On Sunday, Argentines will go to the polls to elect their next president. Voters face a choice between Sergio Massa, the current minister of the economy, and Javier Milei, an economist and deputy (member of parliament) elected to the lower legislative chamber in 2021. The lineup for the runoff is a surprise in itself; Massa, who came first in the general election on 22 October, was expected to be beaten by Milei and centre-right candidate Patricia Bullrich, who ultimately placed third. The incumbent, President Alberto Fernandez, announced in April that he would not seek re-election.
From an ideological perspective, Massa and Milei could not be further apart. Massa is part of the left-wing Peronist Unity for the Homeland party, whereas Milei comes from the far-right Libertarian Party and has described himself as an anarcho-capitalist. The backing that each candidate has received in neighbouring Brazil underlines this political divergence: President Luiz Inácio Lula da Silva has endorsed Massa, whereas Jair Bolsonaro has thrown his support behind Milei. Monetary policy also showcases the candidates’ differences – Massa would strengthen the peso, whereas Milei has promised to replace it with the dollar.
In other words, in Massa and Milei, Argentines face a choice between continuing with a status quo that appears not to be working versus making a very radical, and possibly risky, departure from it.
Massa Upsets the Odds
Argentina finds itself in an extremely difficult economic position: in August 2023, when the primary vote took place, inflation stood at 124 per cent, with the poverty rate rising above 40 per cent in the first half of 2023. The low score for the Unity for the Homeland candidates in the “open, simultaneous and obligatory primaries” (PASO), which serve as an official poll as well as determining the candidates taking part in the election, was interpreted as a rejection of the government’s Peronist policy.
While his position as economy minister presiding over economic downturn should have cost him in the election, Massa was able to leverage his role to enhance his popularity by removing income tax for all but a fraction of the working population.
However, while a growing number of the poorest members of society rely on government support, Massa will know that his current spending patterns are unsustainable and that austerity measures will need to be implemented. Argentina faces International Monetary Fund (IMF) loan repayments of SDR 33 billion (roughly USD 43 billion), and moves such as tax cuts and energy subsidies are putting the country even further behind its fiscal commitments to the international financial institution. The presidential hopeful has already defied the IMF this year, greenlighting the construction of the first instalment of the Néstor Kirchner gas pipeline despite warnings not to.
Milei’s Plans Could Bring Economic Turmoil
While the IMF has expressed concerns about the sustainability of Argentina’s current economic strategy, the alternative has the potential to be even more volatile. Milei surprised many analysts by getting the most votes in the PASO in August, and he led polls until the general election. An economist by trade, Milei is relatively new to politics, having been elected as a deputy in 2021. This element of freshness has inspired millions of people to support him, with Milei representing a shift from the status quo of Argentine politics similar to what Donald Trump represented in 2016.
While Milei may resemble Trump in his approach and what he represents, the two men diverge when it comes to policy. While both used anti-state rhetoric, Trump ultimately did not seek to reshape the upper echelons of government. Milei has promised to radically reform the size and role of government, departing from the state-dominated approach that had become consensus in Argentina. Should he win, Milei intends to cut state spending by 14 per cent of GDP and decrease the number of ministries from 18 to eight. His plans include closing the ministry for women and the health ministry, the latter of which would be replaced by a universal health-care system.
His proposed upheaval is not limited to the machinery of government. To offset the effects of a weak peso, Milei has pledged to replace the country’s currency with the dollar and eventually close the central bank, arguing that a stable currency would bring inflation under control. These promises have alarmed investors and economists alike: the peso continued to plummet as Milei reached the runoff election, and dozens of economists penned an open letter warning of the risks of “dollarizing” the peso. The chief concern among the authors is not having enough dollars in reserve to make such a move, and the fact that efforts to build up supply would likely result in high levels of debt.
A Divergence That Extends to Foreign Policy
While foreign policy is unlikely to play a role in determining the outcome of Sunday’s election, the next president will shape Argentina’s foreign relations. The runoff also underlines the increasingly important choice that many medium-sized countries like Argentina face, between deepening ties with the West or aligning more with China's – and to some extent Russia’s – leadership. Despite Argentina’s naturally strong relations with the United States, Sergio Massa has pushed for greater cooperation with countries outside North America and Europe, such as Brazil and China. This position has been strengthened by the invitation for Argentina to join the BRICS group of emerging economies. Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates were also invited as part of a recent expansion.
However, should Milei emerge as the winner on Sunday, Argentina is likely to embark on a very different diplomatic journey. The presidential hopeful has stated that he would align the country with the United States and Israel, which would almost certainly entail a rejection of the invitation to join the BRICS. That said, Milei is more drawn towards a Trump-led United States than one led by President Joe Biden. A second Biden term could certainly cast doubts on Milei’s ambition.
While it seems that austerity will be unavoidable for the next president of Argentina, alongside difficult and unpopular renegotiations with the IMF, the scope and scale of these challenges remain to be seen. Opinion polling is banned in Argentina in the final two weeks before election day, but polls conducted by companies based outside the country ahead of the runoff all indicate Milei will win by a tight margin. The most recent poll, conducted by AtlasIntel on 9 November, gave Milei a four-point lead. Milei’s prospects were boosted by the endorsement of Patricia Bullrich, who came third in the general election. Still, the centre-right alliance remains divided on who to support.
However, even with the endorsement, polls remain close and the outcome is likely to be determined by the turnout rate. A low turnout would likely favour Milei, and Massa’s ability to mobilise undecided voters against him could be key. Furthermore, a narrow margin could cause unrest, particularly if Milei were to lose. He questioned the legitimacy of the general-election result, and defeat on Sunday could lead to accusations of voter fraud by his supporters.
While polls may give Milei a slim lead, it is worth noting that they failed to predict that Massa would reach the runoff – and the fact that the polls remain close means that it is difficult to accurately predict a winner. In the lead-up to the general election, Massa employed fear tactics, showing voters the cost of travel fares with heavily subsidised “Massa prices” and the much higher prices that consumers would pay if Bullrich or Milei were to win. How much that has remained in voters' minds could prove critical.
With a difficult global economic outlook and frustration with existing political structures in many countries around the world, the outcome of this weekend's runoff election in Argentina will contain lessons for other leaders facing elections in the coming months.