Hard decisions: Argentina turns to far-right -- in The Debrief

Welcome to?The Debrief, from the editors at Factal. Each month, we reflect upon an impactful yet underreported?story that has significant regional or global implications. We'll examine?how the story has progressed and how Factal's coverage has shifted to ensure we are always supplying our members with?the most up-to-date, accurate, factual reporting.

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In Argentina’s electoral primaries on Aug. 13, far-right candidate Javier Milei shocked the nation by sweeping up just over 30 percent?of the overall vote. The self-described anarcho-capitalist and anti-establishment candidate, who represents the Liberty Advances coalition, won the greatest share among all individual candidates.?

Despite garnering significant electoral support, Milei is by no means a shoe-in at the presidential election, which takes place on Oct. 22. Two traditional candidates, Sergio Massa, incumbent economic minister in the ruling Peronist party, and Patricia Bullrich, leader of the main opposition coalition and former defense minister, garnered 37 percent?of the votes between them. A large swathe of the population also chose to abstain in the primaries.

Nevertheless, Milei’s rise is a symptom of deeper dissatisfaction with the economic problems Argentina faces and the inability of the traditional political powerhouses to solve those issues. The left-wing Peronist party, which in its history has won 10 out of 13 elections it has taken part of, had its worst primaries result in decades.?

“The Peronist party has definitely seen better days…the popularity of the movement and some of its leaders is extremely bruised at the moment, not only because of the poor management of the economy, but also due to multiple judicial processes against Vice President Cristina Fernandez de Kirchner.” Factal’s Latin America?regional head Irene Villora said.?

Argentina continues to face a dire economic predicament, with inflation oscillating around 120?percent?and around 40 percent?of the population living below poverty levels. Lack of purchasing power, a continuous devaluation of the peso, the effects of a prolonged and significant drought and allegations of corruption have all?exacerbated the issue further, causing the Peronists to lose a significant number?of votes.

Simultaneously, Argentina was able to get approval for a further $7.5 billion disbursement from the International Monetary Fund (IMF) in late August, as part of the 2022 refinancing of an unpaid loan taken out two administrations ago under opposition candidate Mauricio Macri in 2018. The loan now, totalling around $44 billion, makes Argentina the largest?debtor to the IMF.

Restructuring that loan comes at a high cost. The country has to maintain several conditions, which include having at least $1 billion in foreign reserves, as well as forbidding the central bank to print money to finance the primary deficit. What’s more, Argentina’s relationship with the IMF is tumultuous at best, with outgoing President Alberto Fernández criticizing the fund, as well as the previous government,?for the massive debt increase that has led to zero economic growth or deflation. The populace feels the same way.?

“[The IMF loan] was taken despite…open opposition from a big part of society, and it’s still a very touchy subject in the country,” Villora said. “Anytime an IMF mission visits the country, or when the topic resurfaces in the news agenda, it triggers violent protests and it’s definitely met with a very, very deep rejection.”

Argentina is finding more creative ways to pay off its debt, with the current administration doing a?foreign currency swap with China’s trade payments and receiving loans from both Qatar and a Latin American-based development bank. But the issue remains pertinent, and the lack of a clear future appears to be?pushing the population to back anti-establishment candidates as the status-quo parties remain unable to mediate the situation despite the large IMF loans.?

“I would say there is a permanent mood of uncertainty and unreliability among?the population, both on the future of the economic situation and on the ability of the government...any government for that matter, to handle the ongoing crisis,” Villora said.

The three main presidential candidates all have their own ideas on how to alleviate this crisis, ranging from solidifying workers’ salaries and creating a robust export-oriented economy to focusing on the exchange rate, attracting foreign investment and eliminating the large export tax burden.?

Most radical is Javier Milei’s approach, with long-term plans to dollarize the Argentinian economy, close the central bank, dismantle a multitude of government services and privatize several public agencies, such as education and health sectors. In social and ideological terms, Milei has conservative views on abortion, legalized in Argentina in 2021, and is a climate-change denier, which could affect agriculture and Argentina’s vast mineral and material arsenal.

Regardless of political stance, discontented voters are searching for an alternative to the established political class. The frustration comes from the public living in a country deep in economic trouble, with past administrations that have not improved the situation for millions of Argentinians while amassing yet more debt. Whoever wins the Oct. 22 elections, or likely runoff on Nov. 19, will likely have to balance social unrest with a crippled?economy in need of a repair.?

“If the current or future government wants to be able to repay the loan, they are going to be forced to enforce extremely austere measures,” Villora said. “That, in turn, is only going to generate even higher levels of poverty…whoever wins the presidency in October is going to have to make very, very difficult choices.”?

Further reading:

• The Economist has produced a documentary breaking down Argentina’s economy and how it affects the public.
• For more in general about Argentina, listen to this?podcast series produced?by the Woodrow Wilson International Center for Scholars titled The Argentina Project.
• An award-winning novel,?“La noche de la usina” by Argentinian writer Eduardo Sacheri, sheds light on how the 2001 default crisis affected a group of friends.

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