The News
As the global far right celebrate Javier Milei’s win in Argentina’s presidential race, his rise to power is raising questions about the country’s new role on the world stage.
Given that Argentina is one of Latin America’s largest economies – and one of the world’s most important agricultural epicenters – world leaders are scrambling to figure out how they will navigate relations with Milei, a far-right libertarian who has vowed to gut government institutions crucial for global economics.
SIGNALS
Given Argentina’s dire economy, it’s less likely to decouple from Beijing despite Milei’s harsh criticism of China, experts told Chinese state tabloid the Global Times. The two countries are likely to enter “a trial period” until their governments are able to find common interest. China remains one of Argentina’s largest trading partners, only behind Brazil, and Beijing could be pivotal in funding Milei’s “dollarization” plan, the Diplomat previously reported. While Argentina’s incoming foreign minister signaled that the country will likely not accept an invitation to join BRICS — the main intergovernmental rival to the G7 — China reaffirmed its support for other developing economies to join the bloc. “There will certainly be some bumps along the way” for Sino-Argentine relations, one think tank analyst told the Global Times, but the two economies are far too intertwined for there to be “a major setback.”
While Brazil’s left-wing government has been unenthusiastic about Milei, many Brazilian corporations believe his economic policies will ultimately benefit their country’s economy. With Milei vowing to slash tariffs and “liberalize absolutely everything,” Brazil — as Argentina’s largest trading partner — has the most to gain, one Argentine academic told R7. But experts agree that the biggest impact of Milei’s presidency for Brazil will be its ability to keep up with the demands of Mercosur, the South American trading bloc dominated by Brazil and Argentina, particularly in terms of upholding the bloc’s commitment to environmental sustainability in economic development. If Milei follows through with his promise of reducing Argentina’s role in the bloc, experts say Brazil will need to take over the majority of responsibilities.
Milei has said one of his top priorities is strengthening ties to the U.S., a proposal that has been cheered on by conservative figures like former President Donald Trump. The Biden administration’s messages of congratulations to Milei — vowing to protect democracy and fight against climate change together — “flies in the face of many of the stances” Milei has taken so far, Spanish newspaper AS writes. Regardless of political differences, the U.S. will be crucial for Argentina’s economic survival if Milei goes forward with dollarization — a plan implemented in countries like Ecuador and El Salvador, but never those with the size of Argentina’s economy. While some economists agree that dollarization can help the U.S. — particularly in simplifying trade with Washington – U.S. Treasury authorities have already warned developing economies that dollarization is “not a substitute for sound macro-economic policies,” the Washington Post reports.