Milei’s Ultraliberal Era Begins in Argentina

The swearing-in of Javier Milei last Sunday in Buenos Aires marked the start of what he describes as “a new era in Argentina,” covering the period from 2023 to 2027. The libertarian economist took office as head of state in the country’s Congress, amidst the presence of various deputies and invited foreign leaders. This ceremonial act heralds a new phase in the southern country, with a leader considered “anti-system” who has already promised austerity in public spending and a significant reduction of the state.

Among the attendees at last Sunday’s event, the presence of the King of Spain, Felipe VI, stood out—a regular at the inaugurations of Latin American presidents—alongside various regional leaders. The embrace between Milei and the President of Ukraine, Volodymyr Zelensky, carried special significance. Representing Colombia was the Minister of Foreign Affairs, Álvaro Leyva.

“Let this nation become great again”

“Let this nation become great again.” With this phrase, the new Argentine president initiated his term. It’s not by chance that he echoes Donald Trump’s electoral slogan from the 2016 campaign, as Javier Milei embodies the same style in understanding and practicing politics: a biting critique of the system and established values, and a disruptive discourse against them.

“Just as the fall of the Berlin Wall, these elections have marked the turning point in our history,” expressed the Argentine president, comparing the dire social and especially economic context he inherits to the challenges faced during German reunification in 1989-1990. In fact, the far-right leader highlighted that “no government has received a worse legacy.”

In reality, Javier Milei’s rise to power signifies a break from the Argentine governments of the past 40 years, since the reinstatement of democracy in the country. True to his populist style, he exchanged the podium for the steps of Congress to address the Argentine people “directly.”

“Thank you very much, it will be difficult, but we will achieve it. Long live freedom, damn it! Long live freedom, damn it! Long live freedom, damn it! Long live freedom, damn it! Stand up because we are going to make it,” concluded Milei in the most ecstatic moment of his inauguration speech.

Milei’s Promised Measures

Javier Milei’s political and economic measures, which he has termed an “economic shock,” lean towards shrinking the state and fostering the role of private enterprise: elimination of unproductive state expenses by streamlining and downsizing the state, incentives for job creation, and privatization of deficit-ridden public enterprises.

The Argentine president has predicted challenging years ahead for the country. “There is no money, there is no alternative to austerity, there is no alternative to the shock,” he proclaimed before thousands gathered to hear him at the square facing Congress. “In the short term, the situation will worsen, but later we will see the fruits of our efforts,” he added with his trademark disruptive style.

Milei has warned that the plan he intends to implement will initially have a negative impact on economic activity, employment, real wages, the poverty rate, and the indigence rate. “There will be stagflation, indeed, but it’s not much different from what has happened in the past two years,” he pointed out.

The current reality of the Argentine economy includes a financial and fiscal deficit equivalent to 17% of the GDP, inflation escalating at an annual rate of 300%, paralyzed economic activity, a poverty rate of 45%, and an indigence rate nearing 10%.

Ultimately, the measures of the “economic shock” aim to balance public accounts and end price controls, a policy adopted by the outgoing government. This latter decision will have evident negative effects on inflation. Regarding electoral promises to close the Central Bank and halt the issuance of national currency in favor of adopting the dollar as the national reference currency, everything indicates these will not be immediately implemented, hinting at a devaluation of the peso-dollar exchange rate by nearly 100%.

Radical Fiscal Adjustment

The president confirmed that he will implement a fiscal adjustment equivalent to 5% of the GDP, which, he assured, would fall “almost entirely” on the state and not on the private sector. He also confirmed that he will “clean up” the Central Bank’s liabilities and put an end to monetary issuance, which, in his view, is the cause of Argentina’s high inflation.

However, concerning inflation, Milei’s short-term predictions are not positive. “This is the legacy left to us: an annual inflation rate planted at 15,000%, which we will fight tooth and nail to eradicate,” he asserted. “Our top priority is to make every possible effort to avoid such a catastrophe, which would push poverty above 90% and indigence above 50%.”

Regarding the external debt, the country’s prospects aren’t promising either. “The debt bomb amounts to $100 billion, which will be added to the existing debt of nearly $420 billion,” warned the president.

Euphoria in the Colombian Far-Right

Colombian President Gustavo Petro did not attend Javier Milei’s inauguration, despite being invited. Representing the Colombian state was Foreign Minister Álvaro Leyva. Petro has been engaged in extended disagreements and confrontations with the now-Argentine president through social media for months.

However, the Colombian political right, now in opposition, not only attended the event but lived it with fervor. Senator from the Democratic Center, Maria Fernanda Cabal, who has already expressed her intention to run for the Colombian presidential elections in 2026, took photographs with various far-right world leaders, such as Jair Bolsonaro, former president of Brazil, or Santiago Abascal, leader of the Spanish reactionary party Vox.

“Today, we stand before the recovery of common sense, the value of truth, the value of work, the value of the individual. We will rescue not only Argentina but also Latin America from the clutches of the left,” she said in a video posted on her social networks.

Meanwhile, the leader of the minor ultra-conservative party, Salvación Nacional, Enrique Gómez, showed approval for Javier Milei’s speech on social media. “Javier Milei’s inauguration speech as President of Argentina was spot on: He made an assessment of the economic and social disaster caused by Peronism and other forms of collectivism, their legacy of hyperinflation, didn’t wander into unfulfillable promises, and highlighted the possibility of improving prospects with the advancement of his programs. A speech without vendettas or violence, calling things by their name and being realistic.”