Semafor Signals
Argentina’s presidential frontrunner wants to gut its government agencies
The News
Javier Milei, the ultraconservative frontrunner in Argentina’s presidential race, is causing a stir as he vows to completely cut or defund the country’s legacy government institutes.
The self-described libertarian has said that bodies like the national science agency, the ministry of health, and the central bank are fueling the country’s financial crisis and he has pushed for the privatization of these institutions.
Milei’s proposals have stunned national leaders who are warning that they would only worsen the economy, not save it.
SIGNALS
“Destroying” the national science agency of CONICET and privatizing it is an attempt to hand over control to large business and financial groups that “want to decide which sciences are useful for their profits,” one CONICET researcher told left-leaning newspaper Pagina 12. This will lead to a deterioration of the kind of critical research needed for Argentina’s development, he said. UK government research from 2019 found that investing in research has a 20% annual return, compared to a 5% return for investing in the stock market.
Despite Milei’s anti-China rhetoric, Beijing might prove a critical partner in achieving his libertarian proposals. Milei’s “dollarization” plan – abandoning the Argentine peso for the American dollar – would cost about $40 billion, but given Argentina’s history of struggling to repay debt, skeptics say there are virtually no foreign investors willing to secure Argentine bonds. That would leave the Sino-Argentine bilateral swap line – a currency exchange agreement between Beijing and Buenos Aires – as one of the few options to fund dollarization, but only if Milei does not gut the central bank, which is needed to facilitate the exchange.
Argentina’s federal system means that Milei’s proposed reforms to cut agencies might not adversely impact public sector employment. Of the 3.5 million public servants employed across all governmental agencies – both national and provincial – less than 20% work directly for the federal government, making provincial public employment “by far the most significant in the country,” one academic told CNN en Español. Voters in recent provincial elections have been in favor of expanding some of the agencies Milei wants to gut, and provincial bureaucrats are banding together to rebel against some of his proposals, including one to cut tourism funding.
