Tuesday, July 23, 2024

OP-ED | 31-12-2023 08:14

An electoral 2023 ends... and an electric 2024 begins

The standard greeting of “Happy New Year” would represent wishful thinking rather than any real expectations when it comes to 2024, as President Javier Milei would be the first to insist.

The year ending tomorrow saw the electoral calendar (stretching from the La Pampa provincial primaries last February to last month’s presidential run-off) occupying 41 of the 52 weeks, which would be a fair reflection of its dominance. An inordinately long build-up with the lead changing in each of the three rounds of national voting to end in an extraordinary climax – an anti-system candidate taking power within the system. After anarchism and revolution have been firmly identified with the left throughout the last century, a revolutionary anarcho-capitalist invaded from the right to trump an administration carrying populism to extremes in snatching majority support.

Alberto Fernández was president for all but three weeks of 2023 when he was succeeded by Javier Milei and yet most of the year’s shots were called by somebody else – Economy Minister Sergio Massa, the other half of last month’s run-off. Any comparison between Milei and a hypothetical Massa presidency would be premature yet there is every reason to think that the hyperactive super-minister would have been worse than the procrastinating Fernández because his various stunts (as multiple as his exchange rates) invariably backfired, leaving virtually every macroeconomic indicator worse than those inherited in mid-2022. Of these indicators, the most striking and traumatic was inflation (with the parallel exchange rate under 350 pesos at the start of the year) – still double digits annually (94.8 percent) in 2022 but over 160 percent when Massa left office despite many key items repressed by price controls. Yet in fairness to the outgoing administration, it should be pointed out that a monster drought slashing exports by over US$20 billion would have caused any party or ideology problems.

Most years are viewed as a continuation of the past and can thus be analysed in that context by comparing known quantities. Argentina’s new government represents such a complete break with the 40 years of democracy marked earlier this month (without interrupting them, however) that 2023 will ultimately be judged by whether the changes turn out for the better or for the worse.


The standard greeting of “Happy New Year” would represent wishful thinking rather than any real expectations when it comes to 2024, as President Javier Milei would be the first to insist when he forecasts an austerity year of stagflation without even the “second half” or “spring buds” optimistically floated by his most recent pro-market predecessor Mauricio Macri. Not that Argentina is condemned to failure any more than “condemned to success” in the words of Eduardo Duhalde at the start of this century (with one key question for this coming year whether Economy Minister Luis Caputo or even Milei himself will end up performing the 2002-3 caretaker president’s transitional role or whether transformation is truly underway).

Impossible to peer too far ahead into 2024 with too many questions still awaiting answers. Will the executive branch’s mega-decree and omnibus legislation clear the multiple obstacles lurking in the legislative and judicial branches (not to mention provincial governors in a federal nation and social backlash) while running on empty were it not for his run-off mandate and should he prevail, where would this leave the separation of powers? Is Milei playing with fire when unleashing an inflationary spiral in the name of price liberation and can he sustain the mismatch of reduced interest rates and crawling peg until the next harvest without another traumatic devaluation? The answer to these questions remains open-ended – a pulverised purchasing-power, recession and liberated imports could still halt surging prices in their tracks, stabilising the economy at a lower level but with potential for rapid growth on a par with the post-pandemic year of 2021. A best-case scenario for the economy which still leave solutions being required for the acute social problems of impoverished classes perilously close to becoming a majority.

The operative word for the start of 2024 has to be “worse” – the only question is whether it will be “from bad to worse” or a matter of “it has to get worse before it gets better” (and not the “the worse, the better” speculation of the enemies of democracy).

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