Argentina’s Milei Encounters Significant Challenges in Governing

Argentina's Javier Milei Encounters Significant Challenges in Governing | Mr. Business Magazine

In a surprising electoral upset, Javier Milei secured a significant majority in Argentina’s presidential election. However, the self-proclaimed “anarcho-capitalist” now confronts formidable challenges in realizing his ambitious agenda to streamline the government and adopt a dollarized economy.

The economic landscape in Argentina is dire, marked by a staggering inflation rate of 143% per year, an unrealistic official exchange rate, and an unsustainable fiscal situation. These issues present a daunting task for any incoming leader, and Javier Milei, a first-term legislator lacking executive experience, is further hindered by a lack of majority support in congress.

Election Calculations:

His insurgent party, La Libertad Avanza, secured only 39 seats out of 257 in the new lower house and a mere eight out of 72 seats in the senate. Political analyst Sergio Berensztein highlights Milei’s unprecedented position, asserting that he will assume office as the weakest president in Argentina’s history, despite his victory in the second round.

The key to Milei’s ability to govern lies in his capacity to build alliances and forge strategic pacts, given the fragmented nature of the political landscape. While polls indicate that some of Milei’s more radical libertarian ideas may be unpopular among Argentines, his appeal to reject the entire political class resonated strongly. Paradoxically, Javier Milei now finds himself needing the support of at least a portion of that same political class to effectively govern.

Former president Mauricio Macri, aligned with the center-right, has extended his support to the president-elect. However, achieving a majority in the lower house will hinge on whether all legislators from Macri’s coalition, Juntos por el Cambio, rally behind Milei. Even with this support, Milei must secure votes from defeated Peronists or their allies to pass measures in the Senate.

Javier Milei: who is Argentina’s new president?

Short-term Obstacles for Javier Milei:

As a result, many of Milei’s more radical proposals, such as closing the central bank or replacing the peso with the US dollar, are likely to face significant obstacles, at least in the short term. Milei has already backtracked on some of his unpopular ideas in the final weeks of the campaign, pledging not to privatize education or health, maintain gun controls, and prohibit the sale of human organs. Despite his victory speech emphasizing “drastic change without gradualism,” Javier Milei has moderated his language, now speaking of “fixing problems” at the central bank rather than advocating for its dismantling.

“Milei bears a significant responsibility, and we must observe which of his two facets emerges,” notes Carlos Malamud, principal researcher at the Elcano Royal Institute in Madrid. “Will it be the side he consistently presented throughout his political career, or the one that demonstrated negotiation skills leading up to the second round of the election? He will need to form alliances with Macri and other political figures.”

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