Right-wing economic liberal Javier Milley has been elected as the new president of Argentina. He is very much an outsider in the crisis-ridden country's politics. However, if the promises he made to overcome the crisis are implemented, the outlook of the economy will change dramatically. In short, he promised 'Shock Therapy' for the economy.
The economy of this huge Latin American country has fallen into a complex problem. The rate of inflation is in the triple digits, i.e. more than 100 percent. Economic recession is breathing down may neck. At the same time, poverty is increasing. The 53-year-old economist has passed the electoral battle by riding the current of the intense anger of the common people towards the main stream of politics.
Javier Millei did better in what was expected to be a second round of voting, Reuters reported. In a direct contest between the two, he got 56 percent of the vote. His rival, pro-Peron Economy Minister Sergio Massa, received 44 percent of the vote.
After announcing the results of the vote, Javier Millei said, "The model of decline has come to an end." Can't go back. We now face enormous problems-inflation, unemployment and poverty. The situation is very serious, no work can de done from now on.
In the capital, Buenos Aires, thousands of supporters of Javier Millei celebrated the victory by honking car horns and chanting slogans. The slogan was against Miley's political opponents, who shouted 'Let them all die'. Rock music played on the speakers. Over-excited many also set off firecrackers.
Efrain Viveras, a 21-year-old student from Salta province, said, 'We came to celebrate this historic victory. I am really excited. Change means change. Change for the better. We had no future with Masa. Our future is now back.'
Uncertain Peso
Javier Miele has promised to give 'Shock Therapy' to the economy. His plans include closing the central bank, scrapping Argentina's currency the Peso, cutting government spending and carrying out a major reform program, which could be painful.
According to a CNN report, the future of the Peso is now uncertain. An important part of Javier Millei's plan was to 'dollarize' or dollarize the Argentine economy. This means that Argentina will abolish the Peso and use the US dollar as the country's domestic currency.
If that happens, Argentina will walk a path that no country of its size has ever walked before. For Argentina, it is an 'unknown territory'. The reins of Argentina's own monetary policy will effectively pass to policymaker in Washington.
However, the people of Argentina do not seem to be not seem to be too bothered about it. "Milei is our new man, " Christian, a 31- year-old restaurant worker, told Reuters. He is a bit of a stranger. His policy is somewhat frightening. But now is the best time to turn the page.
Javier Millei's challenges are many. There is no money in the hands of the central bank. There is a tug of war with the International Monetary Fund (IMF) over a loan of 4,400 billion dollars. Inflation has reached close to 150 percent. Capital controls are not working.
For many Argentines, the presidential election was about choosing a 'less harmful' candidate. They know the pain that Javier Millei's financial claims will cause. But there is also deep anger at the economic crisis that Massa and his pro-Peron party have plunged the country into. Argentina is now in debt, unable to get new loans from abroad.
Miley is more popular especially among the youth. These young people have seen their country slide from one crisis to another. As 20-year-old Irene Sosa told Reuters, 'Miles are the future for young people like me. Whatever bad happened in our country, Masa was with him. '
Javier Millei's victory could change Argentina's political map and economy. May also affect trade in grain, lithium and hydrocarbons. He criticized China and Brazil. Said, he does not want to deal with 'communists''. He is in favor of building a stronger relationship with the United States.
Brazilian President Luiz Inacio Lula congratulated the newly elected president of the neighboring country. Former US President Donald Trump also congratulated. However, he hopes that Javier Millei will take Argentina back to their former position. But Colombia's left-wing president Gustavo Petro said Miley's victory was "a day of pain" for the region.
Why Dollar
Milley's argument for choosing the dollar as Argentia's currency is that the dollar is stronger than the peso. And dollars cannot be printed at will, which can be done in the case of pesos. The Latin American countries of Ecuador and EI Salvador, however, make the dollar their currency. The aim of these two countries was to reduce inflation.
According to CNN, Javier Millei's plan has already attracted international attention. His critics have also warned him that he is thinking too straight. They said that once the economy becomes dollar-based, it can no longer be controlled through monetary policy measures such as raising interest rates.
Defeated candidate Sergio Massa described the dollarization plan as a 'surrender of national sovereignty'. However, he also received support from Mille. The Cato Institute, a Washington-based think tank, said the move was a pragmatic strategy needed to address a long-standing problem.
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