Argentina’s President Promised a Free-Market Revolution, and Says He’s Delivering
‘There is no Plan B,’ Javier Milei tells The Wall Street Journal as his moves to privatize state companies and slash government jobs spark inflation and protestsBUENOS AIRES—Argentina’s new president, Javier Milei, says he is bringing a free-market revolution to the country’s long-troubled economy, cutting thousands of state jobs and slashing regulations on everything from divorce proceedings to the price of milk.
But after less than two months at the helm of Latin America’s third-largest economy, the self-described anarcho-capitalist is already facing off against opponents in the streets and in Congress, where some of his overhauls have already been derailed. Its inflation rate is now the world’s highest, surpassing even Venezuela’s.
In an interview with The Wall Street Journal, Milei said he wouldn’t waver from his campaign promise to shake up the state-controlled economy, despite the acute short-term economic pain it will bring.
“There is no Plan B,” Milei said Tuesday at Casa Rosada, the pink-colored presidential palace in downtown Buenos Aires. “There is no room for feelings, for emotions. I can’t afford that luxury. There are 47 million people waiting for answers.”
Speaking a day before thousands filled the streets and disrupted air travel to protest his overhauls, Milei asserted that the measures are already showing signs of success.
Argentina’s inflation, at 211%, is close to reaching its peak, he said, predicting that “in two years we will have ended inflation, for sure.” The central bank has added $5 billion in the past month to its once-depleted foreign-currency reserves.
He has begun unwinding regulations that have long choked business, including price controls for food and restrictions on renting apartments that had created housing shortages. He has decreed hundreds of changes and has presented an omnibus bill to Congress to reduce the state’s role in the economy.
“This represents only a quarter of the reforms we are proposing, and once these laws have passed, we are willing to push for more,” he said.
Many Argentines are anxiously waiting to see if a leader with no governing experience and an eccentric personality—Milei is known as much for his extravagant bouffant as he is for his devotion to raw, unfettered capitalism—can really turn around a country that for decades has lurched from one financial crisis to another. Argentina has defaulted on its sovereign debt nine times.
A libertarian who rose to prominence as a rabble-rousing TV pundit, Milei faces an array of obstacles. His Liberty Advances party holds just 15% of the seats in the lower house of the national legislature and 10% in the Senate.
On the streets, he faces powerful unions allied with the Peronists, whose nationalist movement was founded by the populist army officer Juan Perón in the 1940s. It advocates a major role for the state in the economy and has ruled Argentina for about half of the past 80 years. Milei’s predecessor in office was a Peronist.
Showing improvement to the economy is essential if Milei is to avoid the kind of chaos that took place during Argentina’s financial crisis in 2001-02, which led to a revolving door of five presidents in two weeks and riots that left more than 30 dead. Milei predicted he would ride out protests and other efforts to derail change.
“If I considered that to be an impediment, it wouldn’t have made sense for me to step in to make the changes,” he said.
So far, things have got worse on some fronts, something Milei warned would happen before his government logged improvements.
After a more than 50% devaluation of the peso last month, inflation surged even higher. The gap between the official exchange rate and the black-market rate used by most Argentines has started to widen again. That raises the possibility of another devaluation, which economists say would drive inflation even higher.
In December, a court issued an injunction against moves to reduce the influence of unions and make it easier for companies to fire workers. Activists pledge to harass lawmakers who vote in favor of the measures.
Congress has held up approval of Milei’s omnibus bill, forcing the government to scrap some fiscal proposals to help balance the budget. And his plan to close the central bank, which under Peronist rule printed money at will, faces stiff opposition from the political establishment.
“People can’t support this anymore,” said Amanda Gutiérrez, who works at a printing factory and stopped buying beef, an Argentine staple. The 53-year-old, who protested outside Congress against Milei’s initiatives, said her salary no longer covers her expenses. “His economic theories can’t be implemented,” she said. “They’re backwards.”
Milei remains popular, with 58% support, according to local pollster Poliarquía. And a survey by Opinaia showed 70% of Argentines back his plans to cut public spending in a country accustomed to generous transportation and electricity subsidies.
Still, his support fell 9 percentage points between December and January, according to a Poliarquía poll, as fuel prices doubled and the cost of food soared 30%. Support could erode further, according to political analysts. The Institute of International Finance, an association of global financial firms, is predicting that the economy will contract 7.8% in the first quarter and that annual inflation will rise to about 300% by midyear.
“The population was so traumatized by the economic calamities of the last government that they seem so far to be willing to go along for the ride, for now,” said Benjamin Gedan, director of the Latin American program at the Wilson Center, a think tank in Washington. “But there is just an extraordinary number of land mines to navigate.”
Sitting in a gilded chair in the ornate presidential office, Milei, 53, brushed off concern about his ability to implement his program as “nonsense.” He said he would succeed where predecessors failed because he is a “hyperorthodox libertarian” economist.
“I am still an outsider,” Milei said. “The way I interpret my mandate is as a job. I was tasked with putting the economy in order.”
Milei stressed that his cabinet includes experienced officials who served in the 2015 to 2019 administration of Mauricio Macri, a center-right businessman who tried to reduce spending gradually to avoid protests. The approach failed after he lost access to global financial markets, forcing Argentina to take on a $44 billion International Monetary Fund loan.
Milei said he believes Congress will approve his measures and contended that lawmakers who oppose his agenda would pay in midterm elections in 2025. If lawmakers don’t cooperate, he said, “We will expose them to society, we will show them as enemies of a free society, enemies of progress.”
Some tailwinds could help Milei: a strong grain harvest is expected this year and a new natural-gas pipeline that is seen cutting energy costs.
His opponents are in disarray after the Peronist administration of President Alberto Fernández left office in December. In his four-year term, inflation skyrocketed from 50% and poverty rose to 42% from 35%, according to the Center for Financial Research at Torcuato Di Tella University.
Milei said he sees the West as Argentina’s natural ally after his leftist predecessors had increasingly sided with U.S. rivals, from Russia to China to Venezuela. Milei’s model countries run from Ireland to Australia and New Zealand.
He said he takes inspiration from the biblical prophet Moses and Margaret Thatcher, a startling view for an Argentine in light of the 1982 war over the Falkland Islands between Britain and the military junta that ruled Argentina. Milei said he and U.K. Foreign Secretary David Cameron would have “an adult relationship” to discuss territorial differences.
“Argentina must return to the West at the same time that it has to point out to the West that it has strayed from the path, just as I did at the World Economic Forum,” he said, referring to a speech he gave earlier this month in Davos, Switzerland, which received praise from Elon Musk and former President Donald Trump.
“The state is a coercive machine to steal resources from the private sector,” he said. “Therefore, I would never see the state as a solution to anything, but as the very source of the problem.”
Though he decided that Argentina wouldn’t accept an invitation to join the Brics group of nations including China and Russia, Milei does appear to be backing away from attacks he leveled against some governments and public figures during his campaign. He denied he had “blown up” ties with China, one of Argentina’s top trade partners.
“It’s true that I will not be allied with the communists,” Milei said of Beijing. “But you must separate geopolitical issues from our trade ones.”
Milei, who is due to visit Israel in February, has said there is a possibility that he would convert to Judaism, though he said complying with Shabbat on Saturday could conflict with his workload.
“It’s something that has to do with my spiritual life and because of the large amount of knowledge that I derive from studying, for example, the Torah,” he said.
Milei said Argentina needs foreign investment to ensure the economy bounces back faster.
Argentine consumers are trying to cope with an annual inflation rate exceeding 200%. PHOTO: AGUSTIN MARCARIAN/REUTERS
“The more investments we secure, and the lower the interest rates, that would make the recession much smoother and the recovery much faster,” he said. “We have to make a great effort to communicate so that they can see that this time we are serious, that this time is indeed different.”
Milei said he would follow through with plans to privatize state companies. “Whatever I can sell first, I will sell first,” he said.
He added that selling Argentina’s majority stake in the state-run energy company YPF, which was expropriated in 2012, is no longer a priority because it “would entail a great loss of value for Argentines.”
Milei compared the challenges he faces to those of a 19th century leader, Carlos Pellegrini. When Pellegrini ascended to the presidency in 1890, Argentina was facing a severe financial crisis. Pellegrini passed economic measures that initially hurt ordinary Argentines but, in time, put the country on the path to strong growth.
“He was insulted by all the people,” said Milei. “But today, Argentine history remembers him as a pilot of the storms.”
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