The beginning of the parliamentary year finds the Javier Milei government in an unexpectedly different place to the start of the calendar year. Despite the disruptive impact of Donald Trump’s entry into the White House on the global economy since then, there has not been much change in the positive macro-economic momentum in the past two months apart from a sharp rise in country risk, a scenario where Milei might have been well-advised to replicate the success of Fernando de la Rúa’s “They say I’m boring” 1999 campaign slogan and rest his case on doing his job as an economist. But that is not the nature of the beast. Instead, Milei strayed light years away from his comfort zone by embarking on off-topic anti-woke cultural wars at the World Economic Forum in Davos in late January, followed in mid-February by the totally unforced error of his “diffusion” of the ‘$LIBRA’ cryptocurrency launched by the Texan sharpster Hayden Davis – the legal consequences will take time to materialise if ever but the damage to political image is already there (even if remaining latent in the opinion polls).
Meanwhile, Milei has made himself a hostage to fortune with his rigid determination to follow in Trump’s footsteps while at the same time opening up the economy in complete contradiction of the “Fortress America” policies now being unleashed in Washington. Had Trump clinched his rare earth metals deal with Ukrainian President Volodymyr Zelenskyy at the end of February, Milei would have been badly wrong-footed after his complete U-turn of abandoning his inauguration guest of honour in the United Nations only two days previously, even taking down his Casa Rosada photo. Against that, Milei can at least boast Trump deigning to consider a free-trade agreement with Argentina at a White House press conference last Monday, but what value does that have after the current free-trade partners Canada and Mexico were hit with 25-percent tariffs the following day?
That U(kraine)-turn has also been interpreted by some analysts as a bid to distract attention from ‘Cryptogate,’ with the move to decree the controversial federal judge Ariel Lijo into the Supreme Court seen even more in that light. The success of that move remained unclear when this editorial was written with the Supreme Court verdict on Lijo’s leave and the final decision of a Senate now in session still pending but it seems to be causing more problems than it solves, thus making its value as a distraction relative.
Nevertheless, some of Milei’s critics have been rather more successful in changing the subject than the President himself from the way they have converted his star spin doctor Santiago Caputo into something of a lightning-rod. Cryptogate erupts and half the press makes its main focus Caputo’s interruption of the presidential interview with Jonatan Viale. Milei dragoons his questionable choices into the Supreme Court and the hottest social network issue by a long way is neither that nor last weekend’s state-of-the-nation speech but Caputo browbeating the Radical deputy Facundo Manes. Could there be method in the madness?
Amid all this, such important issues as the tender of the Hidrovía waterway (channelling some 80 percent of all farm exports) and the telecommunications merger lie under the radar but the big question-mark remains the agreement with the International Monetary Fund (IMF). Here the delays seem to stem from reservations on technical points like the currency overvaluation resulting from pegging devaluation behind inflation and the sluggish pace of Central Bank reserve accumulation to pay future debt (despite the purchase of some US$18 billion last year, net negative reserves have only been reduced by a few billion).
But perhaps the bigger doubt of the IMF – and even more the mining and energy sector investors now being treated to road shows in Canada and London – concerns the longer-term political alternatives. There the trends are not good with the crime issue acting as a catalyst of polarisation. Whereas Milei’s onslaught against Buenos Aires Province Governor Axel Kicillof over Greater Buenos Aires crime has backfired in the sense of uniting Peronism, the firing of City Security Minister Waldo Wolff by Mayor Jorge Macri is a further symptom of the implosion of the centre-right PRO’s domination of this city now suffering the erosion of almost two decades. In short, the future alternatives to Milei look like presenting far more contrast than continuity.
But much too early in the year and even more in the Trump administration to say where it will all end.
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