Argentina’s Foreign Policy Under Milei: Limited Disruption?

Abstract

The decisive victory of Javier Milei in Argentina’s 2023 presidential elections signalled major changes in domestic policies and potential shifts in the country’s foreign policy and global positioning. During his campaign, Milei advocated a Western-oriented alignment with the United States, Israel and the ‘free world’, vowing to sever ties with ‘communist’ countries, including Brazil and China – Argentina’s major trading and economic partners. But his capacity to do this will likely be constrained by pressure to maintain domestic stability and his own ultra-libertarian principles. While Argentina probably will increasingly look West under Milei, the extent to which ties with the Global South, including Brazil and China, can be curtailed remains uncertain. The need for economic continuity and stability may temper Milei’s ability and inclination to break or significantly downgrade important relationships, pointing to substantial continuity in foreign and trade policy.

Key words:

• Argentina
• Brazil
• BRICS
• China
• Global South
• Javier Milei
• Mercosur
• privatisation
• Uruguay

Notes

1 See, for example, George Glover, ‘This Is the World’s Next Major Election. The Winner Has to Fix Chronic Hyperinflation and Halt a 6th Recession in 10 Years’, Business Insider, 11 November 2023, https://www.businessinsider.com/economy-argentina-hyperinflation-drought-rolling-recession-dedollarization-javier-milei-peso-2023-11?r=US&IR=T.

2 See Council on Foreign Relations, ‘Mercosur: South America’s Fractious Trade Bloc’, last updated 18 December 2023, https://www.cfr.org/backgrounder/mercosur-south-americas-fractious-trade-bloc.

3 Milei followed up his sombre ‘there’s no money’ inauguration speech with a whopping 54% peso devaluation and a barrage of measures – including major cuts to Argentina’s traditionally generous fuel and transport subsidies, a reduction of the number of ministers from 18 to nine, discretionary transfers to the provinces, and a suspension of all new public construction projects and state advertising – aimed at producing savings equivalent to around 3% of GDP and moving closer to the stated zero-deficit goal by the end of 2024. He also announced tax increases on imported and exported goods. At the same time, the president moved swiftly on economic liberalisation and privatisation with a sweeping decree scrapping more than 350 regulations due to take effect before the end of 2023, though parts related to labour-market liberalisation have since been frozen by courts. He also sent an ambitious legislative package to Congress, asking it to reform the country’s tax system, electoral law and public-debt management, and to authorise the privatisation of more than 40 state companies on an expedited basis. See Lucinda Elliott and Jorgelina Do Rosario, ‘Explainer: What Is in Javier Milei’s Sweeping Argentina Reform Bill?’, Reuters, 29 December 2023, https://www.reuters.com/world/americas/what-is-javier-mileis-sweeping-argentina-reform-bill-2023-12-28/; and ‘Javier Milei Implements Shock Therapy in Argentina’, The Economist, 13 December 2023, https://www.economist.com/the-americas/2023/12/13/javier-milei-implements-shock-therapy-in-argentina.

4 See ISPI, ‘A BRICS+ Challenge to the Dollar?’, 7 September 2023, https://www.ispionline.it/en/publication/a-brics-challenge-to-the-dollar-139933.

5 Ukrainian President Volodymyr Zelenskyy attended Milei’s inauguration ceremony in Buenos Aires – his first trip to Latin America – to thank him for his support. Milei also offered to organise a summit with Latin American and Ukrainian representations. See ‘Ukraine’s Zelenskyy Visits Argentina in Bid to Win Support from Global South’, Voice of America, 10 December 2023, https://www.voanews.com/a/ukraine-s-zelenskyy-visits-argentina-in-bid-to-win-support-from-global-south/7392116.html.

6 See ‘Russia’s Pockets of Support Are Growing in the Developing World’, Economist Intelligence Unit, 7 March 2023, https://www.eiu.com/n/russias-pockets-of-support-are-growing-in-the-developing-world/.

7 See ‘China Activates $6.5 Bln Swap Line with Argentina’, Reuters, 18 October 2023, https://www.reuters.com/markets/currencies/china-clears-65-bln-part-argentina-swap-line-deal-2023-10-18/.

8 For an analysis on the importance of trade with Brazil and Mercosur, see Max Klaver, ‘What Milei Means for Mercosur’, Foreign Policy, 18 December 2023, https://foreignpolicy.com/2023/12/18/milei-mercosur-argentina-economy-trade/.

9 Industries include lithium, a critical mineral for the energy transition for which Argentina accounts for around 6% of global reserves and 20% of global production. See Juan Pablo Medina Bickel and Irene Mia, ‘Geopolitics and Climate Change: The Significance of South America’, Survival, vol. 65, no. 4, August– September 2023, pp. 123–38.

10 See, for instance, Michael Stott, ‘Argentina’s Milei Faces Enormous Hurdles to Govern’, Financial Times, 20 November 2023, https://www.ft.com/content/fc2a1b7d-885c-49d4-bdd7-fc2463df405b.

11 ‘Mondino aseguró que Milei respaldará el acuerdo entre el Mercosur y la Unión Europea’, Ámbito, 26 November 2023, https://www.ambito.com/economia/mondino-aseguro-que-milei-respaldara-el-acuerdo-el-mercosur-y-la-union-europea-n5885101.

12 See ‘Argentina’s Outgoing Government Rejects EU–Mercosur Trade Deal, but Incoming Administration Backs It’, AP News, 4 December 2023, https://apnews.com/article/argentina-eu-mercosur-brazil-paraguay-7448623940e803b314ccd021f22ad7da.

13 See ‘Uruguay, a Failed Mercosur Summit and China’s Long Shadow’, MercoPress, 30 December 2022, https://en.mercopress.com/2022/12/30/uruguay-a-failed-mercosur-summit-and-china-s-long-shadow.

14 See Natalie Liu, ‘Argentina Not Joining BRICS Despite Xi’s Personal Letter to Milei’, Voice of America, 1 December 2023, https://www.voanews.com/a/argentina-not-joining-brics-despite-xi-s-personal-letter-to-milei/7380722.html.

15 See Facundo Iglesia, ‘CAF Approves US$1 Billion Loan to Argentina with IMF Support’, Buenos Aires Herald, 15 December 2023, https://buenosairesherald.com/economics/caf-approves-us1-billion-loan-to-argentina-with-imf-support.

16 See Adam Jourdan, ‘U.S. Offers Argentina’s Milei Support on IMF, Lithium, White House Adviser Says’, Reuters, 10 December 2023, https://www.reuters.com/world/americas/us-offers-argentinas-milei-support-imf-lithium-white-house-adviser-2023-12-10/.

Additional information

Notes on contributors

Irene Mia

Irene Mia is an IISS Senior Fellow and Editor of the Armed Conflict Survey.