U.S. should support Argentina’s Milei for economic and political reasons | Opinion
Javier Milei has taken over Argentina’s presidency under the most daunting circumstances.
For the last century, the country has been a legendary under-performer, lurching from crisis to crisis, relieved only during transitory booms when commodity prices rise. And through both military and civilian governments, it has followed the path laid down by Juan Perón of a huge welfare state financed by squeezing its productive sector, one which expands in good times and bad regardless of its cost.
Milei’s mandate
This approach has now reached its logical endpoint, having taken this once rich country to disaster, with inflation at over 150% and a poverty rate of 43%. As a result, disgusted Argentines have decisively elected libertarian Javier Milei who ran on a platform of spending cuts and eventual dollarization.
Milei promised shock therapy, and since taking office he has shown that he means what he has said with decrees and draft legislation that promise fiscal discipline and massive shrinkage of the state. His success depends on implementing his program before the inevitable pain it entails derails him politically. But Milei enjoys strong public support for now and the reality is that his opponents have no program beyond more of the same policies which have led to Argentina’s decay.
The Argentine example
Milei may represent Argentina’s last chance for revival in the foreseeable future. And while it is up to its people to decide if they will stay the course with him, his success is in the United States’ interest. A strong, stable Argentina would be a valued site for American exports and investment. It would also be a powerful counter-example to the wave of leftist, business-unfriendly regimes which have arisen in Latin America from Mexico and Nicaragua to Colombia and Chile.
And Milei has stated his preference for closer ties with the United States, has declined to enter the BRICS grouping (of major emerging economies) in which Russia and China play leading roles (and which Iran is joining), and is uninterested in the one-sided condemnation of Israel which prevails in the region.
U.S. role
What should the U.S. do to strengthen Milei’s hand? Clear gestures of political support would be a good start. Our delegation to his inauguration was led by the U.S. energy secretary, which was especially appropriate given Argentina’s extensive oil and gas reserves. But now it is time to follow up with visits, if not by the vice president or secretary of state, then by other Cabinet officials such as the treasury or commerce secretaries or the U.S. trade representative. A strong accompanying delegation of corporate leaders who could explore options for doing business there would also send a positive signal.
Despite Argentina’s vast deposits, purchasers of electric vehicles with batteries made from Argentine lithium do not enjoy — for now — the same tax incentives provided for vehicles with batteries with lithium from other countries with which the U.S. has free trade agreements. It is in both countries’ interest to find a solution to this paradoxical situation.
The International Monetary Fund, in which the U.S. is the largest shareholder, has been generous with Argentina in the past, rolling over its massive debt in exchange for promises of reform that were never kept. To the extent that Milei is able to move forward with his program, the U.S. should advocate for as much support as the fund can prudently provide — and not rule out providing new funding under the right circumstances.
Argentina has typically given the U.S. more headaches than opportunities. But we should not miss this unique chance to help this high potential but underachieving country to right itself under a government that values its relationship with us.
Richard M. Sanders is senior fellow, Western Hemisphere, at the Center for the National Interest. He served as director of the Office of Brazilian and Southern Cone Affairs of the U.S. Department of State, 2010-13.