Milei will open his presidency with a wave of privatizations

The elected president of Argentina, Javier Milei, began a transition full of obstacles this Monday. He has barely been able to give the names of some of his future ministers and suspended the meeting that he had agreed to with the president, Alberto Fernández, dissatisfied with details such as the place and the guests for the photo. But he has already advanced some of what will be his first measures. As soon as he takes office on December 10, Milei will undertake a wave of privatizations that will start with the oil company YPF, the energy company Enarsa and the public media conglomerate.

The leader of the new Argentine far-right has three weeks to assemble his cabinet, but he does not have enough collaborators. His party, La Libertad Avanza, lacks sufficient figures to occupy the highest positions in the Administration; It depends on those who can provide the strength of former president Mauricio Macri, his new ally. Milei also fears that while he is preparing for his inauguration, the outgoing government will take measures that harm him. He has reasons for it. His rival in the second round, Sergio Massa, who is also Minister of Economy, warned him during the night of the defeat that it was now his responsibility to keep inflation at bay, today at 142%. Massa even hinted that he was willing to resign, now that his job as minister-candidate was finished.

Milei made little progress on management issues, but abounded in political definitions. On Monday morning, she toured local radio stations repeating one by one what would be his government’s first measures: privatization, control of social protest and dollarization. “Everything that can be in the hands of the private sector, is going to be in the hands of the private sector,” she said. This is not the first time that Argentina has embarked on a privatization wave: in the nineties, the liberal Peronist Carlos Menem left no public company unsold, in a long process that he crowned with the oil company YPF, when he was days away from handing over power in 1999. In 2012, Cristina Kirchner’s government renationalized the company, which was in the hands of Repsol. Milei targeted YPF, which he promised to use “as a bridge for the readjustment of the energy system,” and Enarsa. “The transition lasts more or less two years,” one more than the period he imagines for the dollarization of the economy, his banner in the fight against inflation. “That can be done in a year and once the laws are passed,” he said.

The depth of the changes proposed by Milei is already reminiscent of the “surgery without anesthesia” that Menem applied when hyperinflation devastated the country in 1990. At that time, many of the measures generated social discontent, with protests and strikes. Milei took note of that experience and warned that he is prepared to confront those “who oppose change to defend their privileges.” He was not referring to “the political caste”, the same one he promised to fight during the campaign, but to the employees and officials who could become unemployed. The president-elect revealed that he has already contacted the elected mayor of the city of Buenos Aires, Jorge Macri, to “maintain order in the streets.” “When there is a crime, it is repressed. Within the law everything, outside the law nothing. He who makes them, pays for them,” he said. The changes will be “drastic,” he warned, and he will not tolerate excesses.

Containing possible protests will be just one of the challenges that the new Government will face. Milei will have to speed up a political assembly that feeds the muscle of governability. He will have only 38 of 257 deputies and will need the thirty that former President Macri can provide him to be competitive. In front of him he will meet the 108 legislators of Peronism, the party that from the opposition will also have control of the Senate. Kirchnerism, despite the defeat at the polls, will have the key to block or approve laws and ratify presidential decrees. The ultra will have no choice but to negotiate each law with leaders whom he has been calling for months “filth”, “thieves” and “shitty lefties.”

Milei will also have no political support in the territories: not a single provincial governor responds to him, in a map that will be dominated by Peronists, radicals (social democrats) and local forces that usually sell their votes to the highest bidder, according to need. This opposition dispersion will complicate the agreements of a leader who has not shown signs of negotiating vocation.

War against inflation

The economy is, however, the biggest fire that Milei will have to address. She also has little time for trial and error. Monday was a holiday in Argentina and there was no currency market. This Tuesday it will be known how local investors receive the change of command. The focus will be on the price of the blue dollar, the one that rises and falls freely according to supply and demand. On Friday, it closed at around 1,000 pesos per unit; keeping it under control will be the main challenge during the transition. If Minister Massa finally decides to step aside, the economy will be left without a helmsman. Milei did not take the warnings of the now minister well, so much so that in the end he decided to postpone the meeting with President Fernández to advance the transition. “Let them take responsibility until the end of the mandate, December 10,” Milei said.

On the external front, at least, his victory went down well. The shares of Argentine companies listed on Wall Street soared between 4% and 36%, with special interest in those linked to the energy and banking sector. The most benefited was precisely the oil company YPF, which is now for sale. Argentine debt bonds also rose between three and six points. On the political front, the regional leaders of the far right embraced Milei, whom they consider the spearhead of a resurgence of the conservative wave once led by Donald Trump in the United States and Jair Bolsonaro in Brazil. It was precisely Bolsonaro who showed the greatest enthusiasm with the dissemination on networks of the communication that he maintained with the Argentine through a video call. The Brazilian accepted Milei’s invitation to his inauguration. “That’s perfect, it’s a half-court goal,” said the Argentine, who considers President Luiz Inácio Lula da Silva a representative of “international communism.”

Milei’s victory by more than ten points over Massa has not only mobilized the far right. Defeated Peronism is now in intensive care, forced to rearm after the inevitable decline of Cristina Kirchner, the movement’s leader. The vice president has not spoken since the defeat of her candidate. Attention is focused on the governor of the province of Buenos Aires, Axel Kicillof, the Peronist with the most powerful position after the president. Kicillof is a leader in his early 50s who answers to Kirchner, but aspires to have his own flight, now that Massa is badly injured. His bastion is the largest, richest and most populated in the country, an ideal territory to begin the process of political reconstruction.

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