If Milei meets Massa in a second round, all bets are off for Argentina’s election – and the country’s future

Milei will be competitive against an unpopular incumbent. Should he win, his policies could create unprecedented upheaval.

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Published 16 October 2023 3 minute READ

Javier Milei is leading polls in the run up to Argentina’s first-round presidential elections on 22 October. An economist and former television commentator who served one term in congress, Milei calls himself an anarcho-capitalist and radical libertarian.

He has promised to trash Argentina’s currency, the peso, in favour of the US dollar, abolish the central bank and cut public spending by at least 15 per cent of GDP

Should he win, his largely untested fringe economic ideas will run up against an Argentine state and society accustomed to public largesse via subsidies and generous (though chronically less-than-effective) social safety-net programmes.

Pro-business, liberal votes could tip Milei’s way if the choice is another Peronist

The likelihood of a Milei victory depends in large part on his opponent in a probable second round vote. Pro-business, liberal votes could tip Milei’s way if the choice is another Peronist. Should Milei win, the result is not likely to be pretty.

How Argentina got here

In all but five of the 40 years since Argentina’s democratic transition in 1983, two political parties have swapped power. The Radical Party ruled from 1983 to 1989 and briefly between 1999 and 2001, when a severe economic collapse swept it out of power. 

The Peronist Party governed between 1990 and 1999, and for 16 of 20 years since 2001’s collapse, when the country lost 28 per cent of GDP and the Argentine peso lost 25 per cent of its value. Even the brief interregnum from 2015-2019 of Mauricio Macri and his PRO party included elements of a collapsed Radical Party. 

To many Argentine voters the country’s national political parties have presided over a cycle of intoxicating, short-lived boom followed by severe, prolonged bust

To many Argentine voters the country’s national political parties have presided over a cycle of intoxicating, short-lived boom followed by severe, prolonged bust.

The most recent boom took place under the Peronist couple of Nestor Kirchner and (after his death) his wife Cristina Fernandez de Kirchner, who governed until 2015.

This was fuelled by the government’s decision to end payments to international creditors (Argentina holds the dubious honour of the country that has most often defaulted on its debt) and a booming Chinese economy hungry for Argentina’s agricultural exports, including soya, beef, wheat, corn, and chicken. Between 2003 and 2011 Argentina’s economy grew on average by almost 9 per cent. 

But fiscal profligacy, corruption and a decline in global demand and prices for agricultural products soon caught up.

Between 2016 and 2022 Argentina’s economy slumped to an average growth rate of 0.2 per cent.

This year, according to the IMF, Argentina’s economy is expected to contract by -2.3 per cent. During the same six-year period, from 2016-2022 inflation continued its upward climb from over 20 per cent to just under 100 per cent and will top 120 per cent this year. 

That this decline continued and increased under a Peronist government, then an opposition government, then another Peronist government between 2003 to the present only confirms to many Argentine voters the need for dramatic change – away from the usual crop of political elites of the past 20 to 40 years.

Enter Javier Milei

Milei, an Argentine-trained libertarian economist and self-proclaimed acolyte of Austrian free-market economist Fredick Hayek and US economist Milton Friedman has capitalized on this angry popular mood.

A former member of a Rolling Stones tribute band, with a wild mop of hair and mutton chops, he presents himself as an outsider that will tear down the status quo. 

The 52-year-old bachelor even shows up at political rallies with a chainsaw – a not-so-subtle image of his willingness to violently cut down the public sector and those who stand in his way.

Early in 2023 Milei was seen as a curiosity, an outrageous untested gadfly who was simply stoking a popular mood that wanted to throw a brick through the window of Argentina’s political system. 

Before the mid-August opposition party primaries his numbers seemed to flatten, and some declared that his moment had finished. 

But as we have seen with Jair Bolsonaro in Brazil and Donald J. Trump in the US, standard polling undercounts support for outsiders. Milei gained a surprise plurality in the open primaries, winning 30 per cent of the vote compared to the incumbent Peronist candidate and ‘super economy minister’ Sergio Massa’s 21 per cent and PRO candidate Patricia Bullrich – who won 17 per cent.

The question now is: who will win the first round of the presidential election, in a contest that will likely lead to a second-round in November?

At least in the primaries, then, Argentine voters managed to throw that brick through the window. The question now is: who will win the first round of the presidential election, in a contest that will likely lead to a second-round in November? And how will the top two winners of that contest shape Argentina’s future?

It is most likely that Milei will pass to the second round to face Bullrich or Massa.

Scenarios

A first-round result that forces a second-round run-off between Milei and the pro-business, centre-right Bullrich will tend to favour Bullrich. Despite the enmity between Bullrich’s PRO and Massa’s Peronists, voters from both parties would likely ally to prevent Milei’s election. 

But should a second-round pit Massa against Milei then all bets are off. Bullrich and Milei compete in part for the same constituency.

While Bullrich is more institutional, her pro-business, liberal base would be more prone to cast their votes for a liberal candidate over the moderate Peronist, Massa.

Massa recently exercised – abused – his privilege as the economy minister to reduce taxes and guarantee cash handouts in a craven attempt at patronage, reinforcing the private sector’s distrust of a Peronist renewal.

A Milei win

Should Milei win, either in the first round or the second round, Argentina will enter terra incognita.

For one, despite the fever for radical change, Argentina’s political and economic system has grown and thrived under a hot-house system of public-private economic and political cooperation, even collusion.

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At a business level that has created a crony capitalist system in which the private sector survives and thrives on state benefits and access. At a popular level this includes millions of beneficiaries of public work programs, subsidies and political patronage.

If Milei really is willing to take these structures on, he will confront a formidable popular and broad-based reaction by those who have come to expect state largesse.

Milei, like many untested, outsider politicians, has demonstrated a lack of tolerance for the give-and-take politics and pluralism of democratic politics.

That alone, though, may not present the greatest threat to Argentina’s economic and political stability. Milei, like many untested, outsider politicians, has demonstrated a lack of tolerance for the give-and-take politics and pluralism of democratic politics.

He has threatened to crack down on protestors who take to the streets against his policies, declaring, ‘I’m going to put the leaders of those who throw stones in jail and if they surround the Casa Rosada (the presidential palace) they’re going to have to carry me out dead.’

Either way, win or lose, Milei is in Argentina’s popular imagination and politics to stay. Get ready for a bumpy ride.