- Argentina's Primary: Milei's Moment
Sunday marked a historical turn for Argentinean presidential primaries as Javier Milei, an anti-establishment politician, drew in the largest share of votes. Milei won around thirty percent of all votes, more than any poll predicted. Meanwhile, the primary conservative opposition bloc received 28% of the votes; the current Perronist administration placed third with 27%. Characterized by radical monetary policies, Milei has advocated for Argentina to dollarize the economy and eliminate the central bank. The economic situation has worsened under President Alberto Fernandez as inflation has risen to 115% while poverty has grown to 40%.
- Are the primary results a good reflection of overall voters?
In Argentinean primary elections, adults must vote, meaning that this primary election is usually a good indication of Presidential election results in October. However, the turnout rate was below seventy percent, the lowest since primary elections began over a decade ago.
- How did Milei secure so many votes?
The largest demographic helping Milei is young voters. Melina Vázquez, who researches youth political participation, points out how Milei appeals more to the younger generations as he actively tries to engage his political message toward young voters via social media. When accounting that the status quo has only provided a lack of economic prospects and change, young voters likely feel left out by more traditional parties and see Milei as a politician who would represent them better.
- What has the central bank done as a result of the primary elections?
Argentina’s central bank devalued the peso by 18%. Meanwhile, interest rates rose by 21 percentage points. These changes will try to calm down markets as the market has hedged its bets towards more moderate candidates. Various economists have warned that dollarizing Argentina would cause financial chaos in Argentina, making markets skeptical of Milei.
- How can Milei affect Latin American geopolitics?
Milei, if elected president, could reverse the pink tide in Latin America, a political wave that has seen countries adopt more left-leaning policies. If Milei is successful, there could be a domino effect that can develop within the region. Other LATAM countries will see that Milei’s ambitious economic plans would be effective and could have an enormous influence in the region towards candidates having similar policies as Milei.
- Argentina’s History of Dollarization
Historically, in the 1990s, Argentina pegged the peso to the US dollar. There was a significant decrease in inflation from 3000% to 3.4%. A major flaw was that the central government could not increase its monetary budget to address new problems that arose from this policy: increases in unemployment, inequality in income distribution, and reduced wages. In addition, various financial crises worldwide in the late 1990s reduced trade with Argentina. Brazil and Europe could not import Argentinean products as much since their currencies were weaker than the US dollar. With no control over the peso, Argentina had to stop pegging its currency with the dollar. If Argentina dollarized today, a similar dynamic could reoccur.
While Milei has significant popularity in Argentina, his policies have various complications. Dollarization in Argentina has had problems in the past. Also, passing Milei’s policies as an anti-establishment politician will be complicated. Nevertheless, his unprecedented support sends a message to Argentinian politicians that the people are unsatisfied with the current establishment.
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