The election of libertarian economist Javier Milei to the Argentine presidency on Nov. 19 may not transform Argentina’s economic fortunes overnight. Still, it certainly confirmed a further strategic setback for communist China’s influence in the Euro-Atlantic sphere.
It was another in a series of setbacks around the world that Chinese Communist Party (CCP) leader Xi Jinping has experienced in recent weeks and months, particularly after his charm offensive toward the United States, culminating in a meeting with U.S. President Joe Biden during the Asia-Pacific Economic Cooperation summit in San Francisco this month, which immediately fizzled to nothing.
The resounding election of Mr. Milei wipes out much of Beijing’s years of work to develop strategic relations with Buenos Aires, critical to the CCP’s military space programs and some aspects of its access to Antarctica. Even if the Milei administration can’t remove the CCP’s extraterritorial claims on sites in Argentina, expanding them will certainly be difficult.
The Chinese regime has several significant extraterritorial holdings in Argentina, where no Argentineans are permitted entry, that play a key role in Beijing’s military and global positioning system space programs. The terms of the treaties on these bases are such that China could call in Argentina’s loans if Buenos Aires attempted to end the Chinese base there.
But Beijing’s plans to hold British and U.S. forces hostage in the Euro-Atlantic space by raising military concerns there are now substantially reduced, even assuming the Chinese regime is still, in its weakened state, economically capable of continuing its present course of strategic action against Taiwan and the West.
Mr. Milei had reiterated, in his election campaign and on his victory, the Argentina mantra that the British-owned Falkland Islands were rightfully the possession of Argentina. But he clearly said military conflict wasn’t an option for Argentina on the Falklands issue and that diplomatic negotiations were the only way. The UK government, however, immediately rejected any consideration of accepting Argentina’s claim to the strategically placed islands.
He couldn’t have signaled an end to the Argentine–UK military confrontation more clearly. But he couldn’t have expressed a “no war” situation over the Falklands more clearly, even if he wished. So he said what he had to say to satisfy the Argentine electorate. UK Defense Secretary Grant Shapps said what he had to say about the permanence of British sovereignty over the Falklands.
Beijing, however, had been pushing the previous government of President Alberto Ángel Fernández to escalate military pressure on the Falklands and to reassert Argentina’s claims forcefully in order to coerce the UK to maintain major defense elements in the Euro-Atlantic sphere to deal with such a contingency. That would help reduce British force deployments in the Indo-Pacific and against China.
But what of Mr. Milei’s plans to revitalize the Argentine economy and strategic position?
He faces a significant impediment from the fact that he doesn’t command the Chamber of Deputies or Senate. The outgoing perónista must be expected to do everything in their power to undermine Mr. Milei’s proposed reforms. If Mr. Milei has been compared with former U.S. President Donald Trump, then he needs to expect the kind of ruthless response from the perónista that President Trump received from the combination of the U.S. Democratic Party and the Washington bureaucratic establishment.
This should be evident from the fact that Mr. Milei won the election against former Economy Minister Sergio Massa (perónista), who was still able to win some 44 percent of the vote even though he and his government had presided over inflation levels of more than 140 percent and the absolute decimation of the Argentine peso. It shows the political reality that party loyalty often transcends self-interest.
So Argentineans went to the polls on Oct. 22 to elect a president, vice president, 130 of the 257 seats of the Chamber of Deputies, 24 of the 72 Senate seats, and the governors of most of the provinces. The initial slate for the presidency was five candidates. No candidate won an overall majority of the votes, necessitating a second round of the presidential component of the election to be held on Nov. 19. Eliminated in the first round were former Security Minister Patricia Bullrich, Córdoba provincial Gov. Juan Schiaretti, and Buenos Aires province National Deputy Myrian Bregman.
This left the second round to be contested by Mr. Massa, 51, from the Union for the Homeland (perónista), who took 36 percent of the first round vote, and Mr. Milei, 53, a national deputy from the capital city of Buenos Aires, from Partido Libertario (PL), part of La Libertad Avanza alliance, who took 30 percent of the first round votes.
In the second round, however, the impact of Argentina’s precarious economic condition, blamed on the outgoing perónista government, particularly Mr. Massa, caused a landslide win for Mr. Milei and his running mate, Victoria Villarruel. Together, they carried 20 states plus the Autonomous City of Buenos Aires, while Mr. Massa and his running mate, Agustin Rossi, had only three provinces.
Overall, the Milei ticket took 55.69 percent of the vote, compared with the Massa ticket taking 44.31 percent. As a result, Mr. Milei and Ms. Villarruel were scheduled to be sworn into office on Dec. 10. Before that, however, Mr. Milei said he would visit neighboring Uruguay to discuss tariff issues and would also visit New York and then Israel before being sworn into office.
Without control of the Federal Congress, Mr. Milei’s more radical proposed reforms will face severe parliamentary opposition. He'll likely have to use executive orders, where he could, to circumvent the Congress to achieve his reforms.
It must be assumed that, where possible, China will use its resources to support the perónista in curtailing the Milei administration.
Mr. Milei can expect little support from Washington, given that the United States will hold a presidential election in 2024 and that the incumbent administration will be unwilling to give Mr. Milei support for the simple reason that he was regarded as an ally of President Trump, a Republican presidential aspirant.
The Milei administration, too, was unlikely to win widespread support in South America, where most governments had strong ties with China and were opposed to Mr. Milei’s free market economics. An electoral win in the United States by President Trump in November 2024 could, if it happens, give some impetus to the Milei government and so, too, could a collapse or contraction of CCP influence in the Western Hemisphere.
In the meantime, it should be expected that the Milei administration may begin by introducing a partial dollarization of the economy, allowing some official use of the U.S. dollar to help stabilize the marketplace. He may also be able to position Argentina’s now very low labor costs and high educational levels to make foreign investment in manufacturing appealing to foreign investors.
But, from a strategic perspective, the Argentine elections should be seen as one of the 2023 factors that ended the high-water mark of communist China’s global growth.
