Argentina turning? Milei's surprising political success

This episode examines the surprising political success of Javier Milei, Argentina's libertarian president, and his recent legislative victories.

1. Javier Milei's presidency began with drastic economic measures to address Argentina's inflation and fiscal issues.
2. Milei secured legislative victories that could potentially attract significant foreign investments and stabilize the economy.
3. The reforms are controversial and have sparked protests and debates within the political landscape.
4. Milei's approach to dollarization and economic management remains uncertain and is critical to his long-term policy success.
5. The international community, especially the IMF, is cautious about Milei's unconventional economic strategies.

1: Introduction

Rosie Blore introduces the episode's focus on Javier Milei's presidency and legislative achievements. Rosie Blore: "When Argentina's libertarian president, Javier Milei, was elected last autumn, it wasn't clear that he'd be up to the task of governing."

2: Milei's Economic Measures

Discussion on Milei's harsh economic reforms including peso devaluation and spending cuts. Kindly Salmon: "He devalued the peso by over 50% in December. He took, as he would put, a chainsaw to spending."

3: Legislative Successes

Details Milei's recent legislative victories that aim to attract foreign investment and manage fiscal spending. Kindly Salmon: "The first gives Mr. Milei emergency powers... and it puts in place a really big set of incentives for foreign investors."

4: Future Challenges

Covers the potential economic challenges and Milei's tentative plans for the Argentine economy, including his backtracking on dollarization. Rosie Blore: "The idea was basically to entirely switch out the Argentine peso and use dollars instead."

1. Understand Economic Indicators: Keep an eye on inflation rates and currency values when assessing economic health.
2. Consider Long-term Impacts: When evaluating leaders, consider both the immediate and long-term effects of their policies.
3. Stay Informed on Legislative Changes: Laws can significantly impact investment climates; stay updated on legislative environments.
4. Research Before Investing: Always research a country's economic stability and policy directions before making investment decisions.
5. Be Prepared for Volatility: In emerging markets, economic conditions can change rapidly; maintain flexibility in your financial planning.

Since his election last year, President Javier Milei has enjoyed some economic and political wins in Argentina. But his toughest fight is yet to come. On Britain’s general election trail, our correspondent found voters less keen on the prospect of a Labour victory than on punishing the Conservative party at the polls (10:00). And remembering Birubala Rabha, who campaigned against witch-hunting in India (18.35).

People

Javier Milei, Kindly Salmon

Companies

-None-

Books

-None-

Guest Name(s):

-None-

Content Warnings:

None

Ryan Reynolds
Hey, I'm Ryan Reynolds. At Mint Mobile, we like to do the opposite of what big wireless does. They charge you a lot. We charge you a little. So naturally, when they announced they'd be raising their prices due to inflation, we decided to deflate our prices due to not hating you.

That's right, we're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a try at Mint mobile.com. Switch $45 upfront for three months, plus taxes and fees. Promoting for new customers for limited time unlimited, more than 40gb per month slows full terms at mint mobile.com dot.

The Economist.

Rosie Blore
Hello and welcome to the intelligence from the Economist. I'm your host, Rosie Blore. Every weekday we provide a fresh perspective on the events shaping your world.

Labor is leading in the polls ahead of Britain's general election on July 4. Yet many voters seem motivated not by excitement about a possible new government, but vengeance and anger at the old one. And thousands of women in rural India have been accused of being witches and killed. Biluraba Rabha fought to end this torrid practice. Our obituaries editor celebrates the life of a courageous tribal woman from Assam.

First up, though, when Argentina's libertarian president, Javier Millet, was elected last autumn, it wasn't clear that he'd be up to the task of governing.

Millet is an economist and former tv personality, more of a free market ideologue than a nuts and bolts policymaker. Many people compare him to Donald Trump, given his love of outlandish stunts and his tendency to insult his rivals and castigate the establishment. Argentines elected him because they were desperate for someone to hoist the country out of a deep economic crisis.

Years of overspending from the government had resulted in triple digit inflation six months into his presidency. By some measures, Millet is doing quite well, and he's just had a string of political successes.

But that's not to say that it's all been easy. This really is a pivotal moment, I think, for Argentina. Kindly Salmon is the economist Latin America correspondent. The libertarian populist president, Xavier Malay, has just had a very good few weeks. Inflation has been coming further down, markets are excited by what they're seeing, and I think most importantly of all, last week he got his first two big pieces of legislation through the Senate, and now he needs to set out where he's going with these reforms in the longer run.

Kindly Salmon
But none of this, unfortunately, means it's going to be smooth sailing for Argentina from here. So before we get to the legislation, just talk me through how we got to this point. What has millet been doing since came to power? It's important to really underline just how dysfunctional the argentine economy was when he took office. Inflation was already rampant.

The central bank had negative foreign reserves, and so he acted fast and pretty brutally. He devalued the peso by over 50% in December. He took, as he would put, a chainsaw to spending, and he let inflation really eat away at pensions in particular, and also public sector salaries. All that was pretty painful. Pushed Argentina into a serious economic recession.

But there's also been, as a result, a string of monthly government surpluses. That's pretty unusual in Argentina, and markets have celebrated that in a big way. One of the measures people watch is something called the country risk index, basically a measure of the chance of default. And that's been falling pretty strikingly since he took office in December. You just mentioned he'd recently passed some legislation.

Rosie Blore
Can you tell us about that? There were two bills that went through the Senate last week.

Kindly Salmon
Those bills have already passed the lower chamber, and so they're very nearly final. The first gives Mister millay emergency powers in a whole lot of domains for the next year. It also privatizes several state owned firms, and perhaps most notably, it puts in place a really big set of incentives for foreign investors. And then the second bill tries to deal with the problem that Argentina has, which it tends to spend more than it raises. And so that second bill tried to improve the amount of tax revenue that the state actually gets.

And they both, in the end, snuck through. So forgive my cynicism, but over the years we've said many hyperbolic things about the state of Argentina's economy and also the prospects of change. What impact do you think these bills will actually have? These bills are super controversial. I mean, it took the vice president to put a casting vote to even get one through.

And outside the Senate at the time, there were huge protests.

There was tear gas, there were protesters injured. Some lawmakers seemed to be hit with pepper spray. This is a really big deal. These are really big bills. The biggest is this idea that by giving huge sweeteners to investors, they're going to tempt in really large scale investments, over $200 million, for example, into sectors like mining and hydrocarbons, and that they hope will prompt growth.

There's also efforts to make it easier to hire and fire, to make the tax system more efficient. And of course, they really want to improve how much tax they collect. But that bill was weakened, quite importantly, as it went through so there's a little bit less, perhaps hope on that side. And it also gives Mister Millay extra powers for a year, which he will presumably seek to use vigorously to further his reform agenda. So it's a big moment.

It's not necessarily a definitive moment, but it's a big one. So attracting investment, freeing up labour markets, sounds quite promising. But you've suggested that it's not all smooth sailing from here. I think the hardest part is actually still to come. There are just some really big economic issues that need to be tackled and that probably are putting off investors despite these laws going through.

One is that the argentine peso now looks overvalued. That makes Argentina unjustifiably expensive in dollar terms to deal with. Mister Millais could devalue the peso more. The problem is that that could push up inflation, which of course he's been very keen to get down, or he could keep it overvalued, but that can deter investment. It can be bad for exports in particular.

So there's tough choices on that side. And feeding into that is the problem that this rapid fall in inflation that we've seen in which really should be applauded, may be slowing. There's some early data for June that suggests prices might be edging up a bit and that would then make worse the problem of the overvalued peso as well. Unfortunately, I've got to add a third big problem which looms, which is that it's not really clear what the long term plan is for him in terms of what they want to do with the central bank or what they plan to do with the currency. We know that on the election trail, Millet said a lot of things.

Rosie Blore
How far has he diverted so far from his campaign promises? What do we know about his long term policies? In reality, on the campaign he was categorical about the need to dolarise the economy. The idea was basically to entirely switch out the argentine peso and use dollars instead. Since taking office, he has walked back on this categorical idea of dollarization, in part because it requires a huge number of dollars which Argentina doesn't have.

Kindly Salmon
But the result has instead been a different problem, which is a huge uncertainty, frankly, and mixed mischief from him and his economic team about where they're ultimately going with the currency. When you try to figure out within that uncertainty what Mister Miller himself at least might favour, he seems to be quite keen on something he calls endogenous dollarization, the basics of which are that the central bank would never put any more pesos into circulation. Instead, when people needed to use more cash as the economy grows, which is what normally happens, they would have to do that in us dollars. Many Argentines do save in dollars, but it's a bit unclear if Mister Millay just expects them to pull loads, wads of dollars out of their mattresses or haul them in from offshore accounts. It's not very clear at all how these dollars really end up running the agitan economy.

Rosie Blore
Expecting to run an economy based on dollars pulled out of mattresses sounds like a slightly bonkers idea to me. Is it remotely plausible what he's suggesting? Well, the IMF, which has a $44 billion program with Argentina, is always very diplomatic, but I think it's pretty clear they're a bit worried about this highly unusual potential plan for the medium term. I suspect that if Mister Millais insists on this version of it, it may make it harder for the argentine government to get more money from the IMF, which they are now requesting. There is happily more of a sensible option.

Kindly Salmon
Other countries do have something called currency competition, which Mister Millay and his team also talk about. That's where dollars and pesos could both be used and both are valued and have a role in the economy. Peru has done something like that in the past. It worked pretty well. So there's perhaps a compromise out there to be found.

Mister Millay's shown in those victories last week in the Senate that he can compromise, which maybe wasn't clear when he first took office. And so this may be a time to think about compromising once more. Kinley, thank you so much. It's great to talk to you. Thanks for having me on.

Ryan Reynolds
Hey, I'm Ryan Reynolds at Mint mobile. We like to do the opposite of what big wireless does. They charge you a lot? We charge you a little. So naturally, when they announced they'd be raising their prices due to inflation, we decided to deflate our prices due to not hating you.

That's right. We're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a try@mintmobile.com. Switch $45 upfront for three months, plus taxes and fees. Promoting for new customers for limited time unlimited, more than 40gb per month slows full terms at mint mobile.com dot.

Rosie Blore
With under two weeks to go before Britain's general election, the conservative party is struggling to keep the wheels on its campaign. Well, like you, I was incredibly angry, incredibly angry to learn of these allegations. It's a really serious matter. It's right that they're being investigated properly by the relevant law enforcement authorities, including us. On national tv last night, Prime Minister Rishi Sunak expressed his fury at the latest scandal to engulf his party.

Several conservative insiders are being investigated, including the director of the Tories campaign and a number of candidates, allegedly for using inside information to place Betsy on the timing of the election. It's yet another gaffe in a campaign that has felt doomed from the start. This week, new polls suggest that both Sunak and Chancellor Jeremy Hunt may not only lose the election, but lose their own seats. And wherever you go in the country, even in traditional Tory strongholds, the electorate seems ready to punish the party of power. So over the past few weeks, I have been trailing around after the various political parties.

Catherine Nixie is a Britain correspondent for the Economist and has spent the past few weeks out and about on the campaign trail. I went up to Scotland to look at Keir Starmer, then chased him down to somewhere in the middle of England. I went to south east England to look at how reform might be doing in Britain's seaside towns. And I went on a bus with Ed Davey and the Lib Dems and their lovely wholesome snacks. And I also went to Godalming in Surrey to see how things are looking for the Tories.

Tell me about Godalming. Why did you go there? Well, I went to Godalming because it is just the nicest place. You can't picture anywhere so charmingly english. It's sort of higgledy piggledy houses, lovely church spires, streams.

Catherine Nixie
The china in the charity shop is much more expensive than the kind of china that you'd get in most fancy shops. It's a pleasure just to stroll through its lovely leafy, red brick streets. It sounds like it has all the hallmarks of an upmarket Tory seat. But I assume you didn't just go there for the chic charity shops and the red brick streets. Why else did you visit?

So, it's the constituency of Jeremy Hunt, who is currently the chancellor of the UK, and it's a real possibility that the Tories might lose their seat. So we went to kind of chat to locals, see what they think. If the Tories see who they'll be voting for in the next election, that. Would be a huge thing. If the chancellor of the Exchequer loses his seat, what were the reasons people were giving you for voting for him or against?

So, in Godalming, we went down to one of its many picturesque corners. We were standing by a stream underneath a willow tree and a grandmother and her grandchild. Came up and we asked them how they were thinking of voting. So you live in Godalming? Yes, I live in Godalming, yep.

And it's obviously very charming. Very English, very kind of Tory. Yeah. For years. Yes.

Lovely. And it seems a very tory sort of place. Sort of. But definitely there's a lot of people who are. A lot of people who used to live in London live here.

Okay. Definitely a lot of remainers around here. So that was very unpopular, Brexit. But I know people who are. But there are quite a lot of lib dems is strong around here.

Should ask my husband. You won't be voting. They can't count on your vote. Oh, definitely not. No way.

Not after the pantomime we've had and dishonesty and, you know, everything really well. You know, ripping out all the. Not spending enough money on public services is really awful for schools, hospitals. It just feels like everything's gone to rack and ruin and it's just been. So she's talking about a pantomime there, but, I mean, it sounds like it was a pretty beautiful setting in Godalming, and she's talking about things going to rack and ruin.

Rosie Blore
Doesn't sound very much like it. What's really going on there? No, it was interesting, as she said, rack and ruin. I think both I and the producer, we sort of caught each other's eye and looked around as a swan glided by. And, you know, the wind blew lightly through the leaves of the tree.

Catherine Nixie
It doesn't feel like it's in rack and ruin in Godalming, but it feels probably to them worse than it did. But I think it was also. What I got was a sense of a moral ruination, was what lots of people were talking about. They felt that, particularly with Partygate, when, during COVID when everyone else had to stay at home, Boris Johnson. And within ten Downing street, they were having parties.

The sense that the government isn't telling the truth to people, the sense that people have behaved in an immoral way, the rack and ruin is not merely the physical things that people see. It's something more profound that I think people felt was fraying the edges of government. Not just this government, but government as an institution was being damaged by the conservatives. And even now, the director of the conservative campaign is being investigated over an alleged bet relating to the date of the election. What I keep coming back to that seems sort of amazing here is that you have people like Jeremy Hunt, chancellor of the exchequer, who you would normally expect in a campaign to be out and about all over the country, he's trying to defend his own seat in Godalming.

Rosie Blore
What does that tell you about the Tories campaign and about what's going on right now? On the day that we were in Godalming, Jeremy Hunt was there out leafleting, you know, pressing the flesh in his own constituency. It tells you they're in a really bad way. I mean, this election, it is a punishment beating election, and it's also. It's a kind of cannibalistic election, because what the other parties are doing is they are feasting on the corpse of the former Tory body.

Catherine Nixie
Labour are going for the left flank, reform are going for the right flank. Lib Dems are kind of munching on the middle of the Tory vote. So if you look at where Ed Davy, the leader of the Lib Dems, is going, his battle bus is not so much doing a political tour as a Jane Austen one. It's just going around all the loveliest places in the country, these charming, charming towns, and they are mopping up the Tory vote. And in Godalming, the Lib Dems are likely to do quite well.

And there was some sympathy for Jeremy Hunt. He himself wasn't disliked, but from people like the Joneses who we spoke to, that is not enough. They said that they hoped that the Lib Dems would, to use misses Jones words, get him out. Dems are the much stronger. Well, they're the ones that could get Jeremy hunting.

And that's important to you, to get Jeremy Hunt out. Well, Jeremy Hunt in himself is actually quite a good local mp, but he voted along. He votes along party lines, which I just find absolutely outrageous. You should stand up for that. You know, he was a remainer and this constituency was overwhelmingly remain, and yet he backed all the ridiculous things that once it started, you know, the Tories did.

And. It'S kind of interesting, isn't it, because I remember in the election campaign in 1997, before labor did indeed win and win over the Tories, and there was this big change then. There was a huge amount of excitement about what might happen, and people were kind of excited to vote for Labour. I haven't detected much excitement around. What have you seen in your wanderings?

Catherine Nixie
No, I'd say no excitement. Pure vengeance is the general mood that I come across when I've been walking around. What people want is they want the absence of a negative, not the presence of a positive. Lots of people are not that thrilled about Labour. Hard to be starmer is not terribly charismatic.

The policies are not terribly charismatic. None of it's going to put a spring in your step, but I have only managed to meet one person who will openly admit to voting conservative. Now, this is also a thing you have shy Tories. Nobody wants to publicly admit generally to being a conservative, particularly in certain areas. But it is striking not just how little support they have, how much active hostility there is to them after Brexit, after austerity, after so much that has happened.

What's interesting is godalming is very different to lots of the other places I've been. It is, you know, the epitome of the wealthy english town. But the mood was almost exactly the same. And what I've seen is whether people were to the right of the Tories or to the left of the Tories. More centrist than the Tories are.

What unites Britain at the moment is this absolutely overwhelming desire to get the Tories out and give them a kicking as they go. And that's exactly what we saw in Godalming as well. Catherine, thank you so much. Thank you.

Ann Rowe
If you were to meet Birubala Rabha, you might think she was an ordinary tribal woman of Assam. Ann Rowe is the economist's obituaries editor. She's very small, wiry, bespectacled. Her feet were hard from walking on roads, and her hands were calloused from doing farm work. She'd married at the age of 15, and to make money for the family, she'd learned weaving and then tried to grow crops up in the mountains.

So she'd had a tough life, like almost everyone else in that remote northeastern corner of India. If you went to her house, it was like all the others, tin roof, bamboo walls, very little furniture beside a bed. But that was almost all she had, and she didnt want any more than that. It was a life of complete simplicity. On the other hand, Biruballa Rabha was an extraordinary woman because she campaigned for years in India to end the practice of witch hunting.

Between 1991 and 2010, almost 2000 women in India were killed as witches. They were declared to be witches by the BEJ or ojas. Those were the medicine men, really, quacks, who believed that these women had certain powers and were using the evil eye or spells or mantras to gain power over people and do them harm. So if anyone fell ill with a mysterious disease, or if crops failed to grow, or even if the weather was bad, they would often target a woman, and then the village itself would go mad and hunt the woman down. Sometimes the women were stripped or they were burned, whipped tonsured and then ultimately, quite a few of them were killed.

The victims were usually women on their own, widows or elderly, simply trying to live their lives in peace, but without a man to protect them. In very many cases, the fact that their families had decided they wanted to gain property from them, grab their lands and so on, so they would get them declared a witch so that they had a good excuse to seize their property. Otherwise, it was perhaps just a feeling of resentment by relations or a big dispute which had got out of control. And for these reasons, the women were hunted.

Birubala Rabha was actually called a witch herself. It began in 1985, when her eldest son started to become mad, chattering to himself and using violence against people. At that time, she knew of witch hunting, but was not campaigning against it. And she went to a quack to see whether she could get some cure for her son. And she declared that Biravala's son had fallen in love with a fairy and come under her spell, that the fairy had become pregnant with his child, that in three days the child would be born and then the son would die.

Hearing this news, Biruballa could scarcely believe it. She refused to believe it in the end, especially when her son lived not only for the three days, but for weeks, months and years afterwards.

She realized then that it was all lies, superstitions. But she still faced the problem that she was called a witch herself. And the attacks redoubled when, in 1996, her husband died of throat cancer. And then even her close relations began to believe the myths about her. Nonetheless, she was a very courageous woman, and she always stood up and declared that there were no witches in this world and that the women she knew who had been accused of being witches were not so.

And she set up a mission to rescue these women and try to give them shelter. When she addressed one village meeting and made her declaration, she so astounded the men at it that they called on her to recant. And when she refused, they went to her house to attack her. She often faced down mobs like this, but she was not afraid. She was not afraid of death or of being beaten up or anything else.

She made friends with two of the local police superintendents and also with the politicians who, in the end, drove through a law which was largely her work. She herself was barely literate, but she pushed so hard that in the end, in a Sam, a law was passed which would send a person to prison for up to seven years for calling someone a witch and also impose a substantial fine on them. It was said to be the most severe law in India.

In one film of hers, she was seen going to her tin trunk in her house and going through it in search of something. The tin trunk was full of carrier bags, and every carrier bag was stuffed with her rewards. Some were loose and some had been framed, but what she was really looking for were the tiny photos of nine women whom she had personally rescued. Their hair had been shorn, but they were alive and they had joined her group. In the end, she thought saving lives was the most important thing.

Rosie Blore
Ann Ro on Birobala Rabha, who has died age 75.

That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is Jon Joe Devlin, and our sound designer is Will Rowe. Our senior producers are Rory Galloway, Sarah Lanyuk, and Sam Westran. Our senior creative producer is William Warren.

Our producers are Maggie Khadifa and Benji Guy. And our assistant producers are Henrietta McFarlane and Koonal Patel. With extra production help this week from Jonathan Day and Elna Schutz. We'll see you back here tomorrow for the weekend. Intelligence.

Hi, this is Janice Torres from Yokiero di Nero. If you own or operate a business, whether it's a local operation or a global corporation, partnering with bank of America could be your smartest move. By teaming with bank of America, you'll enjoy exclusive digital tools, award winning insights, and business solutions so powerful you'll make every move matter. Position your business to capitalize on opportunity in a moment's notice, visit bankofamerica.com bankingforbusiness to learn more. What would you like the power to do?

BankofAmerica na Copyright 2024.