Argentina stands out as a glaring example of how the common man is affected when a political outsider subscribing to extreme-right rhetoric assumes power. In his first 12 months, the country’s President Javier Milei has introduced drastic economic measures sparking protests since they have only augmented the distress of a population already plagued by economic ills. It may not be a coincidence that the first foreign leader to meet Donald Trump after his victory last November was Milei. He has been invited to the inauguration of the new President of the United States of America, Trump. This justifies Milei’s rightist credentials beyond any doubt. Milei wanted support from Trump to shore up the floundering economy for which his policies are responsible, while Trump needed an avid follower from Latin America.
Milei had declared a war on bureaucrats, imposed drastic public spending cuts and sweeping deregulation of Latin America’s second-largest economy. The outcome has been one of unmitigated disasters. A recession has already plunged more than half the country into poverty within the first six months of 2024. It is an irony of history that Milei did not so much win the last election as the previous government gifted victory to him. It is worth remembering that when voters gave their verdict in October 2023, monthly inflation stood at about 8 per cent. This caused so much anger and frustration with the established parties among the people, who feared an uncertain future, that they were looking for a change of leadership outside the ambit of known political outfits. Milei skilfully exploited their sentiments. Soon after his victory monthly inflation far surpassed the level of the earlier government and soared to 25 per cent. However, it dropped back to about 3 per cent in November. One is persuaded to believe that Milei’s public sector cuts were painful but necessary. Milei also devalued the peso, making domestic prices go up. However, the later situation seems to have improved. His election campaign centred around replacing peso with dollar. There are reports of a very high social cost attached to Milei’s austerity programme of slashing services and jobs. Many among the populace, just like India, are unable to afford health insurance, further straining underfunded public hospitals. Violent protests against these measures were witnessed in Buenos Aires last summer. Though the economy is showing signs of tentatively recovering from Milei’s shock therapy, reports suggest more unrest is likely if living conditions do not improve in the next few months.
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As things stand now, Milei’s ability to prevent a backlash depends on external factors, which is why, experts say, he rushed to Trump to seek his blessings even before he could start his presidency. For, Argentina’s $44 billion loan from the International Monetary Fund (IMF) is running out and the government is seeking additional funds to ease currency controls without bringing about further devaluation of the peso. Such an eventuality may again cause inflation and damage Milei’s popularity rating ahead of key congressional elections. The IMF, despite its support of Milei’s measures so far, is wary of its dollars being used not for the purpose for which they are given. Since its 2018 financial crisis, Argentina has relied on IMF bailouts, while loans from Beijing have stood it in good stead. It has become Latin America’s largest recipient of Chinese commercial funds. The problem is this dependency on China may prove counterproductive for Argentina as Trump is known for his insistence on disengaging from China.
