Argentina鈥檚 wake-up call? National strike, politics slow Milei鈥檚 broad reforms.
| Buenos Aires, Argentina
In the teeming crowd in front of Argentina鈥檚 National Congress last week, Alicia聽Ambrosi聽weaved her way around banners and placards聽pleading for more economic assistance 鈥� and deriding a new president intent on fundamentally changing how the country works.聽
The retiree, who once sewed socks in a factory, sees herself as part of the growing number of Argentines聽slipping below聽the poverty line. Her pension is roughly $150 a month, about minimum wage, but with climbing inflation, she says she can barely cover basic expenses.聽
鈥淚f I ate two bananas before, now I eat one,鈥� Ms.聽Ambrosi聽says of a聽brutal聽economic picture that鈥檚聽rapidly deteriorating.
Why We Wrote This
It鈥檚 common for presidential candidates to promise big. In Argentina, where the economy is in crisis, newly installed President Javier Milei is working to square his at-times extreme ideas with a challenging political reality.
The聽public turnout聽for聽the Jan. 24聽national strike against President Javier聽Milei聽demonstrates聽the power struggle underway in Argentina聽today, as the fledgling administration attempts an overhaul of the role of the state. Tens of聽thousands 鈥� mostly聽those who did not vote for Mr.聽Milei聽in the November election聽鈥撀燼re urging聽Congress to block the president鈥檚 wide-ranging package of economic and legislative reforms,聽which聽include privatizing state companies, rolling back environmental protections, and curtailing workers鈥� rights.聽
While the scale of the strike, the first in five years and聽promoted聽by powerful unions, was minimized by government officials, days later Mr.聽Milei聽was forced to ditch controversial fiscal proposals. It was viewed as a trade-off to聽secure congressional approval of his broader reforms package. On Friday,聽聽a聽backtracking on changes to pension plans, taxes, and export-tariff hikes.
鈥淲hat we鈥檙e seeing is a government聽that emerges聽out of great political weakness,鈥澛爏ays聽Carlos聽Fara, a political analyst in Buenos Aires. 鈥淚t leaves the impression that they have sort of bought into a fantasy鈥� that they hold more power than they聽actually do.聽
Getting worse before better?
Mr.聽Milei聽rose to聽the presidency聽using fiery rhetoric that promised to dollarize the聽struggling聽economy and cut the waste he聽said聽was driven by a corrupt political class. He rode the wave of 鈥渙utsider鈥� status, going from incendiary media personality to legislator and then president in a handful of years. While聽he secured 56% of the vote in the runoff in November, that was only after forging an alliance with another conservative block. The number of seats that his party controls in the Congress is just a fraction of what he needs to govern.
Since taking office聽in December, he鈥檚 had to confront聽Argentina鈥檚聽political聽reality 鈥� softening some of his stances in order to build political聽capital, and聽grappling with a worsening economic picture. He devalued the official currency within days of taking office, a move that accelerated inflation, which has now聽. December alone聽saw an average 25% increase in prices, with basic聽food and hygiene聽products聽climbing even further. Bread was up 38% from the previous month, and diapers were 45% more expensive.聽
The president has been clear:聽Life聽in Argentina聽will get a lot darker before there is a reprieve. He intends to slash public spending to bring it in line with revenues and to cut key subsidies on which a swath of Argentines have come to depend, such as for utilities and public transit.聽More than 40% of Argentines live below the poverty line,聽.
鈥淚 don鈥檛 know where we got this idea, that you have to suffer in order to one day be better,鈥� says聽Antonelia聽Colletti, a high school art teacher at last Wednesday鈥檚聽national strike.
Mr.聽Milei聽is operating under very thin margins, says聽Ignacio聽Labaqui, who teaches political science at the Catholic University of Argentina. He needs Congress to approve certain tools that enable him to implement his plan before his popularity suffers from what is sure to be very difficult months ahead.聽
Even聽鈥渋f everything goes well,聽Milei聽won鈥檛 have a lot of good news until April or May,鈥� says Mr.聽Labaqui.聽
鈥淭his is a hyper-minority government.聽Milei聽has to聽be very pragmatic and flexible. ... It鈥檚 very difficult for his agenda to advance if he doesn鈥檛 negotiate with a part of the opposition.鈥澛�
So far,聽Mr.聽Milei聽has shown a propensity for pragmatism,聽Mr.聽Labaqui聽says, giving key government positions to other conservative forces outside his small party, and shelving some of his more controversial ideas, such as dollarization.聽Other contentious elements of his reform package,聽such as requiring permission for public聽gatherings of three or more people, have also been scrapped.聽
But聽Mr.聽Milei聽has聽clung to rhetoric that focuses on the 鈥減olitical caste鈥� as the source of all evil,聽something he returned to in a recent speech at the World Economic Forum in Davos, Switzerland.聽The language inherently vilifies those with whom he聽has to聽negotiate.
Mr. Milei has yet to fill roles in the public administration, and faces both communication and coordination problems that come from lack of experience, says聽Mr.聽Fara. 鈥淭his is going to be a government that is constantly in problems, unless it has some sort of resounding economic success,鈥� he says.聽
Hoping for stability
The big unanswered question is still how much runway Argentines聽are聽willing to give this new government. People are exhausted by the revolving door of economic crises. One recent poll suggests nearly two-thirds of Argentines surveyed think Mr.聽Milei聽can solve the country鈥檚 problems, if given time. Other surveys show his popularity is already taking a hit.聽
Andrea聽Ortigoza聽voted for聽Mr.聽Milei,聽using聽a聽common聽refrain among supporters: 鈥淚 wanted a change,鈥� she says.聽
And although she鈥檚 terrified of rising transit costs and how they will eat into her meager earnings as a housekeeper, Ms.聽Ortigoza聽still supports him.聽
鈥淲e have to give him a chance,鈥� she says.聽
But Juan聽Sucno, a father of two, sees Argentina as caught in a game of roulette. In January, he had to close his motorcycle repair shop because his rent had tripled, while his sales stagnated as the cost of materials shot up. Now he drives for Uber.聽
鈥淲hat I鈥檓 hoping for is that [Mr. Milei] can maintain stability,鈥澛燤r.聽Sucno聽says. 鈥淭o hope for things to improve is pretty difficult.鈥�
