Funnily enough, I am associating Argentina with a sequence of words starting with “M”. Messi, Maradona, mate, muchachos, Mayo, now also Milei… With that in mind, reading the latest media headlines, it would be challenging not to relate it with yet another “M” word, namely - a miracle.
The country, which once constituted an unparalleled economic model for other Latin American countries, has been struggling with one of the world’s greatest economic crises for over three decades now. Since the introduction of neoliberal reforms in the 1990s, the Argentinian financial condition has been steadily deteriorating. The idea of pegging the dollar to the peso proved to be tragic in its consequences. The particularly large social stratification additionally rendered the poorest residents of Argentina being the most affected by the hyperinflation. These citizens oftentimes had to survive for less than $2 a day. According to data provided by the United Nations, between 40 and 55 percent of the entire population lived in such conditions.
The natural course of events, given their aforementioned development, was a huge increase in unemployment and a devastating level of the country's debt, which the authorities in Buenos Aires were unable to repay. The bond of the weakening Argentinian currency with the strengthening American one resulted in over-inflated prices of services and goods, already unattainable for many.
Citizens began to rebel against the incompetence of the government, which in 2001 declared the state budget insolvent, limiting the acquisition of funds from national banks. Thus, the economic crisis quickly became a political one, leading the citizenry to "celebrate" the election of a new president five times in a span of just two weeks.
The simplistic-sounding solution of unpegging the peso from the dollar, introduced by all legislative options, did not bring even a pinch of the expected results. Inflation was constantly rising, poverty was spreading on an ever-increasing scale, and the national debt could not be forgotten. A glimmer of hope was only brought by launching exports of natural resources to wealthier countries, such as China. However, even this tactic failed to fully help the country, which in 2018 retrieved the largest rescue package ever granted from the International Monetary Fund (IMF).
Among all this frustration…
Tired of the endless plague of the crisis, citizens expected change - a new governmental apparatus, different from the previous ones. The conviction of the Argentines that innovative, unused practices were required, materialized in the recent presidential elections. Last November, Javier Milei, a radical, unpredictable, sometimes even aggressive economist, representing his own party La Libertad Avanza, won against Sergio Massa. The latter was supported by the so-called Peronists, united in Partido Justicialista - the group of heirs to Juan Peron’s political ideology, promoting elements of both socialism and nationalism.
Massa's parliamentary faction governed the country until 2023. Their center-left proposals did not bring the promised economic enhancement. Many citizens felt cheated or frustrated by the looming specter of hyperinflation, already reaching unimaginable proportions. The emergence of an anti-system radical, criticizing the existing structural arrangement (additionally with a vast education in economics) almost automatically mobilized a large group of people to actively support Milei in the race for the famous Casa Rosada.
The candidate's most vocal postulate was the full dollarization of the state, believing it would break the (still prevailing at that time) link between the dollar and the peso. In his eyes, the latter was too unstable and too weak to continue its function. In addition, the president-economist argued for the need to eliminate the Central Bank (which was allegedly responsible for monetary expansion, excessive printing of banknotes, and all-encompassing inflation), reducing both social spending and taxes, privatization, or implementing the principles of free market. Many experts, both before and after the campaign, considered Milei's plans too controversial (if not simply impossible) to implement in the Argentinian reality.
…a miracle happened
While still a candidate for office, Milei argued that his postulates - although initially painful to some communities - are unquestionably important for the future of the entire country.
And until recently, it did seem as if the reforms were only deepening the already structural economic problems, merely introducing higher living costs for increasingly poorer citizens, caused by the elimination of various types of subsidies. Spending on some sectors, including education and the pension system, were cut. The new president further decided to drastically reduce the bureaucracy, removing some of the existing ministries.
However, the entire process of putting Milei’s plans into action has been going on for a year, and - in an era of massive influx of information - it is easy for public opinion to forget about certain events that often become "outdated" after just a few days. Therefore, while the world was focused on other aspects of the international balance of power (such as the American elections), almost neglecting the Argentinian struggle, the real miracle occurred - the country’s inflation rate for October dropped to 2.7%.
I myself rubbed my eyes in amazement, staring at the headlines of the largest news portals. It seemed to me as a surreal closure of a Latin American nightmare that stretched over time like the Andean Cordillera. The "crazy boy" of politics, the southern version of Donald Trump (as some describe him), turned the impossible into achievable, introducing a new end into the Argentinian tale of wealth and poverty.
The moral of this story is one - “fighting fire with fire” is apparently not just superficial advice without much coverage in the real world. The tragic effects of neoliberal reforms of the 90s were combated by free-market initiatives of a man whose most famous statement during the election campaign was the famous "No. Hay. Plata” (“There. Is. No. Money”), in reference to the lack of funds to continue the country's social policy.
And, of course, as one swallow doesn't make a spring, so too that one month of great statistics will not entirely eliminate the problem that has haunted Argentina for so many decades. However, it is hard not to be full of admiration for the results of Milei's economic policies, even if we find it difficult to accept some of his behavior, attitudes, or public declarations...
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