Argentina’s shock therapy reminds of junta times [VIDEO]

Sergiu Mișcoiu discusses with Cross-border Talks Malgorzata Kulbaczewska-Figat and‌ Veronika Sušová-Salminen. The topic of this episode is the changes which Milei brought – in economic policies, in terms of identity and past (the heritage of military dictature and Peronism) and his foreign policy, with the first foreign visit made to Israel. He made also an opening to China. Mișcoiu discusses in details about all the changes, which Milei brings, while emphasing his ideological orientiation – in support of the right-wing, of European sovereignists, of anti-communism, and his mockery of left-wing presidents. Foreign policy could allow him to receive some financial support via loans, if internal economic policy goes bad. And Milei tries to be the successful face of the neoliberal experiment in the world. The popular resistance against Milei however is growing. There are protests against him on national level.

The complete transcription of the recording is available below the video.

Malgorzata Kulbaczewska-Figat: Welcome to everybody listening to Cross-border Talks. This is Malgorzata connecting with you from Poland. I am today in the studio together with my friend and the co-creator of Cross-border Talks, Veronica Salminen. And again, we are welcoming Sergiu Mișcoiu, the political scientist from Romania, to discuss what is going on in Argentina. 

As you might remember, Sergiu was our guest in December 2023, just after Javier Milei was elected president of Argentina. We are now assembling together again less than two months after, because what is going on in Argentina is much more than a shock therapy that we might remember from our countries, the Central and Eastern European countries. Having a self-proclaimed anarcho-capitalist, self-proclaimed ultimate anti-systemic candidate, the new Trump of the South promised in the electoral campaign to close down the central bank and to destroy entirely the corrupt Peronist system of the previous decades in Argentina. What is going on now is watched with disbelief and even shock by experts, but also by citizens of Argentina who start assembling in the street to protest against what the president is doing. We are going to go into more details in a few moments. But first, hello, Sergiu!

Hello. Thank you for having me with you.

I would like to remind everybody that not to miss any episode of Cross Border Talks, you are welcome to subscribe to our YouTube channel, but also to our accounts on other social platforms.

Sergiu, let us sum things up. What has been going on in Argentina for the last 60 days? Less than 60 days, actually. What are the most shocking changes that the new president has been introducing? And is Argentina really finding a way out of the crisis with these extraordinary measures?

It’s very interesting what happens in Argentina. Egoistically, from the point of view of a political scientist, I think that we are all mesmerized and we have a very nice field to study. But this is less nice for most of the Argentinians who are now facing a very difficult situation. What happened in Argentina was that as planned, Javier Milei formed his government. He needed to go beyond his political, new and emerging political party. And he had to gather in his government also some less radical right wingers, including two of his former contestants. These are the third person in the presidential elections, Patricia Bullrich and  Luis Caputo, two of his enemies from the former government. But now they are with him and defend the new plan he’s got for restructuring Argentina. 

This plan is no longer only a plan. I think he knew very well from the very beginning that he needed rapid action in order to pass very rapidly and as smoothly as possible, even though he knew that the things won’t get very smooth, these packages of reforms in order to capitalize later on during the second half of the year, or maybe by the beginning of 2025, on the would-be results of his measures. 

What was also noticeable was that he did not wait for things to happen naturally, but he pushed through very rapidly for a huge package of reform. All in all, it’s the most right-wing government Argentina has had at least since the military dictatorship. And even though then you had some elements of social conservatism, including social redistribution during the military governments, now, you have a pure ultra-neoliberal government with lots of elements of the far right also, which, of course, creates a resemblance between the actual government and some other prior governments. And I think that we can compare Milei with Carlos Menem in the 1990s with his “see me, follow me” populism, but also with his obsession with regulating the currency, attaching the peso to the dollar, and also with his very strong pro-Western ism. And I think we will come back later on that aspect, more or less, this is the face of the new  government with the elements of the 90s, with elements of the far right, with elements of anarcho capitalism and some more moderate right wingers who are very necessary in his government in order to secure as much as possible relative majority in the parliament.

Veronika Sušová-Salminen: Hello, everybody. I will ask the next question to Sergiu. And this will be a question which is related to what you have said. You said that Milei has relative support within the political process. He has basically no majority. He is far from the majority in the National Congress. He doesn’t have a large support among governors, even if there are some which are siding with him currently. But we see that his political party is in the minority everywhere. So he has no way to push such a radical program. And there is a political opposition he used already, as we know, as an instrument to push some of his reforms, which qre legally dubious, and they will probably be prone to legal challenges in the future. He is basically offering, as you said, a very radical program. I will remind you that he offers to change 300 laws in a very, very short time, about 1000 articles of laws and 300 different laws. He’s proposing a lot of changes in Argentina. Some of them include privatization. Some of them include pension reform and other fiscal measures, which, by the way, he had to now back off, because they were way too radical. So how he is going to deal with these institutional constraints of the political system, with so radical reform, with so little support within the establishment. And of course, he works with a polarized Argentinian society because he is far from having a majority support for his reforms.

That is true. But it is also true that the discontent within Argentinian society was so huge that people preferred to have a very radically different approach to politics and even of society, as compared to what existed before. Milei tries to capitalize on the fact that the people were profoundly discontent and they applaud the shock therapy that could, in the end, lead to various results. And from this point of view, let’s at least be honest with him saying that his predecessors had inherited money. Macri and Fernandez had inherited either some reserves in the central bank and a debt or smaller debt and no reserves in the central bank. His inheritance puts him in a sad situation. There are no reserves and a huge debt. Because of that, he wants to implement this omnibus law, as it is called, this omnibus law with where more than 300 laws with thousands of articles are modified so that the proposals for privatizations, strengthening the power of the president,, strengthening the power of the executive in more general,  making huge cuts in the public expenses, implementing deregulation are passed. And this is a very radical and intensive program of reform of Argentinian society. 

Now, as you said, he has a minority government, more or less with an increasing number of MPs trying to make allegiance in order to profit from some of the redistribution of functions that he is able to provide. That’s the tricky part. Now, he tries to negotiate. He’s more pragmatic than he was before. He tries to negotiate to offer some functions and some advantages to some members of the moderate opposition in such a way that they become more lenient with his policies. A couple of days ago, the government made lots of concessions in this omnibus package, postponing lots of measures, for instance, privatizations of some of the important national societies and the strategic enterprises, also trying to win the governors by reducing the cutting taxation of the direct exports of the regions outside Argentina. And trying to implement some measures that could capture a majority within the chambers, knowing that he needs a majority there in order to pass this huge program.

Now we need also to mention the fact that the mood in Argentina in relation to this huge program of reform is very complex. As you said, things are very polarized. You do have the unions and the opposition of the left being very critical. But you also have lots of people who barely dared to show their faces. For instance, former supporters of the military government, sons and nephews of the former military who were in power and who are now exhibiting in a quite grotesque way, their power. And for instance, you do have and that’s striking in the videos you do have, khaki cars, the old khaki cars of the military, the Ford cars circulating, the Ford Falcons circulating, especially in Buenos Aires, as a symbol that we are back, the military are back. We are in a government that is implementing a quite authoritative way neoliberal program. And that’s, of course, another issue that creates polarization and scares parts of the population who suffered a lot under the Argentinian military juntas.

Let’s all turn our attention now to the foreign policy. I say this because we were talking last time. Also about what Milei will probably mean for the foreign policy strategy of Argentina. Now we know that he withdrew from the BRICS, where Argentina was invited just last year. This a demonstration of some kind of pragmatism, which he was already speaking about within the political process. He stopped being so aggressive towards China and Mercosur. During the campaign, he was showing some moderation, let’s say, towards these two important economically important partners. On the other hand, he was just recently in quite a huge rift, a diplomatic rift with the Colombian president, who is an open leftist. I remind you that he called him a murderous communist. And, this was causing the diplomatic conflict already because the Colombian Foreign Ministry called back the ambassador from Argentina. He also already said that he will, in the beginning of February, have first overseas trips. And what a surprise he is going to visit Israel, which again, is showing something. He will also visit Italy with the Vatican. I am not sure how much Pope Francis will be happy to meet such a politician from his own country and Italy. It’s clear, because we know that half of the Argentinians are originally basically from Italy, so this makes sense that he’s going there. So what we can do is there is some kind of new pragmatism that he’s attacking only those who are weaker because Colombia is no problem for him. But China has recently also been no problem. And is it going to be like pro-Western together with some kind of moderate strategy towards China in this case?

In the electoral campaign, he clearly promised to revise the geopolitical strategy of Argentina: he spoke about going out of BRCs and cooling down the relations with China. This is much more complicated because of the dependency of Argentina, of the Chinese economy. It seems that he would find a way of understanding with the Chinese leaders. This could also have been anticipated because of the sizes and the importance of the economic exchanges between the two countries at the same time. Once again, I think that Carlos Menem 90s tropism is there: Argentina becoming the most advanced avant post of the Occident in the South. Their vision of the West is very much of the right wing, putting an emphasis on freedom in a libertarian way. Argentina would then go towards the United States, towards Israel, towards Viktor Orban and Giorgia Meloni in Europe, towards the rightist regimes who are playing the anti-communist, anti-socialist, anti-left card. This explains why Milei competed with the Colombians for the place of leadership in South America. He despises Lula da Silva and he tries to become the captain of the South American flagship ship. Marginalizing, mocking the left wing presidency is a strategy that is consistent with what he believes should be his foreign policy.

I do think that he needs foreign policy for two things. The first is that if the situation will get worse economically, he should have some leverage to get some loans from different partners. On the other hand, he needs to show for the domestic public that he is consequent in his acts, as compared to what he promised in the campaign: We will smash the leftists, we will be the new central point, a new model for the neolibera experiment in the world.

In the last question, I would like to ask about the popular resistance, which seems to be growing against Milei. On 25th January Buenos Aires was paralyzed by 20 hour long strike, which of course did not hit on not only the capital, but it was a nationwide action under the gaze of the biggest trade union confederations in Argentina and the people of the working class participating in the protest were furious about what the president was doing, and they claimed openly that his actions were not helping them to live on in any way. Also, I think it is important to mark at this moment that while Milei portrays himself as a champion of freedom, this is definitely not the freedom of assembly or a freedom to protest, because his reform package includes also the amendments in the law that concern street, protesting. People who block roads, for instance, might see their vehicles confiscated for participating in a ‘disruptive protest’. Both him and Patricia Bullrich claim that people who participate in the protest should not be entitled to get any social security. It is a full assault on the right to strike and the right to peaceful protest.

Coming back to the question: how many people are now involved in this popular resistance? And is it a real challenge to Milei or there is still a majority of Argentineans waiting one wishing a reset of the whole system and supporting the president?

As you said, we had 1.5 million Argentinians in the streets, 600,000 in Buenos Aires, the country was paralyzed. But Milei anticipated this course, and he had a bit of communication prepared with elements that were quite interesting. Other elements were less interesting and bore more resemblance to the old dictatorship style, like banning some of the demonstrators and trying to stop all the crowds that produced a huge noise. You know how the casserolazo protests work in Latin American, this is a method of protest that is very well entrenched in the spirit of the Argentinians. Of course, a loud protest creates the impression that the opposition is very strong, but Milei knows that labor unions are doing their best and try to fire, as he hopes, their last bullets in order to push people on the streets and to mobilize them. He also hopes that they will get tired soon.

Meanwhile, the inflation was huge – the monthly inflation was 25% in December and continued in January. So the economic situation is very difficult and people protest. But he hopes that this will get exhausted rapidly in the following month. And moreover, if the packages of economic reform will boost the economy, as he hopes, in the second half of the year, there will be some sort of a stabilization and regrowth. In this case the protesters won’t have any object to protest against. We should also note the fact that his popularity dropped some percent, but not very much, less than expected.

Different sociological surveys show different trends. A half of the Argentinean population says that the president needs some sort of ‘golden period’, a carte blanche of at least three, five months to see what he can do. After all, he did not come after a regular situation with institutions working properly. He took power after a very messy year 2023 and a very messy decade fo the Argentinian economy. Last but not least, it’s interesting, because on one hand, he’s the advocate of freedom of liberty and he compared the state with a pedophile in a kindergarten court before the elections, in order to justify why the state needs to get out of the people’s life. But at the same time, most of his measures and especially the speeches against the demonstrators create the impression that the new state will be closer to a semi-authoritarian state with a strong police, with a strong army.

There are nine ministries now. There is no ministry of education, but there are ministries of the army and of the interior. We can also imagine that his neoliberal economic enthusiasm will come together with a strong authoritarian repression against those who will dare to object. Especially if the results, on the economic side, at least in terms of figures, not in terms of social stability, will not be so bad. If he is marvelously able to stabilize the country, let’s say, after June or July this year, this will push him to be stronger on this path of combination between ultra neoliberalism and the strong civil authoritarianism.

Well, a mixture of semi authoritarian or full authoritarian government with neoliberal experiment is nothing new to Latin America. And looking at history, it is very hard to be optimist on the Argentinians’ future or the near future – even though Javier Milei is indeed trying to be a pragmatist and not a madman like he called himself in the campaign.

As Sergiu said, Argentina of today is a very interesting case for political scientists, but perhaps not really the best place to live today. In solidarity with the struggling Argentinians, we are closing this episode of Cross-Border Talks. We will be continuing to watch what is going on in Argentina, what is going on in Latin American region and what will be the consequences of what is happening for all the world? Thank you. Thank you for being with us. Again, I will remind you to subscribe to cross-border talks, not to miss any episode. Thank you very much and see you again.

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