<p>Javier Milei astonished the world, a few months ago, when he was elected president of Argentina. A self-described libertarian, Mr Milei campaigned on the premise of small government and a vibrant message that he would fix Argentina’s crumbling economy. Known for his colorful personality and a distinctive style, Mr Milei has proposed a comprehensive overhaul of his country’s fiscal and structural policies. As a libertarian, he supports the freedom of choice, prostitution, same sex marriage and gender identity. In foreign policy, he intends to take Argentina closer to the United States, distancing his country from geopolitical ties with China and Russia.</p><p> Argentina has always been an economic paradox. In the first few decades of the twentieth century, it was one of the world’s richest nations. It is now an economic disaster. How could this happen? The answer is two words: Juan Peron - better remembered as the husband of Evita, made immortal by Sir Andrew Lloyd Webber’s west end musical, Eva Peron. Mr Peron turned Argentina into a country with powerful organised interest groups, labour unions and the Army, all of whom jostled with each other for influence and resource. His socialist and inward-looking policies led to the nationalisation of industry, and trade barriers wrecked the foundations of economic growth. Over the years, with successive Peronist governments, Argentina had run into a wall. Inflation touched 20,000% and the economy continued to contract. Argentina defaulted several times to international creditors and has repeatedly gone cap-in-hand to the International Monetary Fund for one bailout after another. It is a clear example of a state where leftist populism exhausted the coffers of the treasury. Successive governments exceeded previous benchmarks in demonstrating greater levels of incompetence. </p><p>Mr Milei brings a refreshing change, albeit a radical one, to a country written off by almost everyone. He campaigned on the premise that the only way to save Argentina was to first dollarize the economy and second, shut down its central bank. Dollarization, he believes, would prevent domestic monetary policy from abusing Argentina’s economy. Now that he is in power, he has, quite logically, put the strategy on hold. However, in his very first speech as president he blatantly announced, to cheering crowds, that there was no alternative to austerity. Instead of untenable promises, he bluntly declared that there were painful times ahead. Within a week of coming to power, his government declared the devaluation of the Peso by over fifty percent, its intent to slash all subsidies and reduce the size of government ministries by half. In a country, which has grown accustomed to handouts and entitlements, these are very brave decisions. Mr Milei has suspended construction projects and reduced transfers from the treasury. He intends to eventually balance the budget and fix the shambles of Argentina’s fiscal position. Argentina has been in the red for 113 of the of the past 123 years. It owes the IMF USD 45 billion and other creditors USD 250 billion. Previously, it simply borrowed more to repay past debts. This circus has now become untenable.</p><p>It is hard to say whether Mr Milei will be able to fix a situation that appears unfixable. He will need all his political capital, topped with lots of luck, but if Argentina has any chance of being a normal country then the libertarian conservative at the Casa Rosada is its only hope. Argentina joins a number of countries across Europe, Latin America and Asia that are tilting to the political right. If Mr Milei cracks it, we should expect more right leaning libertarian governments being elected around the world.</p>
<p>Javier Milei astonished the world, a few months ago, when he was elected president of Argentina. A self-described libertarian, Mr Milei campaigned on the premise of small government and a vibrant message that he would fix Argentina’s crumbling economy. Known for his colorful personality and a distinctive style, Mr Milei has proposed a comprehensive overhaul of his country’s fiscal and structural policies. As a libertarian, he supports the freedom of choice, prostitution, same sex marriage and gender identity. In foreign policy, he intends to take Argentina closer to the United States, distancing his country from geopolitical ties with China and Russia.</p><p> Argentina has always been an economic paradox. In the first few decades of the twentieth century, it was one of the world’s richest nations. It is now an economic disaster. How could this happen? The answer is two words: Juan Peron - better remembered as the husband of Evita, made immortal by Sir Andrew Lloyd Webber’s west end musical, Eva Peron. Mr Peron turned Argentina into a country with powerful organised interest groups, labour unions and the Army, all of whom jostled with each other for influence and resource. His socialist and inward-looking policies led to the nationalisation of industry, and trade barriers wrecked the foundations of economic growth. Over the years, with successive Peronist governments, Argentina had run into a wall. Inflation touched 20,000% and the economy continued to contract. Argentina defaulted several times to international creditors and has repeatedly gone cap-in-hand to the International Monetary Fund for one bailout after another. It is a clear example of a state where leftist populism exhausted the coffers of the treasury. Successive governments exceeded previous benchmarks in demonstrating greater levels of incompetence. </p><p>Mr Milei brings a refreshing change, albeit a radical one, to a country written off by almost everyone. He campaigned on the premise that the only way to save Argentina was to first dollarize the economy and second, shut down its central bank. Dollarization, he believes, would prevent domestic monetary policy from abusing Argentina’s economy. Now that he is in power, he has, quite logically, put the strategy on hold. However, in his very first speech as president he blatantly announced, to cheering crowds, that there was no alternative to austerity. Instead of untenable promises, he bluntly declared that there were painful times ahead. Within a week of coming to power, his government declared the devaluation of the Peso by over fifty percent, its intent to slash all subsidies and reduce the size of government ministries by half. In a country, which has grown accustomed to handouts and entitlements, these are very brave decisions. Mr Milei has suspended construction projects and reduced transfers from the treasury. He intends to eventually balance the budget and fix the shambles of Argentina’s fiscal position. Argentina has been in the red for 113 of the of the past 123 years. It owes the IMF USD 45 billion and other creditors USD 250 billion. Previously, it simply borrowed more to repay past debts. This circus has now become untenable.</p><p>It is hard to say whether Mr Milei will be able to fix a situation that appears unfixable. He will need all his political capital, topped with lots of luck, but if Argentina has any chance of being a normal country then the libertarian conservative at the Casa Rosada is its only hope. Argentina joins a number of countries across Europe, Latin America and Asia that are tilting to the political right. If Mr Milei cracks it, we should expect more right leaning libertarian governments being elected around the world.</p>
