’t have the majority in the Parliament, where it is just the third electoral group with 35 deputies (members of the Camera Baja) and 7 senators. Massa’s coalition has 58 deputies and 13 deputies and Bullrich’s coalition has 31 deputies and 2 senators. Then, there are a few small and local parties with few other deputies and senators. So, again, he has to deal with Bullrich to vote for his reforms.
That’s why he wanted to approve the Ley Ómnibus in full and not discuss the talk each of the 600 different articles it contains separately.
This can be tiring even for the exuberant Argentinian President, but he won. On the second of February, the Camera Baja approved the law after some concessions, with 144 votes against 109. The law can be still amended as its hundreds of articles are subjected to a round of individual votes following the so-called “general vote”.
We will see how it ends, but what we can say by now is that the International Monetary Fund (IMF) seems to like what Milei wants to do. Despite more than 40 billion dollars in debt that Argentina has with the IMF, just a few days ago the country obtained a loan of almost 5 more billion dollars with the promise to carry on with the reforms.
It is a big win and a breath of fresh air for the new government as Argentina is facing fiscal problems which include increased cost of living and commodities, having a big problem with the rise of the cost of the goods as the inflation is at about 210% currently and still increasing. In this situation, Argentina is having a hard time paying back the debt to the IMF. Once one of the biggest economies of South America, Argentina has since failed several times and its economy has already collapsed 9 times, more than any other country in the world. To give an idea, from the big crisis of 2001, we can count 3 defaults (2001, 2014, and 2020) and 2 debt restructurings.
For these reasons, Milei said that the country needs a shock. The words of his Minister of Economy, Luis Caputo, at the end of December were worrying. Caputo announced the devaluation of Argentinian Peso’s currency by 50% against the U.S. dollar. The official exchange rate will be set at 800 pesos for 1 dollar, compared to the current, which is around 360. The Minister, in an interview, said “vamos a estar unos meses peor…” (which translates to “for a few months we will be worse than before”). Even if he added soon after, “this is the right path to follow”.
The different Unions and opposition parties are already planning more protests. Despite the action of Minister of Security, Patricia Bullrich (former rival of Milei during the electoral campaign), who is trying to stop the protests on the streets, they are worried the cost of these reforms will affect the life of the middle class in a country where the index of the poor people keeps increasing (in the third quarter of 2023 it reached 44.7%). The most deprived persons are now 9.6% of the population, according to the annual report of the UCA, the Argentine Catholic University.
Everybody in Argentina knows that something big will happen but nobody knows what exactly.