Clearly, a majority of voters have had enough of the status quo. What they want is a seismic shift in the underlying political and economic dynamics. And that is what they will get, for better or worse (my money is on the latter).
Sunday’s electoral victory of Javier Milei, an avowed libertarian with big sideburns, a fiery temper and far-right sympathies who claims to be on a mission to rid Argentina of its corrupt political caste (sound familiar?), was not much of a surprise. He had lead the polls leading up to the vote, had been endorsed by the country’s main right-wing party, and his opponent, Sergio Massa, is currently the economy minister in a country that is on the verge of hyperinflation (CPI: 148%) and where four in ten people live in poverty.
What was surprising is how emphatic the victory was. Milei, a political nobody just a few years ago, won 56% of the votes, compared to Massa’s 44% — one of the highest electoral margins of the country’s 40-year democratic era. Massa managed to win in only three of Argentina’s 23 provinces and federal district.
Clearly, a majority of voters have had enough of the status quo. According to a close friend living in Buenos Aries province, the word one keeps hearing is “change” (also sound familiar?), which is perhaps understandable given the dire state of the economy, the high levels of child poverty (67%) and the woeful performance of Alberto Fernández’s outgoing government. What people want is a seismic shift in the underlying political and economic dynamics. And that is what they will get, for better or worse (my money is on the latter). And the reverberations will reach far beyond Argentina’s borders.
The End of Argentina’s BRICS Membership (Before It Even Began)
On the campaign trail, Javier Milei said that as president he would cancel Argentina’s entry to the BRICS and align the country with the US and Israel — a move that will certainly be welcomed by Israel’s Netanyahu government, especially given that Buenos Aires is home to the largest Jewish population in Latin America, and one of the seven largest in the world. Until now, Latin American governments have lead the way in standing up to Israel during its “gazacide“, as Kurt Hackbarth recently reported for Jacobin. Bolivia has severed diplomatic relations with Tel Aviv while Colombia, Chile and Honduras have all recalled their ambassadors.
By contrast, Milei has stated that his first two trips before taking office on December 10 will be to the United States and Israel — the latter apparently for “spiritual reasons” (presumably a reference to Milei’s desire to convert to Judaism after his presidency is over).
Relations with China, meanwhile, are likely to be a lot more strained going forward. Milei has referred to the Asian nation as an “assassin,” telling a Bloomberg News in August:
“People are not free in China, they can’t do what they want and when they do it, they get killed. Would you trade with an assassin?”
Milei has since clarified that he wouldn’t stand in the way of private business deals between Argentine and Chinese companies. Diana Mondino, Milei’s pick for foreign minister, has also played down Milei’s statements, saying he never proposed formally breaking with China, which is probably a good thing given that China is Argentina’s second largest trading partner, providing much-needed foreign currency.
Now, China’s “comprehensive strategic partner[ship]” with Argentina (in the words of China’s Ministry of Foreign Affairs spokesman Wang Wenbin) is probably over (or at least on hold). And that could be a problem given that China is heavily invested in many of Argentina’s strategic sectors, including lithium and gas — sectors that the US government and corporations also have their eyes on. Beijing is also a major creditor since signing a currency swap in 2009 with then-President Cristina Fernández de Kirchener, as Bloomberg recently reported:
Since then, China has invested billions in the country, in everything from lithium and solar power plants in the north, to a space station in the southern Patagonia region.
The ties have become even stronger in recent years, with Argentina joining Xi Jinping’s signature Belt and Road initiative in 2022. It announced plans to join the BRICS group of emerging markets, of which China is the largest, next year.
China’s investments in Argentina only reflect a fraction of its overall influence in Latin America, where it’s chipped away at the US’s dominance in recent decades. Through Belt and Road, China has poured billions into the construction of roads, bridges, trains, power grids and energy plants across the region. It’s also turned its attention toward governors instead of just national leaders, building relationships that have allowed it to invest in even the most remote areas, as it’s charged ahead to become South America’s No. 1 trading partner.
Special currency swap arrangements signed between Buenos Aires and Beijing in June and July this year have enabled the Argentine government to continue servicing its $44 billion loan package from the IMF, thus avoiding yet another default. That credit line could be at risk if Milei maintains his hard line toward Beijing. It is not hard to imagine, for example, his government blocking key Chinese investments in strategic sectors, including Vaca Muerta, an oil and shale gas reservoir in Patagonia that holds the world’s second-largest shale gas reserves and the fourth-largest shale oil deposits.
Milei has also said that his government would endorse and apply the Collective West’s sanctions against Russia, adding: “I would never support an autocratic government like Russia’s.”
In other words, on the off chance that Milei doesn’t cancel Argentina’s BRICS membership, its is unlikely that the BRICS’ founding members will continue to endorse the membership of a country whose government supports US and/or EU sanctions against a fellow member. In such an event, it will be interesting to see whether or not the founding members opt to invite another Latin American country to replace Argentina, with the two most obvious candidates being Bolivia and Venezuela.
South American Trade bloc, Mercosur, Also on the Line
Milei has also launched scathing verbal attacks on the four-nation trade bloc Mercosur, comprising Argentina, Brazil, Paraguay and Uruguay, even going so far as to threaten to withdraw from the grouping, which will probably be harder than exiting the BRICS given the role it has played in promoting regional economic integration. If it were to happen, though, the result would almost certainly be the disintegration of Mercosur, which in turn will spell the end of multi-decade trade negotiations between the trade bloc and the EU.
The hopes in Brasilia and Brussels are that pragmatism will prevail and that Milei will temper his policies toward Brazil’s President Luiz Inácio Lula da Silva once he is in office. Brazil is Argentina’s biggest trade partner but relations between the two countries already soured during Jair Bolsonaro’s presidency. They could be about to get even worse…
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Nick Corbishley 