Argentina election: Will Milei’s plan to ditch the peso for the dollar be a winner against Massa?

  • November 18, 2023

When voters go to the polls this Sunday to choose Argentina’s next president, they will have to choose not only between two candidates but between two opposing views of what kind of country they want to live in.

That’s an old saying in the age of identity politics. However, nowhere is it truer than in Buenos Aires, where Sergio Massa, the country’s current finance minister and deputy of the political party, is clashing with Javier Milei, a former television personality who entered politics less than 36 months ago.

The dispute between the Massa, from the federal government Union for the Homeland (Home Country Union), and Milei of Development of Freedom (Freedom Advances), ends a divisive political campaign that has seen a series of surprising changes, since August when Milei shocked the country by winning the first vote. After a weak showing in the first round of elections in October, Milei appeared to be on the back foot; this week he is again leading the polls.

One of the biggest questions now facing voters in this soccer-obsessed nation is: which of these two political opponents, both of whom played as goalkeepers in their youth, are the safest hands in an economy currently facing high inflation. in the world?

More than 35 million Argentines will be asked to vote on Sunday on whether they trust Massa to lead the country through its worst economic crisis in two decades with conventional policies that have failed in the past or sink into the unknown with Miley. who advocates the radical idea of ​​abandoning the Argentine peso in favour of the US dollar as the national currency.

Argentine law prohibits the publication of polls up to eight days before the vote, but the latest results of the past few weeks have shown the candidates almost neck and neck, and many analysts believe the election will be close.

On a personal level, the two candidates could not be more different: Massa is a family man who dreamed of becoming a politician since he was 11 years old and has spent his career in and out of elected office; Milei lives alone with five English mastiffs – all identical clones of the previous animal – and was elected to Congress in 2021.

Massa has carefully chosen his political alliances to advance his rise to power, while Milei has become famous for political stunts, such as wielding a chainsaw at rallies, and vowing to unleash a wrecking ball on his opponent’s ruling class.

It is Miley who has attracted the attention of many people this year, not only because of her political style – in addition to throwing saws, she is often angry and has accepted the nickname ‘The Crazy One’ since she entered the election – but she has also accepted the nickname of ‘The Crazy One’. because his proposed reforms will move Argentina to the right.

Besides his controversial dollarization program, his political agenda includes ending gun control laws and transferring authority over the penitentiary system from civilians to the military; both measure part of the method of hard crime.

Milei proposes to use public funds to support families who choose to educate their children privately – like the child she studied at a private Catholic school in Buenos Aires – and to privatize the health sector, which in Argentina has always been in public hands.

In recent weeks, Miley caused a stir when it appeared that she wanted to open up the organ transplant market, although she later retracted her declarations.

He was similarly forced to apologize after calling Pope Francis, who is from Argentina and is seen as a symbol of progressive politics in South America, a “messenger of Satan” in 2017. However, the apology did not stop him from suing Francis. siding with “bloodthirsty dictators” in an interview with right-wing commentator Tucker Carlson in September.

At university, Milei studied economics and idolized Milton Friedman, even naming one of her beloved dogs after the free market theorist.

But his most controversial proposal concerns public finances, as he plans to drastically cut government spending and, excitingly, abolish the central bank and make the country completely dollarized.

The idea of ​​dollarization is not new – two other countries in Latin America, Ecuador and El Salvador, used the dollar in the last 30 years to fight inflation – but it has not been tested in a large country like Argentina.

Milei’s pitch is simple: Argentina’s inflation rate, which is often among the highest in the world, is caused by politicians and big banks printing new pesos to finance their social programs and election promises. As a result, the peso loses value, and everyone becomes poorer. To fix the problem, Argentina must abandon the peso and accept the dollar, whose value is set by the US Federal Reserve and which it cannot print at will.

The downside of dollarization is that the nation loses the ability to influence the economy through monetary policy. For that reason critics of dollarization often refer to it as a straightjacket.

Because Argentina’s inflation rate is so high – just this week new data revealed prices are set to rise 142% by 2023 – the proposal has also attracted foreign institutions.

In recent months, for example, The Economist, international conservative book, he warned against the lure of the dollar, arguing that Argentina does not have enough dollars to support the exchange rate and that the downside would far outweigh the benefits.

On the other hand, analysts at the Cato Institute, a US-based economic institute, chose this measure as the only effective strategy to end the decades-long crisis.

In the early 1990s the Argentine peso was ‘pegged’ to the dollar, meaning its value was pegged to the US dollar, but Argentines still use pesos for their purchases.

Inflation returned in full force when money was allowed to float.

Massa criticized the dollarization program as a surrender of national sovereignty and tried to show that current government actions are paying dividends.

Although still high – 142% year-on-year – , inflation in October was 35% lower than in September.

Some mainstream politicians, including former President Mauricio Macri and another candidate, Patricia Bullrich, have endorsed Milei despite some misgivings about the dollar.

Interest in Sunday’s election extends beyond Argentina’s borders.

Abandoning the tradition of not participating in another country’s elections, the remaining politicians in the region including Luiz Inácio Lula da Silva of Brazil, Gustavo Petro of Colombia and José Luis Rodriguez Zapatero of Spain endorsed Massa.

Meanwhile, Milei can count on the support of former Brazilian President Jair Bolsonaro, Peruvian-Spanish writer Mario Vargas Llosa and former Spanish Prime Minister Mariano Rajoy.

The stakes are high because Miley’s victory can be seen as a boost for far-right politicians like Bolsonaro and former US President Donald Trump just before the 2024 US presidential election, while Massa’s win will be a show of centre-left policies.

Polls close at 6 p.m. local time (4 p.m. ET) and the vote count is expected to be quick — barring any problems or unexpected objections, that is.

Milei appeared to question the results of the first round of voting in October, although her party did not file a formal objection.