Javier Milei's policy agenda in Argentina includes economic reforms like slashing state spending and privatizing state-owned companies to reduce inflation and promote growth.

He plans to implement a hyper-orthodox adjustment, including restructuring the currency exchange market and Central Bank, to curb price rises.

Milei's economic plan involves dollarizing the economy by replacing the peso with the US dollar.

Implementation could take up to two years and cost around $35-50 billion.

Dollarization would expose Argentina's economy to US dollar shocks and US Federal Reserve interest rate control.

Milei's government may struggle with domestic monetary policy under dollarization, which would require constitutional changes.

He introduced economic reforms, including slashing the currency value and scrapping 366 rules.

Milei has laid off 5,000 government employees, increased prices, and sparked protests.

Milei's budget cuts and the peso's devaluation have increased inflation and reduced household income in Argentina.

Milei's economic plan includes budget cuts and tax hikes, aiming for a fiscal surplus with a 120% peso devaluation.

The plan may lead to high inflation, reduced purchasing power, and cuts in subsidies and social spending.

A general strike has been called by the General Confederation of Labor in response to Milei's economic plan, affecting 40 percent of Argentina's workforce.

Milei's economic reforms face opposition and an uphill battle due to limited congressional support.

The Argentine Senate has approved bills proposed by President Javier Milei, granting him broad powers in areas like energy, pensions, and security.

Argentina owes the IMF $44 billion as its peso depreciates, widening the official and black market exchange rate gap to nearly 40%.

Milei's foreign policy approach may alienate Argentina from China, risking a diplomatic crisis and economic sanctions.

Javier Milei met with Elon Musk to discuss US investment in overhauling Argentina's economy.

Javier Milei's policy agenda in Argentina includes economic reforms like slashing state spending and privatizing state-owned companies to reduce inflation and promote growth.

Title:

Content: MercoPress, en Español

Montevideo, December 16th 2023 - 14:34 UTC

Argentina: Milei says burden on private sector is “transitory”

Saturday, December 16th 2023 - 10:05 UTC
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Argentine President Javier Milei Friday released a live broadcast through his Instagram account explaining that “The effort that falls on the private sector is transitory.” The head of state added his administration was “focused on avoiding hyperinflation.”

Milei, an economist by trade, also explained that a “hyper-orthodox adjustment with a sincere exchange market and restructuring of the Central Bank” was being implemented in order to curb the rise in prices through ”a sincere [currency] exchange market and [the]restructuring of the Central Bank (BCRA).“

He added that although the ”effort“ currently weighed ”60% on politicians“ and ”40% on the private sector,“ this situation would be ”transitory“ while pledging that this path would lead to closing ”the gap of the import exchange rate plus the PAIS tax“ and, with this, it will ”lower the country risk.“

Once the economy is rearranged, the government will begin to ”eliminate the things that we libertarian liberals do not like,“ the President went on.

”Never the night could beat the day; let's not curse the darkness. Argentina is starting to wake up and stand up,” he stressed.

The Argentine President will convene next Tuesday with all provincial governors to address the impact of the most recent measures on local economies.

Santiago del Estero declared an economic emergency and San Luis announced a contingency plan whereby public workers are to be paid their wages in installments.

In addition, the agriculturally-rich provinces of Córdoba, Santa Fe, and Entre Ríos have expressed their concerns over the increase in export duties.

The following provinces have already announced spending cuts in line with the national government's announcements: Santiago del Estero, San Luis, Córdoba, Tucumán, Santa Fe, Catamarca, Tierra del Fuego, Chubut, San Juan, Neuquén, Entre Ríos, and Santa Cruz.

Interior Minister Guillermo Francos was reported Friday to be coordinating Tuesday's gathering.

Categories: Economy, Politics, Argentina.
Tags: Javier Milei.

What economic issue did Milei want to address?

He plans to implement a hyper-orthodox adjustment, including restructuring the currency exchange market and Central Bank, to curb price rises.

What economic issue did Milei want to address?

Milei's economic plan involves dollarizing the economy by replacing the peso with the US dollar.

Title:

Content: Argentina sees the light with Maverick Javier Milei – Ivo Vegter

In a surprising turn, libertarian firebrand Javier Milei secured Argentina’s presidency after a second-round victory against his left-wing rival. Vowing to end decades of socialist mismanagement, Milei, an outspoken economist, faces challenges in implementing radical reforms, including abolishing ministries and dollarising the economy. While hailed as the world’s first libertarian president, Milei’s uphill battle involves legislative opposition and managing economic pain amid promises of a freer, market-oriented Argentina. Skepticism remains, awaiting the true impact of his ambitious plans in a nation grappling with deep-rooted economic struggles.

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Argentinians see the light

By Ivo Vegter*

It took a second round of voting, but the libertarian Javier Milei has defeated his Peronist rival to become president of Argentina.

A month ago, Javier Milei unexpectedly lost the first round of the Argentinian general election to his left-wing Peronist rival, Sergio Massa, after the latter had cynically promised zero taxes as a way to bribe voters.

In my column on the lessons South Africa could draw from that election, I said: ‘Let’s hope Argentinians see the light before Massa and Milei face off in the run-off election.’

Happily, they did see the light.

After decades of economic malaise under a government that for most of the last 30 years has been socialist, corrupt, wasteful and incompetent, leaving Argentina eighth from last in the Fraser Institute’s Economic Freedom of the World Report 2023, they elected Milei, a libertarian firebrand, in the biggest landslide since Juan Perón’s election in 1973.

Milei becomes the first libertarian president, not only of Argentina, but in the world. The closest precedent that comes to mind is that of Calvin Coolidge, the small-government conservative president during the Roaring Twenties in the US, but Milei is far more radical than that.

‘“oday the reconstruction of Argentina begins’, he said, after winning 56% of the vote in the head-to-head race. That was also his first lie as president-elect, since he doesn’t actually take office until 10 December, but we’ll let that slide.

Radical

To describe Milei as radical would be putting it mildly. He has described the country’s ruling elite as thieves and the government as ‘a criminal organisation’. He has promised to abolish ten of the government’s 18 ministries. He said he would do away with the central bank and dollarise the Argentinian economy.

‘The model of decadence has come to an end’, he told his supporters. ‘There’s no going back. We have monumental problems ahead. Inflation, lack of work, and poverty’.

Milei is an accomplished economist, and largely follows the Austrian School of individualist free-market economics. He has variously described himself as an anarcho-capitalist and a minarchist (an anarchist who accepts the legitimacy of a small government dedicated to protecting life, liberty and property).

He has been extraordinarily outspoken on the evils of socialism and statism, and how they turned Argentina from a once-wealthy world power into an over-indebted, poverty-stricken, underdeveloped basket case.

Mainstream media

The mainstream media, with its largely left-leaning bias, has compared Milei to former presidents Donald Trump of the US and Jair Bolsonaro of Brazil.

‘Argentina set for sharp right turn as Trump-like radical wins presidency’, trumpeted the Washington Post

‘Argentina Elects Javier Milei in Victory for Far Right’ was the headline in the New York Times, which added: ‘Argentina’s next president is a libertarian economist whose brash style and embrace of conspiracy theories has parallels with those of Donald J. Trump.’

The ‘embrace of conspiracy theories’ is a particularly vicious jab. Readers would have to follow a link to find an explanation, and it turns out that the Times only referred to Milei’s allegations of polling irregularities, which have not been tested.

It is entirely plausible that Argentina’s electoral system is less secure than that of the United States, and that the incumbents – who went as far as abolishing taxes in order to engineer a win – might have been involved in some electoral skulduggery.

Allegations of election fraud are very common on all sides of the political spectrum, and do not, in and of themselves, rise to the level of the debunked claims of Trump, and his attempt to derail the orderly election of his rival.

Authoritarians

More importantly, both Bolsonaro and Trump are alt-right populists. They are moral authoritarians – not liberals – and appeal to collectivist – not individualist – principles such as nationalism and protectionism. They have often, rightly, been described as fascist, which is just as antithetical to libertarians as is left-wing socialism.

That both former presidents expressed their support for Milei has a lot more to do with shared anti-socialist positions than any real congruence in their political philosophy.

Milei has himself rejected the right-wing label, and indeed, his classical liberalism (for which ‘libertarian’ in the American sense is a synonym) does not yield to a simplistic left-right analysis. Rather, it falls on the liberal end of an authoritarian-liberal scale, and on the progressive end of a conservative-progressive scale.

Sour-grape-ish

Milei does have some views that are questionable, or traditionally associated with the conservative right, such as his anti-abortion stance and his rejection of climate alarmism.

Neither define him, however, and both are issues on which libertarians can and do disagree.

By similar logic, Milei’s promise not to dismantle Argentina’s extensive social welfare programmes does not make him some sort of left-winger.

In focusing on incidental agreements between Milei and leaders like Trump and Bolsonaro, and ignoring the fundamental philosophical differences between the former’s individualist, free-market, small-government ideas and the authoritarianism, nationalism, populism and protectionism of the latter, the media does both Milei and their readers a great disservice.

That a politician does not perfectly reflect all one’s personal political or moral views is in any case far less of a concern when that very politician proposes as far as possible to keep government out of people’s personal affairs and to leave most of the world’s problems to the private sector.

‘When your response to everything that is wrong with the world is to say, “There ought to be a law,” you are saying that you hold freedom very cheap’, said Thomas Sowell.

Moreover, it seems extraordinarily petty and sour-grape-ish to complain about a few differences of opinion with a candidate who promises radical change in a country that is mired in economic crisis, thanks to the policies of its incumbent rulers.

Music to the ears

Sniping from the mainstream press aside, the rise of a truly libertarian president in one of the world’s most economically unfree countries should be music to a classical liberal’s ears.

Who doesn’t want to radically slash the size of government? Who doesn’t question the inflationary monetary policy of highly indebted countries? Who doesn’t want to see free enterprise flourish, and witness the departure of a government that strangles business with red tape and taxes, and tries to pick winners by throwing subsidies at favoured companies?

On the face of it, this should be an excellent experiment to show whether the libertarian prescriptions for government do, indeed, produce a better outcome than the socialist quagmire in which Argentina has been stuck for so long.

Pain and gain

Practically speaking, however, there are reasons to remain skeptical.

First, we’ve only seen Milei’s talk, and not his walk.

Second, making drastic changes in the structure of a country’s government and economy, as Milei proposes, will be painful.

It is arguable that the short-term pain is justified by the long-term gain, but electorates are rarely forgiving to those who inflict necessary pain. Witness Margaret Thatcher, who saved Britain from the socialist economic malaise of the 1970s, but remains hated to this day by those who bore the brunt of her reforms.

Dollarising an economy does not produce immediate results, for example. It can take years before the stabilising effect of dollarisation filters through to low inflation rates. It can, however, immediately harm people and even increase poverty levels, depending on the exchange rate at which existing deposits are converted.

Drastically reducing the size of government will also face much immediate opposition, especially from civil servants who stand to lose their jobs.

Privatising healthcare, education or other government functions is also fraught with transition difficulties. Much depends on exactly how such privatisation is carried out. It can fail, and even if the eventual outcome is a success, it could cause years of disruptions and dissatisfaction.

Then there are the entrenched patronage networks of the incumbent socialist government, who will be highly upset – and fight back vigorously – when the taps of corrupt fiscal spending get turned off.

Finally, few voters have the patience to wait five or ten years for radical free-market reforms to have a positive impact, and Argentina’s president only serves a four-year term before facing the electorate again.

Legislative opposition

A further obstacle to Milei’s reforms is that he will not be the philosopher-king of every libertarian’s dreams. He will not be a dictator.

He will simply be the head of the executive in a constitutional parliamentary democracy, with strictly circumscribed powers.

And the elections did not result in a similar landslide in the legislature.

Argentina has a 72-seat Senate, or upper house, and a 257-seat Chamber of Deputies, or lower house. Together, they make up the Argentinian National Congress.

In both houses, Milei’s libertarian coalition, Liberty Advances (La Libertad Avanza, or LLA) took more seats from the conservative coalition, Together for Change (Juntos por el Cambio, or JxC), than from the socialist Peronista coalition, Union for the Homeland (Unión por la Patria, or UxP).

In the Senate, this leaves the Peronistas as the largest coalition, with 32 seats. It would need 37 seats to command an outright majority. The conservative coalition, JxC, retains only 27 seats. As the third-largest party in the Senate, Milei’s LLA only has six seats, which even in coalition with the conservatives is not enough for an outright majority.

In the lower house, the picture is similar. UxP has 104 out of 257 seats, JxC has 93, and LLA has 38. The only difference is that here, a JxC and LLA coalition can command a simple majority.

This leaves Milei at the mercy first of the conservatives, who would welcome market-oriented reforms and a departure from socialism, but by their very nature would be reluctant to endorse Milei’s more radical, disruptive proposals. Once Milei has cleared that hurdle, he needs to gather a majority in the upper house, which will be even harder.

Argentina is also heavily indebted, including to the International Monetary Fund, and creditors are likely to have a say in how the country is run. Anything that scares them will raise the cost of credit, which Argentina can ill afford.

Wait and see

Once the initial euphoria of seeing a true libertarian in power has cleared, then, we are left with the sobering realisation that Milei may not be able to achieve anywhere near as much as he has promised.

Turning failing countries around is not for the faint-hearted, and it always comes with social upheaval and economic pain.

Even if Milei gets the good ship Argentina pointed in the right direction again, the prevailing winds and currents may still dash it – and its captain – upon the rocks.

Read also:

*Ivo Vegter is a freelance journalist, columnist and speaker who loves debunking myths and misconceptions, and addresses topics from the perspective of individual liberty and free markets.

This article was first published by Daily Friend and is republished with permission

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Implementation could take up to two years and cost around $35-50 billion.

Title:

Content: Argentina election: Javier Milei's radical proposals face test of reality

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Javier Milei, the anti-establishment politician who cruised to victory in the Argentine presidential election last week, has courted intense controversy with radical, provocative policy proposals and statements.

This led many detractors of the self-styled "anarcho-capitalist" to call his candidacy a "leap into the void".

Now, with the mop-haired president-elect only two weeks away from taking over Latin America's third-largest economy, many are asking, how will his policies and positions face the test of reality?

Taming inflation takes time

Javier Milei had proposed to dollarise the economy and eliminate the Argentine Central Bank as a strategy to "kill" hyper-inflation. This meant making the US dollar the national currency in place of the Argentine peso, whose value, Mr Milei said, had been "melting like blocks of ice in the Sahara".

One obstacle is that ditching the Central Bank and making the US dollar legal tender would need approval from the Argentina's Congress and could even require changing the constitution.

Although Mr Milei convincingly won the presidency, his Libertad Avanza (Freedom Advances) movement is barely the third largest political force in Congress. This suggests difficult negotiations might be in store.

Some economists have also questioned whether Mr Milei's plans are feasible, saying they would weaken his government's ability to manage domestic monetary policy.

Having the US dollar as the Argentine currency would effectively leave interest rate policy in the hands of the US Federal Reserve. Argentina's economy would be more vulnerable to external shocks involving the US dollar, for example sudden rises in prices for oil and fuel imports, which could make internal adjustments even more painful inside the country.

Sceptics also point out that Argentina would need to have in hand the US dollars to replace the pesos. Experts believe this could require anywhere between US $35bn to $50bn which indebted Argentina currently does not have and may not be able to borrow easily.

Mr Milei himself has admitted his "shock adjustment" economic stabilisation recipe could actually take up to two years to bring down inflation. "Saying anything else is lying," he said.

A climate sceptic?

Another topic that had made media headlines was Mr Milei's apparent declaration of himself as a climate change "sceptic", that is, someone who denies the role of humans in global warming.

"I do not deny climate change. What I am saying is that there is a temperature cycle in the history of the Earth... Therefore, all those policies that blame humans for climate change are false," Mr Milei said during a presidential debate last month, causing much commentary and criticism.

In his proposed government programme, one of the numerous ministries he had said he planned to axe would be the existing environment ministry.

Such apparent climate scepticism risked putting Mr Milei sharply out of tune with an international majority of governments and leaders who plan to gather at the COP28 climate conference in Dubai soon to seek urgent solutions to the problems of climate change and global warming.

Pragmatism and the Pope

Before he was elected, Mr Milei virulently attacked Argentine Pope Francis, calling him a "Jesuit who promotes communism", and even the "representative of the evil one [the Devil] on Earth".

Such statements caused frictions with the local Catholic Church and the Vatican.

However, this antagonism appeared to miraculously dissipate only days after his election win, when Mr Milei had what he called a "very friendly" phone call with the Pope, whom he addressed as "Your Holiness", inviting him to visit Argentina in 2024.

Asked in a TV interview about this change of heart, Mr Milei conceded that, when one is president, "there are some things that require greater doses of pragmatism".

No break with China and Brazil

Before his election, Milei had signalled he could freeze ties with Brazil and China, Argentina's two top trading partners, on the grounds that he did "not make pacts with communists".

"I am going to be aligned with the United States, Israel, and the free world," he said.

Not surprisingly, this assertion caused consternation in Beijing and Brasilia, as well as in Argentina.

A Chinese foreign ministry spokesperson was quoted as warning that it would be a "huge foreign policy mistake" for Argentina to cut ties with countries such as China and Brazil.

Mr Milei's predecessor, outgoing left-wing President Alberto Fernández, had carefully nurtured ties with Beijing and had welcomed an invitation to join Brics, the China-led group which also comprises Brazil, Russia, India, and South Africa.

Experts questioned the wisdom of dismantling a relationship that clearly brought benefits to Argentina, and not only by China being a top market for Argentina's soybean, meat and grains.

China was also helping to prop up Argentina's financial reserves with a major currency swap deal - significant support for a country already heavily indebted to the International Monetary Fund (IMF).

Days after the election, however, there seemed to be clear signs that no major break in relations was planned. The president-elect received a personal letter of "congratulations and good wishes" from Chinese President Xi Jinping and Mr Milei himself made a point of thanking Xi on social media.

Mr Milei's pick for foreign minister, Diana Mondino, also dismissed as "nonsense" any suggestion that there would be a rupture in "commercial relations" with China or Brazil.

In Brazil, Mr Milei's invitation for former President Jair Bolsonaro to attend his 10 December inauguration was interpreted as "unfriendly" towards Brazil's current left-wing President Luiz Inácio Lula da Silva.

But Milei has since said Lula would be "well-received", if he wanted to come.

Dictatorship denial

Mr Milei and his vice-presidential running-mate Victoria Villarruel also ignited intense controversy during the campaign with their position regarding Argentina's 1976-83 military dictatorship.

Defying traditional positions held by Argentina's government and society for the last 40 years, Mr Milei caused outrage by contesting the generally accepted estimate of those abducted and "disappeared" in the dictatorship - 30,000 - asserting the actual number was closer to 9,000.

The candidate argued that the political violence of the 1970s in Argentina was a two-sided "war" in which "the forces of the state committed excesses but the terrorists [anti-government guerrillas] ... [also] committed crimes against humanity".

This equivalence of presentation of the two sides raised howls of protest from groups like the Plaza de Mayo mothers and grandmothers of disappeared persons.

This was just another striking way in which the Milei-Villarruel duo were trying to shake up the political status quo in Argentina. The next four years will show if they can do it.

Dollarization would expose Argentina's economy to US dollar shocks and US Federal Reserve interest rate control.

Milei's government may struggle with domestic monetary policy under dollarization, which would require constitutional changes.

He introduced economic reforms, including slashing the currency value and scrapping 366 rules.

Title:

Content: Updated 21 mins ago - Economy

Argentine President Milei's plan to remake the economy with a wrecking ball

If your economy is broken, you can try to fix it — or you can essentially just throw it in the trash and try to build something new from scratch.

Why it matters: The latter is, broadly, the plan of anarcho-capitalist Argentine president Javier Milei, while the former is the plan of Zambian president Hakainde Hichilema.

Where it stands: Milei came in like a wrecking ball after he took office in December. He slashed the official value of the currency in half, introduced a "mega-decree" scrapping 366 separate rules, and laid off 5,000 government employees.

  • Alejandro Werner, the former head of the International Monetary Fund's Western Hemisphere department, explains that this course of "shock therapy" carries enormous risks, both to the upside and the downside.
  • The devaluation, at least for the next few months, increases the Argentine inflation rate, which was over 200% in 2023. Milei's budget cuts will also cause a plunge in household income, as well as a deep recession.
  • The economic pain will embolden Milei's opposition — including in the courts, which have already suspended many of his early decrees. A general strike is planned for Wednesday.

What we're watching: Werner is hopeful that Congress will be at least minimally cooperative, that a good agricultural harvest will help replenish foreign reserves, and that inflation will fall to an annualized rate of 50% by the end of the year.

  • Argentina being Argentina, however, Werner notes, it's entirely possible that Milei's opponents in Congress will block most of his policies and devastating hyperinflation will result.

Reality check: Argentina's action stands in stark contrast to the zugzwang in Zambia, which is trying to restructure the old-fashioned way. There, creditors find themselves in a standoff without any obvious resolution — and where even the IMF seems powerless to move things forward.

Between the lines: Milei was quite the toast of the Davos elite this week, notwithstanding the fact that he's on the record calling climate change "a socialist lie."

  • "The Argentine economy is in such bad shape that it has to be shaken up. President Milei and his team are doing exactly that," said IMF chief Kristalina Georgieva in a CNN interview.
  • Milei returned the favor, saying that the CEOs assembled for his speech were "social benefactors" and "heroes."
  • "Let no one tell you that your ambition is immoral," he added.

The bottom line: For the time being, Milei seems to be able to draw on a wellspring of support and goodwill from the international community.

  • The IMF has restarted its program in the country, which means $4.7 billion in international funds have been unlocked and default isn't imminent.
  • All the same, Argentina's bonds are still trading at roughly the same level as those of Spirit Airlines. Some kind of default remains more likely than not — just pitched as part of a bold recovery plan, rather than being draped in anti-creditor rhetoric.
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Milei has laid off 5,000 government employees, increased prices, and sparked protests.

How will Milei's reforms impact workers?

Milei's budget cuts and the peso's devaluation have increased inflation and reduced household income in Argentina.

As of 2024, what are the statistics regarding poverty?

annual inflation rate of 211% is highest in 32 years

Milei's economic plan includes budget cuts and tax hikes, aiming for a fiscal surplus with a 120% peso devaluation.

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Will Javier Milei Be Able To Blame Economy Minister ‘Toto’ Caputo Once The Going Gets Tough?

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Paradoxically, the word that appears to define Argentina’s (and the world’s) first ultra-libertarian president is pragmatism. Initially seen as a positive characteristic allowing the economist to shake off some of the fringe characters and ideas that made up his La Libertad Avanza coalition, Milei’s pragmatism could also lead to negative outcomes if his plans don’t work out.

The economist-president was smart in creating an electoral alliance with Mauricio Macri and Patricia Bullrich, along with PRO party hardliners, and later moved strategically to show independence from the former president to avoid being portrayed as a puppet, like his predecessor. He gave Bullrich the Security and Defence Ministries, minimizing Vice-President Victoria Villaruel’s power and therefore her dictatorship-denying influence, particularly over the security forces. He also sealed a deal with Luis ‘Toto’ Caputo – a leading economic figure from the Macri’s 2015-2019 administration – behind the ex-president’s back, apparently distancing himself from certain extreme measures proposed during the campaign such as dollarization and torching the Central Bank —where the economy minister’s business partner Santiago Bausili at financial consultancy Anker Latinoamerica has taken the reins.

While Caputo had fallen into disrepute, his recycling by Milei didn’t spook the markets initially, or certain sectors of society and the media that appear to have already aligned themselves with Milei. As the nascent administration begins to put its “chainsaw” austerity plan in motion, society will begin to feel the pain of the extreme measures and its tolerance will be tested, as will Milei’s and his team, at the center of which once again sits ‘Toto’ Caputo.

Toto was the first to face the music and lay out an economic plan for the Milei administration, even before the president who mustered the courage only when he announced the DNU emergency decree that came before the Omnibus law. During the first announcement, Caputo sought to deliver a didactic message that made clear the weight of the situation left behind by the Fernández-Fernández administration (“la herencia”). He looked uncomfortable, just as he did during his previous public service posts where he avoided the media and is said to have left the government suffering from panic attacks. His decision to take the “electric chair” ministry remains bewildering. The minister announced a series of measures aimed at achieving a fiscal surplus in their first year in office including aggressive budget cuts and tax hikes.

Caputo’s announcement represented the first time that Milei’s plans were laid out in any sort of detail beyond a declaration of intentions. While in line with the campaign promise of reducing the state’s obligations by more than five percent, the severity of the devaluation of the official peso-dollar exchange rate (120 percent taking it to 800 pesos) and the rest of the measures has set off alarms. Most prices have risen aggressively over the last several weeks, particularly gasoline and food, indicating inflation will spike and could persist. The December reading already hit 25.5 percent, and many expect similar numbers for January. At the same time, it is becoming apparent that forcing the “caste” to absorb the totality of the austerity plan is logically contradictory, as it inevitably affects the everyday citizen which is evident in subsidy reductions and cuts in social spending. Milei had promised he’d rather amputate his arm than raise taxes, but he’s raised export duties and the PAIS tax which pushes the value of the dollar even higher for certain transactions.

The ‘caputazo’ (as the plan is being jokingly called) replaced pure austerity with a mix of higher taxes together with spending cuts and the “dilution” of part of the deficit through high inflation. The next few months will see runaway inflation run even farther away and put intense pressure on the population, as wages and salaries fall even farther behind. Milei had warned that we would have to suffer on our way to libertarian utopia. Leftist social movements and unions have already begun to mobilize against the government, including a general strike at the hands of the General Confederation of Labor. Given Bullrich's hardline predisposition, these were peaceful marches. Will they remain so in a few months if the middle class joins in, desperate to make ends meet?

Once again, the question of Milei’s pragmatism will be front and center. Assuming the impact of his economic plan is as painful as it seems, the level of social conflict will likely rise dramatically. At the same time, he needs to continue to negotiate legislative support for his ambitious reform package, which initially seems to rest on the possibility of an “anti-Peronist” front as seen in the Senate first and at the commission level in the Chamber of Deputies later. How much will society accept that it voted Milei for an orthodox austerity plan that directly hits its purchasing-power? Will the charismatic libertarian be able to retain public support, or convince his voters that excruciating pain is a necessary condition for economic redemption? How long will Caputo resist this time? And if the plan doesn’t work, how much of the blame will Milei be able to pin on the financial trader?

At this point, we have many more questions than answers.

This piece was originally published in the Buenos Aires Times, Argentina's only English-language newspaper.

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What issue did Milei want to address without printing money?

The plan may lead to high inflation, reduced purchasing power, and cuts in subsidies and social spending.

As of 2024, what are the statistics regarding poverty?

annual inflation rate of 211% is highest in 32 years

A general strike has been called by the General Confederation of Labor in response to Milei's economic plan, affecting 40 percent of Argentina's workforce.

Who has opposed Milei's proposed layoff order?

Milei's economic reforms face opposition and an uphill battle due to limited congressional support.

Title:

Content: Milei Experiment

In the tangled web of Argentine politics and economics, one figure has emerged as both a lightning rod for controversy and a beacon of hope ~ President Javier Milei.

In the tangled web of Argentine politics and economics, one figure has emerged as both a lightning rod for controversy and a beacon of hope ~ President Javier Milei. His first 100 days in office have been marked by a whirlwind of fiscal manoeuvres, bold policy shifts, and commitment to economic reform. But as Argentina teeters on the edge of uncertainty, Mr Milei’s ambitious agenda raises questions even it offers solutions. At the heart of Mr Milei’s strategy lies a radical departure from conventional wisdom.

Brandishing a chainsaw as a symbol of fiscal austerity, he has pledged to slash spending and achieve a budget surplus, a feat unheard of in a country plagued by decades of fiscal mismanagement. His unorthodox approach has garnered both praise and scepticism, as Argentines grapple with the harsh realities of rising poverty and economic contraction. The cornerstone of Mr Milei’s economic vision is the elimination of money-printing and the pursuit of a unified exchange rate. By devaluing the peso and cutting interest rates, he aims to rein in inflation and restore confidence in the economy.

Yet the path to stability is fraught with pitfalls, as the spectre of recession looms large and investors remain wary of the government’s opaque monetary policies. While Mr Milei’s commitment to reform is commendable, his political isolation poses a significant obstacle to meaningful change. With little support in the Argentine Congress and a fragmented coalition, he faces an uphill battle. The recent defeat of a sprawling omnibus bill highlights the challenges ahead, as competing interests and entrenched political factions threaten to derail Mr Milei’s ambitions. Moreover, the uncertainty surrounding Argentina’s future monetary regime adds another layer of complexity to the equation. Will Mr Milei pivot towards dollarization or pursue a more gradual approach to currency reform? The lack of clarity on this front only serves to fuel investor anxieties and exacerbate economic volatility. Amidst these challenges, Mr Milei’s fate hangs in the balance. How much economic pain can Argentines endure before turning on their unconventional leader? And can Mr Milei muster the political support needed to navigate the treacherous waters of Argentine politics?

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In the end, the trajectory of Mr Milei’s presidency hinges on the delicate balance between economic resilience and political manoeuvring. Should he manage to maintain public support and secure crucial alliances, Mr Milei could emerge as a formidable force in next year’s mid-term elections. However, any slip in popularity could spell disaster for his ambitious agenda, opening the door for his adversaries to dismantle his presidency. Whether Mr Milei’s gamble will pay off remains to be seen. But one thing is certain. In a country accustomed to political upheaval and economic turmoil, the journey towards reform is bound to be fraught with uncertainty and adversity. Only time will tell whether Mr Milei’s vision for Argentina’s future will lead to prosperity or further hardship

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Who has opposed Milei's proposed layoff order?

The Argentine Senate has approved bills proposed by President Javier Milei, granting him broad powers in areas like energy, pensions, and security.

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In initial victory for Argentine President Milei, Senate gives overall approval to key reform bills

By ISABEL DEBRE
Associated Press

BUENOS AIRES, Argentina (AP) — Argentina’s Senate has approved key state overhaul and tax bills proposed by President Javier Miliei, delivering an initial legislative victory to the libertarian leader in his efforts to deliver on his promises of radical change.

Senators voted 37 to 36 late Wednesday to give their overall approval to the overhaul bill after 11 hours of heated debate as protesters urging lawmakers to reject Milei’s harsh austerity clashed with police outside Congress. The lawmakers still must approve individual measures in an article-by-article vote that will stretch throughout the night.

In a reflection of the fierce backlash to the legislation and deep polarization gripping Argentina’s Congress, Vice President and head of the Senate Victoria Villarruel cast the tiebreaking vote in favor of Milei’s agenda.

The legislation delegates broad powers to the president in energy, pensions, security and other areas and includes several measures seen as controversial, including a generous incentive scheme for foreign investors, tax amnesty for those with undeclared assets and plans to privatize some of Argentina’s state-owned firms.

If the Senate approves the articles with modifications, the lower house still has to okay them before Milei can claim passing his first law since entering office last December.

As Senators pored over the bills, protesters in downtown Buenos Aires hurled sticks, stones and Molotov cocktails at police who fired water cannons and tear gas to disperse the crowds.

The fiery right-wing economist rose to power on promises he would resolve Argentina’s worst economic crisis in two decades, with annual inflation climbing toward 300% and a recession deepening.

But his political party of relative novices holds just a tiny minority of seats in Congress and he has struggled to strike deals with the opposition.

Senators approved two bills, a tax package that lowers the income tax threshold and a 238-article state reform bill that passed the lower house of Congress in late April after weeks of negotiations.

Initially dubbed the “omnibus bill” because of its more than 600 articles, the watered-down version at hand still delegates broad legislative powers to the president in energy, pensions, security and other areas.

The proposal’s immense scope — and staunch opposition to it — has limited progress.

“We have the weakest president we’ve ever seen who is trying to pass the biggest bill we’ve ever seen,” said Ana Iparraguirre, an Argentina-based analyst at Washington strategy firm GBAO. “That’s the contradiction.”

Unlike previous Argentine leaders since the return of democracy in 1983, Milei has failed to pass a single piece of legislation during his first six months in office. Instead, the populist outsider has relied on executive powers to slash state spending and sweep away economic restrictions.

“Today, it’s almost more important for Milei to demonstrate that he can pass laws in Congress than what he passes,” said Lucas Romero, director of Synopsis consultancy.

The package has faced tough resistance from the left-leaning Peronist movement loyal to former president Cristina Fernández de Kirchner, which has dominated Argentine politics for the last two decades and holds sway over the country’s powerful trade unions.

Thousands of bankers, teachers, truckers and workers from a range of other unions converged around Congress throughout the day, banging drums, blasting trumpets and chanting, “Our country is not for sale!” and “We will defend the state!”

“If this law passes, we are going to lose so many of our labor and pension rights,” said 54-year-old teacher Miriam Rajovitcher protesting alongside her colleagues, middle-class Argentines who say they’ve had to reconfigure their lives since Milei slashed their school budgets and devalued the currency, sending inflation soaring. “I am so much wor0se off.

The rally took a tense turn when hundreds of riot officers pushed back with their shields against angry protesters trying to surge through a barrier.

Police used pepper spray, water cannons and tear gas against the huge crowds while demonstrators set two overturned cars ablaze and threw Molotov cocktails.

Dozens of protesters were being treated by medics in the streets and police said 20 officers had been injured in the clashes. At least five Peronist lawmakers said they were hospitalized after police sprayed pepper spray in their eyes.

“Today the government is declaring war on the Argentine people,” Peronist lawmaker Cecilia Moreau told reporters outside Congress.

The presidency called protesters “terrorists” and accused them of “attempting to carry out a coup d’état” by disrupting Congress.

The Peronist bloc controls 33 out of 72 seats in the Senate while Milei’s party, Freedom Advances, holds just seven seats. The bill needed 37 votes from the 72 total legislators in the Senate to get a majority and ended up with a 36-36 tie.

Analysts say that foreign investors and the International Monetary Fund, to which Argentina owes a staggering $44 billion, are closely watching Wednesday’s vote to see whether Milei can build consensus with his opponents to deliver on his ambitions.

Wednesday’s article-by-article vote will stretch for hours, with analysts expecting lawmakers to further weaken the most divisive sections of the bills.

One of the most contested measures is an incentive program to spur foreign investments that offers lucrative tax breaks for 30 years, no import tariffs and other perks for big corporations that critics say go too far.

“What this law is hurting most are the pockets of workers, not the big companies that are just going to get richer,” said 36-year-old Juan Barreto, a bank employee jostling amid crowds of his fellow union members.

Argentina’s unions have also voiced vehement opposition to measures that would make it easier for companies to fire employees as well as plans to privatize some state-owned companies. The question of which ones will head to auction has generated intense debate.

Backlash to the tax bill has centered on an amnesty that would allow Argentines to register undeclared assets at home and abroad without paying heavy taxes, as well as a lower income tax threshold to boost revenue.

Frustrated by legislative resistance, the president has moderated his previous all-or-nothing approach. Earlier this month, in a bid to break the impasse, Milei fired his politically inexperienced Cabinet chief and replaced him with Interior Minister Guillermo Francos, a career politician skilled at congressional wheeling and dealing.

In recent weeks, Argentina has gotten a taste of what awaits if Congress fails to pass the bills.

Sovereign bonds have tumbled. The country’s currency, the peso, has depreciated as well, widening the gap between the official and black market exchange rate to nearly 40%. The peso was trading at 1,255 per greenback on the informal market Wednesday, a rate far lower than earlier this year.

Even as the IMF has praised Milei’s agenda and released tranches of frozen loans, the fund has held back from striking a new deal with Argentina.

Meanwhile, Milei has been in Silicon Valley rubbing shoulders with billionaire tech executives Elon Musk, Tim Cook and Mark Zuckerberg. The meetings however, have not produced any announcements of substantial investments.

“What you’re seeing in the last three weeks is the market and investors getting a little nervous,” said Marcelo J. García, Americas director at geopolitical risk firm Horizon Engage. “The market is saying, ‘Show me that you can govern.’”

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Argentina owes the IMF $44 billion as its peso depreciates, widening the official and black market exchange rate gap to nearly 40%.

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Milei's foreign policy approach may alienate Argentina from China, risking a diplomatic crisis and economic sanctions.

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Materials
"We don't make deals with communists."
Will Argentina and the United States be friends against China?
Olga Shevchenko
For Argentina, which has no access to international capital markets and where inflation topped 200% last year, China remains the most important investor and lender.
What can the United States offer in return?
It is unlikely that Argentina, which is a serial defaulter, will be granted a loan.
But they can give the F-16 and the status of a partner of NATO.
Javier Miley ’ s presidential campaign in Argentina was one-of-a-kind, from the chainsaw he waved at rallies to his promise to create a market for human organs.
He shouted "Long live freedom!" to the heated crowd and called his own cloned dogs his closest advisers.
These antics, however, overshadowed the most radical point in Miley ’ s platform — a foreign policy aimed at alienating Argentina from its main trading partner, China.
Focus translated Benjamin Gedan ’ s article on the importance of Argentina joining the United States in confronting China.
Throughout his winning campaign, the country ’ s new far-right president, a libertarian economist, made it clear that he would not be a friend of Xi Jinping.
“We don ’ t make deals with the Communists, ” Miley said in an August interview with Bloomberg Television, putting China on a par with Cuba, Nicaragua, Venezuela and North Korea.
Now that Miley is in power, this policy promises to fundamentally change Argentina ’ s international relations, raises the possibility of an economy-catastrophic diplomatic clash between Buenos Aires and Beijing, and provides the United States with an unexpected opportunity to offer an alternative to Chinese trade and investment.
The stakes in a region where China ’ s influence has soared in recent decades and local elites have no incentive to take sides in the U.S.-China rivalry are higher than ever.
Washington should make the most of this opportunity and demonstrate the benefits of cooperation with America.
A brief reference
Miley ’ s remarks surprised many in a region where not joining the growing rivalry between the United States and China has become a tenet of faith.
Trade between Latin America and China has grown rapidly since 2000, reaching $450 billion a year.
Beijing is also investing heavily in the region, both public and private.
The China Development Bank and the China Export-Import Bank have provided $136 billion in loans to Latin America over the past two decades.
It is therefore not surprising that the United States has found few supporters of its idea of secession from China.
President Donald Trump ’ s first secretary of state, Rex Tillerson, has warned U.S. neighbors about China ’ s “imperial ” ambitions.
His successor, Mike Pompeo, followed a similar tone, going to Panama to highlight China ’ s “predatory economic activity. ”
In November, at a meeting of Latin American leaders at the White House, President Joe Biden expressed alarm about China ’ s “debt trap diplomacy. ”
Latin American leaders clearly hold a different view.
Last year, Honduras severed diplomatic relations with Taiwan in favor of official ties with China.
This followed similar decisions by Costa Rica in 2007, Panama in 2017, El Salvador and the Dominican Republic in 2018 and Nicaragua in 2021.
Today, Latin America and the Caribbean accounts for seven of Taiwan ’ s 12 remaining diplomatic partners.
In October, the presidents of Chile and Colombia met with Xi in Beijing, where Colombia and China upgraded their relationship to a “strategic partnership. ”
Both presidents are leftist, but conservatives in the region have also sought to favor China.
These include then Ecuadorian President Guillermo Lasso, a former banker who signed a free trade agreement with China in May.
A total of 21 countries in the region have joined the Chinese Belt and Road Initiative.
So far, this has been particularly true for Argentina, which is the fourth-largest recipient of loans from Chinese banks — a total of $17 billion.
China is the country ’ s second largest export market after Brazil, filling cargo ships on the Paraná River with huge consignments of Argentine corn, soybeans and wheat.
The multi-billion dollar credit line of the People ’ s Bank of China has become a major source of hard currency, helping to pay off imports and repay debts to the International Monetary Fund.
For Argentina, which has no access to international capital markets and where inflation topped 200% last year, China remains indispensable.
In return, Argentina agreed to host a space station in Patagonia run by the People's Liberation Army; offered to use Chinese technology for its next nuclear reactor; expressed interest in buying fighters developed by China and Pakistan; and explored the possibility of building a Chinese port in Tierra del Fuego in the strategic Beagle Strait.
China is a major investor in Argentina ’ s booming lithium industry.
Surprisingly, in 2016, the Argentine Coast Guard sank a Chinese fishing vessel illegally working at sea.
However, Argentina usually pays homage to Beijing.
In 2021, Miley ’ s predecessor, center-left Alberto Fernandez, celebrated the centenary of the Chinese Communist Party, recalling the friendship of Juan Peron and Mao Zedong.
New turn
However, Miley seems ready to put these relations in jeopardy.
While in power, he is not so straightforward in expressing his rejection of China, reluctantly accepting trade and investment relations with that country.
During his inauguration, he amicably exchanged greetings with a senior Chinese diplomat and responded amicably to Xi ’ s congratulatory letter.
However, Miley does not hide his real preferences.
After a meeting at the White House in November, he said Argentina ’ s foreign policy would prioritize “countries that respect freedom. ”
Given Miley ’ s conservatism and his combative and improvisational leadership style, a diplomatic crisis seems increasingly likely.
In just two months in office, he rejected an invitation to join the Chinese-led BRICS bloc in favor of the Organization for Economic Cooperation and Development, called the Colombian president a “communist killer ” and promised to move Argentina ’ s embassy in Israel from Tel Aviv to Jerusalem.
Even among Western friends, he looks like an elephant in a china shop.
At the World Economic Forum in Davos, Miley criticized his colleagues for betraying capitalist principles.
China's Dilemma
For China, the Miley represents a diplomatic challenge.
China has a big appetite for Argentinian exports of agricultural products and minerals, but Xi is known for not turning the other cheek.
China imposed infamous economic sanctions on Australia for criticizing China ’ s mistreatment of the COVID-19 pandemic, and then did the same with Lithuania over Taiwan.
When Brazil ’ s former far-right president Jair Bolsonaro thought about excluding Chinese company Huawei from its 5G wireless network, China threatened to refuse to supply vaccines against COVID.
(He carried out this threat in Paraguay, Taiwan ’ s only diplomatic partner in South America.)
In recent years, Xi has sought to soften the image of China, which has suffered as a result of the pandemic and aggressive “wolf-warrior diplomacy. ”
In Latin America, Xi does not seem to pay attention to the ideologies of presidents and is friends with both conservatives and leftist leaders.
Betting on charm has yielded mixed results.
According to the Pew Research Center, almost half of Brazilians have a negative attitude towards China, the same can be said about a third of Argentines.
In addition, Chinese investment in the region has evaporated in recent years, even as the maturity of previous loans is coming to an end.
However, Xi does not show much tolerance for Miley.
A few days before his inauguration, the Global Times, the newspaper of the Communist Party of China, published an interview with an Argentine economist entitled “The best approach for Argentina is never to take sides. ”
China later expressed disapproval of a meeting (subsequently denied) between Argentina ’ s new foreign minister and Taiwan ’ s senior diplomat in Buenos Aires, leading to fears of a possible freeze on China ’ s credit line.
The experience of the last conservative president of Argentina, Mauricio Macri, is instructive.
Although Macri was more courteous than Miley, at the beginning of his presidency he stirred up Beijing by promising to strengthen ties with Washington, to unveil secret agreements between China and Argentina, and to revisit priority Chinese projects, including two controversial dams in the remote province of Santa Cruz.
In response, China reportedly threatened to suspend other infrastructure investments, including an unrelated railway project, which exemplified the use of unusual cross default and cross cancellation clauses in its overseas contracts.
Macri eventually gave in, and it ’ s entirely possible that Miley would also avoid discord with China.
At the same time, Miley is reputedly much less disciplined and much more ideological than the former businessman and center-right Macri.
Tensions with China could have significant repercussions for Argentina.
In response to Argentina ’ s western pivot, China could restrict access to its market for Argentine food exports, suspend the credit line, stop negotiating a free trade agreement with the Mercosur bloc, cut investment in infrastructure and minerals, and impose other economic sanctions.
Examples of such economic coercion are numerous.
Just this month, Ecuador postponed plans to hand over Russian-made military equipment to Ukraine after Russia threatened to boycott Ecuadorian bananas, one of its main industries.
What about America?
Paradoxically, Miley is a test for the United States as well.
His undisguised admiration led to inflated expectations of support for the ailing Argentine economy.
Argentina's needs are manifold and not easy to meet.
The United States, for example, is unlikely to lend to Argentina, which is a serial defaulter.
Nor is it expected that they will equal the multibillion-dollar mega-projects that China is implementing under the Belt and Road Initiative, such as the construction of railways and dams.
American farmers and pastoralists compete with their counterparts in Argentina, so the United States will not replace China as a major export market.
Finally, Biden does not have as much influence as Xi does in private sector decision-making, and American companies are understandably wary of investing in Argentina.
Disagreements in politics could be another stumbling block, at least for Biden.
Miley calls climate change a “socialist lie, ” opposes abortion rights and gun control, and is loved by far-right figures including Trump, Tucker Carlson and Viktor Orban.
On February 24, he spoke at the Conference of Conservative Policy Initiatives and enthusiastically embraced Trump behind the scenes.
Miley has already tested the Biden administration by trying to control protests in a country accustomed to protesters obstructing traffic and flooding public squares across the capital.
The new government already had several opportunities to demonstrate its approach, including during a nationwide strike in January.
His harsh reaction drew criticism from the Inter-American Commission on Human Rights.
Miley also showed contempt for his opponents in Congress, calling lawmakers who voted against his proposed reforms "traitors" and suggesting that he would be able to rule the country through executive orders.
Such behavior could lead to attempts to impose conditions for supporting Argentina to avoid a repetition of the US Cold War policy in the region, where the logic of “the enemy of my enemy is my friend ” led to blind support for repressive anti-communist regimes.
This was also true in Argentina, where the United States supported a military regime of “dirty war ” that killed an estimated 30,000 people between 1976 and 1983.
During his encouraging visit to Buenos Aires on February 23, US Secretary of State Anthony Blinken rightly hinted at possible disagreements.
Standing next to Argentina ’ s foreign minister at a press conference, he highlighted Argentina ’ s “strong and long history in the field of labor rights, women ’ s and girls ’ rights, and human rights more broadly. ”
If Argentina fails to meet these challenges, or if its democratic institutions are threatened by an authoritarian president, the White House should reconsider its approach.
Violent treatment of peaceful demonstrators or intimidation of legislators, judges or journalists should be considered triggers.
Influence of USA
For now, however, the United States is trying to act in the old way.
That's the right idea.
After all, such love for the US in Buenos Aires has not been felt since the early 1990s, when the administration of President Carlos Menem sought “carnal relations. ”
Biden seconded his energy secretary to Miley's inauguration and later sent his deputy national security adviser for international economic affairs to Argentina.
For his part, Blinken promised that “the people of Argentina can count on us as long as you work to stabilize their economy. ”
The United States has reportedly given the go-ahead for the sale of F-16 aircraft to Argentina, a long-standing request previously rejected by Britain over fears of a new invasion of the Falkland Islands.
Under Menem, the United States included Argentina on its list of “major non-NATO allies, ” and there is now talk of including that country among NATO ’ s official partners (Colombia is the only country in the region that currently holds this title).
The White House is also looking for ways to incentivize purchases of Argentine lithium for electric vehicle batteries, although the inflation reduction law favors minerals for batteries produced and processed domestically or in countries that have signed a free trade agreement with the United States.
NASA has expressed interest in training an Argentine astronaut to fly to the International Space Station.
But the United States must go further and faster.
While Argentina is curbing excessive public spending, the U.S. government must take steps to build infrastructure to significantly expand food and energy production and include Argentina in U.S. clean energy supply chains.
A lot depends on the US strategy towards Argentina.
Even the active support of Argentina from the United States will not be able to compensate for the deterioration of Argentina ’ s relations with Beijing – China will remain an influential player in this country.
However, if the United States helps stabilize Argentina ’ s economy, it will present it as a trusted friend heading South America ’ s second-largest economy.
It will also demonstrate the value of partnering with the US for presidents willing to resist the temptations of China ’ s huge market and pocket-stuffing.
On the other hand, the refusal to support Miley during this difficult period, when deep budget cuts and rampant inflation are undermining his popularity, will serve as a negative signal, reinforcing the desire for non-alignment throughout the Western Hemisphere.
About the author
Benjamin N. Gedan (@ benjamingedan) is a Ph.D., director of the Latin American Program at the Woodrow Wilson International Science Center, associate professor at the Johns Hopkins School of Advanced International Studies, and former director of the South America Division at the National Security Council in the Obama administration.

Javier Milei met with Elon Musk to discuss US investment in overhauling Argentina's economy.

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Content: BUENOS AIRES, Argentina — President Javier Milei of Argentina kicked off a visit Wednesday to the United States, where he'll meet with tech billionaire Elon Musk, as his government seeks an infusion of cash to overhaul Argentina's embattled economy.

The populist president started his four-day trip in Miami, home to one of the largest populations of Argentines in the U.S., where he received an honor from the Jewish community Wednesday at an Orthodox synagogue. Milei will meet with Musk on Friday in Texas, his spokesperson said, where he will also tour a factory for Tesla, Musk's electric car company.

Milei's third trip to the U.S. in merely four months as president comes as he reshapes Argentine foreign policy in line with Washington. Standing beside Gen. Laura Richardson, head of the U.S. Southern Command, at the southernmost tip of South America last week, Milei vowed to boost the nations' ''strategic alliance'' — underscoring how he sees U.S. support as vital to the economic overhaul on which he has staked his presidency.

''We took advantage to present a new foreign doctrine for Argentina,'' Milei wrote Wednesday on social media platform X of his meeting with Richardson. In the same post, apparently directed at Musk — a self-declared free speech absolutist — Milei said he promoted ''true freedom of expression'' and slammed journalists critical of his administration as trying to ''stop us from speaking."

''We are not going to remain silent in the face of slander, insult or defamation,'' he wrote.

Milei's plan to drastically cut public spending has inflicted economic pain and encountered resistance in a nation where annual inflation tops 276%. On Wednesday, police forcibly dispersed anti-government protestors blocking a main Buenos Aires artery.

Not only is the U.S. the biggest investor in Argentina, it also has the most influence over the International Monetary Fund, to which Argentina owes $42 billion. The IMF has endorsed Milei's shock therapy for Argentina, agreeing to disburse $4.7 billion from a bailout package the country took out six years ago.

The State Department's investment climate statement last year noted ''capital controls, trade restrictions, and price controls'' as factors hampering investors in Argentina. Milei has vowed to roll back those interventionist policies with market-oriented changes favored by business leaders, like Musk, one of the world's richest men who leads rocket company SpaceX, social media platform X and Tesla.

Milei and Musk — who both share a brash personality-driven style and distaste for government overreach — have expressed mutual admiration. Ahead of his inauguration last December, Milei praised Musk as an ''icon of freedom in the world." Musk gushed over Milei's speech lambasting socialism at the World Economic Forum in Davos, Switzerland, commenting ''So hot'' with a meme of a couple having sex while watching Milei speak.

With its vast lithium reserves, Argentina has much to offer Musk, a dominant player in the electric auto industry who has dubbed the metal, an indispensable ingredient in electric car batteries, "the new oil."

Milei's free-market policies have raised hopes in the U.S. that the metal and other badly needed raw materials can be extracted closer to the U.S., breaking China's dominance of the battery supply chain. The Biden administration said it was exploring investment opportunities in Argentine lithium earlier this year.

What are some of the "liberal democracies" that the Milei administration prioritizes partnerships?