If Jair Bolsonaro (Brazilian president from the beginning of 2019 to the end of 2022) was a forerunner of libertarian Javier Milei among the South American far right, there was a central contradiction right from the start in the former’s presidency which is only now beginning to emerge in the second half of the latter’s first (for now) term.
On the one hand, Bolsonaro, a gun-toting populist and former paratroop captain, had a general (Hamilton Mourão) as his vice-president and was very much driven by the military caste with a nationalist outlook favouring statist policies prioritising development via public works dating back to dictatorship days (nostalgia for the “economic miracle” of the 1970s). But on the other hand, his star minister was his economic czar Paulo Guedes, a Chicago graduate and champion of the free market backed by a bevy of neo-liberal economists and a clique of CEOs, strongly committed to deregulation and the privatisation of state companies, including even the oil giant Petrobras (resisted by Bolsonaro defining it as a “strategic asset”), as the best means of reducing the fiscal deficit and attracting foreign investment.
Two competing technocracies equally identified with the right. A tough choice for Bolsonaro, who could thank Guedes for campaign financing from the business élite as well as votes from supplying a liberal image in contrast to a Partido Trabalhista fallen into disrepute while remaining at heart an economic nationalist like most military officers. And also a tough choice for the mighty São Paulo industrial lobby subscribing to the free-market policies of Guedes while hankering for the protectionism offered by the military nationalists. It would seem that the latter eventually gained the upper hand but in any case that whole régime all lost in the end.
All that was then and there – let us turn to the here and now. Milei is no military man like the ex-officer Bolsonaro (imagine the libertarian lion at a recruiting office with that shaggy mane) but an obsessive economist far more akin to Guedes. As the exclusive figure of his movement, this has made so far for a remarkably steady economic course (indeed almost monothematic in taming inflation via fiscal surplus) in contrast to politics oscillating wildly between crass blunders and shrewd pragmatism. There has always been a latent tension within the “red circle” establishment between enthusiasm for “liberty advancing” and defence of its corporate “caste” interests but two developments in this infant year have brought it out into the open – an Indian tender competitor underbidding Techint in its own hitherto captive pipeline market in January and the closure of FATE tyre manufacturers in the month ending today. Thus far the protests have tended to come from the individual businessmen at the receiving-end rather than their lobbies but this week the voice of Bolsonaro’s military nationalist wing headed by General Mourão found its echo here at the same level of government – Vice-President Victoria Villarruel.
The estranged veep took her cue from the Supreme Court ruling against Donald Trump’s tariffs in the United States, strongly hinting to Milei that the rampant protectionism of his US idol should be his model, but there can be no doubt that the FATE closure was the real catalyst convincing her that now is the time to speak out. When Villarruel objected to opening up the economy and freeing imports as leading to dependence on Communist China, it would be all too easy to dismiss her as a total outcast within the current administration but back in 2023 the Milei-Villarruel ticket seemed a perfect combo with an extreme liberal appealing to anti-Peronist Argentina and a pro-military nationalist reaching out to Peronist Argentina – Milei’s populist style has always polled well among Peronist voters but an overt clash with pro-industry nationalism might jeopardise his support there.
The fate of FATE’s San Fernando plant has invariably been analysed as an over-protected factory proving unable to survive an abrupt exposure to mostly Chinese competition but this column would like to view it from a different perspective. Tyres are not the only iron in the fire for FATE owner Javier Madanes Quintanilla – he also owns Aluar centred in Puerto Madryn, almost monopolising aluminium, which has given him a foothold via inputs in that metal in the Vaca Muerta shale deposits where he sees the future lying. Almost simultaneously as the FATE closure, YPF sold its Manantiales Behr conventional oilfields in Chubut to the Pérez Companc group in order to concentrate its investment in Vaca Muerta. Rather than FATE being doomed by foreign competition, might not YPF and Madanes Quintanilla be doing basically the same thing – diversifying their focus from traditional activities to the Vaca Muerta boom? If all businessmen did that, it might be observed, this country could end up like Venezuela.
The difference is, of course, that the aluminium magnate did not seek to sell FATE but closed it down. The tyre plant would admittedly be a hard sell – if Carrefour tried for six months to sell its infinitely more attractive supermarket chain and could not find a buyer willing to pay much more than half the cool billion sought by the French owners, what chances with a plant working at a third of its capacity when tyre prices have fallen by 43 percent under Milei while imports surged 45 percent last year after tariffs were halved? Madanes Quintanilla does not have much more joy with aluminium – Trump has slapped 50 percent tariffs on that metal alongside steel while the Economy Ministry has (vindictively?) lifted a 28 percent anti-dumping tariff on Chinese imports. So presumably full speed ahead with Vaca Muerta for him.
In conclusion, the main point of this column is to suggest that the tensions between the liberal right and the nationalistic right evident from the start in the Jair Bolsonaro presidency in Brazil could start to make themselves felt here.
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