🔒 FT editorial: Argentina cannot afford another failure

In the midst of Argentina’s severe crisis, self-proclaimed “anarcho-capitalist” Javier Milei assumes the presidency, offering a risky path to economic reform. His victory reflects a regional trend as voters seek radical alternatives. While Milei’s rhetoric advocates for minimal government and economic overhaul, the untested leader faces challenges in a deeply polarised nation. Skepticism surrounds his ability to implement effective reforms and navigate foreign relations, raising uncertainties about Argentina’s future under his leadership. The global community watches closely as Milei’s unorthodox approach unfolds in a nation desperate for change.

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Argentina cannot afford another failure

By Financial Times editorial board

Libertarian Javier Milei offers a high-risk path to radical economic reform

Argentina has entered uncharted waters with the election of self-styled “anarcho-capitalist” Javier Milei as president. Amid the South American nation’s worst crisis in more than two decades, scarred by triple-digit inflation and the failure of successive governments, Argentines plumped for dramatic change in the form of an eccentric television economist.

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Milei’s election on Sunday is the latest example of a trend across Latin America, where voters despairing of stagnant living standards, endemic corruption and rising crime have rejected incumbents in favour of radical insurgents from the left and right of the spectrum.

Exactly what Argentines have chosen this time is less clear. In the final weeks of the campaign, Milei, who is untested in government, played down some of his more extreme ideas. He ruled out loosening gun controls or privatising education, though he continues to advocate dollarisation and taking a chainsaw to the state.

Although sympathetic to hard-right populists such as former presidents Donald Trump of the US and Jair Bolsonaro of Brazil, Milei is neither nationalist nor protectionist and more mystic than religious. His closest adviser is his sister, who ran his campaign.

Milei’s success as a TV economist came from his message that Argentina’s venal political class needed to be swept away and the state reduced to a minimum — popular ideas in a country whose public sector has almost doubled in size in the past two decades. Above all, he represented a clear break with the dysfunctional continuity offered by his defeated rival, the Peronist economy minister Sergio Massa, who lost by more than 11 percentage points.

Argentina’s economic problems are rooted in chronic government overspending, paid for by printing money or excessive borrowing. This destroys confidence, fuels inflation and hastens capital flight. A web of elaborate price and exchange controls spun by the Peronists to try to contain the damage has made the problem worse. Milei’s dollarisation would not be a magic bullet, even if it were achievable; wide-ranging structural reforms are also needed.

Successfully implementing radical economic change in a highly polarised nation suffering a deep crisis is monumentally difficult even for an experienced leader commanding a congressional majority. Milei is a political novice with a small legislative base and an unpredictable character.

Argentina’s main conservative opposition, led by former president Mauricio Macri, has offered support but that will not suffice for a majority; Milei will need other allies. In his favour is the size of his second round mandate and the hunger of most Argentines for deep change.

How well the inexperienced president-elect’s mercurial temperament will adapt to governing a nation in crisis with strong unions and a history of mass protest is a key question. His choice of ministers and advisers will be crucial.

Some of Milei’s foreign policy judgments are worrying. A willingness to accept Bolsonaro’s overtures could torpedo Argentina’s relationship with Brazil, its biggest trading partner. Milei’s admiration for Trump will not endear him to the Biden administration and his description of the communist government in Beijing as an “assassin” could prove costly, given Argentina’s dependence on agricultural exports to China.

Markets, which share many Argentines’ desire for change, initially cheered Milei’s victory. But if the president-elect is to have any chance of fulfilling their hopes, he will quickly need to start showing he is capable of governing pragmatically and enacting well-designed reforms. His record to date hardly inspires confidence.

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