Trump's 'chainsaw' ally wins key election in South America



Since taking office in December 2023, Argentina's self-proclaimed "anarcho-capitalist" President Javier Milei has successfully taken a "chainsaw" to his leftist predecessors' ruinous policies and rescued his nation from an economic death spiral.

Despite delivering significant results, the fate of the Argentine president's libertarian agenda and his nation's continued support from the U.S. were conditional on the success of Milei's Freedom Advances party in Sunday's midterm elections.

Fortunately for Milei and his anti-left alliance with the United States, the Freedom Advances party prevailed over its leftist rivals in almost every district in the country, securing nearly 41% of the national vote — far and above the result reportedly expected by the Milei government.

Milei's party picked up 64 seats in the lower house of the Argentine National Congress and 12 seats in the Senate. The ruling party exceeded the threshold necessary to sustain Milei's presidential vetoes.

President Donald Trump congratulated Milei "on his Landslide Victory" early Monday morning, noting, "Our confidence in him was justified by the People of Argentina."

"He's making us all look good. Congratulations Javier!" added Trump.

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Photo by Tomas Cuesta/Getty Images

"The [Argentine] president is fighting 100 years of bad economic history and policy," Treasury Secretary Scott Bessent said at an Oct. 14 Cabinet meeting where Milei was present. "There's a midterm election coming up. We think he's going to do quite well and then continue his reform agenda."

Bessent indicated that whereas the Obama administration "wasted" an opportunity to support Latin American governments when they moved center-right politically, the Trump administration is forming economic bridges with like-minded nations that "want to do the right thing."

'The entire country confirmed its will to irreversibly change the destiny of our homeland.'

In the case of Argentina, whose stability Bessent indicated was "in the strategic interest of the United States," American support recently came in the form of a $20 billion currency swap — a lifeline bypassing the International Monetary Fund that is aimed at economically stabilizing the country — and the possibility of $20 billion more in private credit.

Trump underscored the importance of the election and noted that if Milei and his party didn't win, the U.S. would "not be generous with Argentina."

"Our approvals are somewhat subject to who wins the election because if a socialist or — in the case of New York City — a communist wins, you feel a lot differently about making an investment," said Trump, suggesting further that the U.S. wouldn't waste money supporting a government kneecapped by or captive to a leftist philosophy.

Milei noted in his victory speech that when the new lawmakers take their congressional seats in December, Argentina "will have the most reformist Congress in Argentina," and his party will work to make Argentina "the most free country in the world," reported the Buenos Aires Herald.

"Today, the entire country confirmed its will to irreversibly change the destiny of our homeland," added Milei.

Florida Rep. María Elvira Salazar (R) stated on Sunday, "Milei is the moral reference for the hemisphere, the exact opposite of Maduro. He's proving that freedom, capitalism, and democracy still work. President Trump recognizes that, and together we can help Latin America prosper with those same values."

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Investors optimistic about Milei's ability to bring Argentina back from the brink



In the early 20th century, Argentina was one of the world's richest nations. After six major military coups and decades of reckless spending, the nation was reduced to a shambles such that when libertarian economist Javier Milei replaced outgoing leftist President Alberto Fernandez on Dec. 10, 2023, inflation was set to reach 211%; 45% of the population was impoverished; and Argentina owed $44 billion to the International Monetary Fund.

The South American country's problems have not gone away — inflation, for instance, reportedly reached a 12-month rate of 254.2% in January and poverty now affects nearly 60% of the populace — but investors have begun expressing newfound optimism about Argentina's future.

"It seems the market is starting to believe," financial analyst Mariano Sardans of FDI Argentina told Reuters.

This belief is fueled in part by the apparent efficacy of Milei's shock measures and his committment to seeing them through.

Within hours of taking power, the self-proclaimed "anarcho-capitalist" took his metaphoric "chainsaw" to half of Argentina's government ministries; his government allowed for its peso currency to devalue by 50%; and his economy minister Luis Caputo revealed Argentina would be cutting spending by 3% of GDP.

Extra to cutting government spending and making strides toward dollarizing the currency, Milei's government has purchased over $5 billion in dollars to build up their reserves and issued "Bopreal" bonds to tackle import debts. In discussions with the IMF over Argentina's debt, the Milei government has also advocated pursuing even tougher fiscal measures than those deemed reasonable by the international body.

"The market is becoming very optimistic about Javier Milei's conviction," Javier Casabal, a fixed income strategist at Adcap Grup Financiero in Buenos Aires, told Reuters. "It's a real shift worth celebrating, given that most investors did not have confidence in his ability to reduce the deficit just a few weeks ago. If anything, perhaps he's going overboard in some ways."

Milei's follow-through on his austerity scheme has pushed Argentina's risk index to a two-year low and driven some bonds to four-year highs. However, to succeed in his turnaround of the Argentine economy, Milei will likely have to overcome street opposition, provincial protests, and legislative setbacks.

Milei's economic reform bill was, for instance, thwarted in the nation's Congress earlier this month, preventing Milei from privatizing various state entities, reworking myriad regulations, and reducing state subsidies outright.

Reuters reported that the oil-rich province Chubut recently threatened to cut off the nation's energy supply because the Milei government withheld roughly $16 million to pay down some of Chubut's outstanding federal debt.

Extra to the caltrops laid before his austerity agenda by lawmakers and provincial leaders, leftist groups have worked to further paralyze the country. Late last month, the General Confederation of Labor, Argentina's largest trade union, organized a 12-hour general strike to voice anger at the country's rescue from oblivion.

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Javier Milei eliminates half of Argentina's government ministries on first day as president



Javier Milei, Argentina's new libertarian president, has wasted no time amputating various bureaucratic tentacles.

Within hours of being sworn into office on Sunday, Milei made good on his vow to take a "chainsaw" both to government spending and to what he called his country's "political caste," signing an executive order to cut the number of government ministries from 18 to nine.

What's the background?

Argentina is suffering 143% annual inflation. Four in 10 Argentines are living in poverty. The country has a trade deficit of over $43 billion and a $45 billion debt to the International Monetary Fund, reported the Associated Press.

Milei, keen to stop the bleeding, proposed his so-called Chainsaw Plan in June 2022, detailing how he would sell off state-owned companies, slash public spending, reduce and simplify taxes, and eliminate the various government agencies seen to be exacerbating the country's financial crisis. Additionally, he suggested the country would adopt the U.S. dollar and shut down Argentina's central bank.

Milei reiterated part of his plan in a video that went viral ahead of the election.

"Ministry of Tourism and Sports — out!" he said, tearing a ministry name tag off a whiteboard. "Ministry of Culture — out! Ministry of the Environment and Sustainable Development — out! Ministry of Women, Genders and Diversity — out! Ministry of Public Works — out, even if you resist!"

Milei also tore off the tags denoting the Ministries of Science, Technology, and Innovation; Labor, Employment, and Social Security; Education; Transportation; Health; and Social Development.

The president-to-be concluded the video by stressing, "The thievery of politics is over. Long live freedom, damn it!"

— (@)

Adios, big government

While convention dictates the newly elected president give his inaugural speech to an assembly of lawmakers, Milei instead addressed supporters outside the National Congress building in Buenos Aires, stressing that now is the time for austerity and tough love.

"There's no money," the economist told the crowd.

"We don't have margin for sterile discussions. Our country demands action, and immediate action," said Milei. "The political class left the country at the brink of its biggest crisis in history. We don't desire the hard decisions that will need to be made in coming weeks, but lamentably they didn't leave us any option.

"In the last 12 years, GDP per capita fell 15% in a context in which we accumulated 5,000% inflation. As such, for more than a decade we have lived in stagflation. This is the last rough patch before starting the reconstruction of Argentina," he continued.

Milei added, "It won't be easy; 100 years of failure aren't undone in a day. But it begins in a day, and today is that day."

A century of failure might take some time to undo, but Milei nevertheless got a decent head start Sunday. Milei issued a presidential decree titled "Decree of Necessity and Urgency," which eliminated eight government ministries.

DPA International reported that the Ministries of Social Development, Health, Labor, and Education will all be collapsed and rolled into a new Ministry of Human Capital. What remains of the Ministry of Women, Genders and Diversity will be subordinated to this new ministry.

According to the Buenos Aires Herald, a special commission will analyze whether the decree is valid. Afterward, it will go to a vote in the Argentine Senate and Chamber of Deputies. For the decree to be annulled, both chambers must vote to reject it.

The Milei administration characterized the cut as a means "to rationalize the actions of the nation-state and make them more efficient."

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