Does Argentina influence the United States?

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Javier Milei got the support of Elon Musk

As Argentina's libertarian and maverick President Javier Milei marks his first anniversary in power, his efforts to revive the economy are still underway – but his policies are proving influential in the United States.

Milei came to power with a mission to cut public spending in a country that had been living beyond its means for years.

Despite its harsh austerity measures and the continued rise in the poverty rate, it still enjoys the support of just over half the population, according to a survey carried out earlier this month by the organization CB Consultora.

This level of popularity is similar to that of Donald Trump at the moment. About half of American voters supported the president-elect in last month's presidential election – and Trump hailed Milei as a man who could “make Argentina great again.”

Meanwhile, tech billionaire Elon Musk, who appears set to play a key role in the new US administration, also congratulated Milei, saying Argentina is “seeing a giant improvement” under his leadership.

But what do Trump and Musk see in Milei? And are they as close ideologically as is often assumed?

Reuters

Prices continue to rise in Argentina, but more slowly

Milei's greatest achievement so far, the one most appreciated by Argentines, is his success in reducing inflation. But he has caused a stir in the United States because of his deregulation campaign, which has been taken up by small-government activists eager to shrink the size of state in Washington, similar to what is happening in Buenos Areas.

In Milei's first package of measures, he cut public fuel subsidies and halved the number of government ministries.

He is now trying to push through a proposed massive sale of state-owned companies, including the country's flagship airline, Aerolineas Argentinas, which was already privatized once before being renationalized in 2008.

All of this is just music to the ears of Elon Musk, who is tasked with similar cost-cutting initiatives under the banner of the so-called Department of Government Effectiveness – a misleading name, since he acts as an advisory body and not an official government department. .

Musk and his department co-head, billionaire Vivek Ramaswamy, have said they want to scale back federal regulations, oversee mass layoffs and close some agencies altogether.

Musk has talked about cutting federal government spending by $2 trillion ($1.6 trillion), or about a third of annual spending. According to him, Milei is doing “a fantastic job” in Argentina by “cutting entire departments” – and he would like to do the same in the United States, with Trump's blessing.

Reuters

Trump and Milei think highly of each other

But longtime observers of Latin America are skeptical.

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics in Washington, believes that “taking inspiration from Milei to reduce the size of government makes no sense.”

“The situation in Argentina is very unique to Argentina, because it's about putting an end to decades of mismanagement of public resources. It has nothing to do with the United States.”

Ms. de Bolle says Argentina had no choice but to act because government overspending was so excessive that the country was “erupting into crisis every few years.”

“It's appropriate for Argentina, but not for anyone else.”

Reuters

Aerolineas Argentinas privatization plans part of Milei's cost-cutting drive

Marcelo J. Garca, Americas director at Buenos Aires-based consultancy Horizon Engage, says Milei's decision to use a chainsaw during the election campaign as a sign of his approach to government was a “masterpiece work” of political marketing that has “captured the imagination of activists in small states around the world.”

But he says that while Musk's business interests would benefit from reduced government regulation, that's not necessarily what Trump wants.

“I'm not sure the Trump platform is compatible with a Milei-type chainsaw small government,” he told the BBC.

He points out that Trump's policies “require big government in certain areas,” such as building border walls and mass expulsions of illegal immigrants. “You can’t do these kinds of massive programs with small government.”

According to Milei, infrastructure projects are best left to the private sector and have nothing to do with the government.

Reuters

Milei supporters were out in force at this month's Mercosur summit in Montevideo

Milei and Trump are on the same side in the global culture wars, denouncing what they see as “woke agenda.” But economically, their ideas are very different.

Milei is a strong supporter of free trade and Argentina is a member of the South American trade bloc Mercosur, which also includes Brazil, Paraguay and Uruguay.

Although he favors Mercosur's recent free trade deal with the European Union, he doesn't like the way the organization refuses to let its member countries strike their own deals. As a result, he said, Mercosur “ended up becoming a prison.”

“If the bloc is not a dynamic engine that facilitates trade, stimulates investment and improves the quality of life for all citizens of our region, what good is it?” he said at the Mercosur summit in Uruguay earlier this month, where the deal with the EU was signed.

Trump is also having difficulty with his own regional trade alliance, the United States-Mexico-Canada Agreement (USMCA), but for reasons that are the opposite of Milei's.

Trump wants to renegotiate the USMCA, an agreement he himself concluded during his first term, in order to protect the American manufacturing industry and safeguard American jobs.

He even found a way to weaponize the alliance by threatening to impose blanket 25% tariffs on goods from Canada and Mexico unless they secured their shared borders with the United States. United.

AFP

Milei wants free trade to prevail in the port of Buenos Aires

Monica de Bolle doubts Trump shares Elon Musk's enthusiasm for a smaller state: “You can't be a populist nationalist and care about the size of government. So Trump doesn't care. He put Elon there -down because it’s kind of fun to have someone.” there, it's making noise.”

The economic debate is set to continue, both in the United States and in Argentina. But ultimately, if half your population supports you, that means the other half doesn't support you. Trump will have to deal with it after his inauguration on January 20, but Milei already has to deal with his own polarized population.

According to Marcelo J. Garca, Milei is a “divisive leader” who has made no attempt to convince his opponents.

“The other half of the country that didn't support him will probably never support him, no matter how healthy the economy is, because he doesn't want them to support him,” he says.

“Leaders tend to want to be liked by everyone. That’s not the case for Milei,” he adds.

According to him, this is a real weakness: “We cannot build a long-term sustainable political project if we do not address people who did not vote for us.”

The next big test of public opinion for Milei will come in October 2025, when Argentina holds midterm elections. That could prove crucial in deciding whether his small-government revolution will determine the country's future — or whether, like previous attempts at reform, it will run out of steam.

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