Argentina’s Milei Says He’d Reject ‘Assassin’ China, Leave Mercosur
(Bloomberg) -- Argentina’s presidential frontrunner Javier Milei would freeze relations with China and pull South America’s second-biggest economy out of the Mercosur trade bloc with Brazil, foreign policy proposals that are as radical as his economics.
In an interview following his unexpected primary victory on Aug. 13, the outsider candidate has given international policymakers the biggest insight yet in how he would conduct Argentina’s affairs on the world stage.
“People are not free in China, they can’t do what they want and when they do it, they get killed,” he told Bloomberg News on Wednesday, referring to Beijing’s government. “Would you trade with an assassin?”
President Xi Jinping’s ruling Communist Party typically silences dissidents with lengthy prison sentences and has been accused of detaining more than 1 million mostly Uyghurs in camps in its Xinjiang region. The US has dubbed that campaign a genocide, while Beijing calls the facilities vocational training centers.
China has also been accused of kidnapping a handful of people from overseas territories including Thailand, but unlike Russia has not faced credible accusations of assassinations.
Milei shook Argentina’s political establishment last weekend after receiving more votes than a pro-business opposition bloc and the ruling Peronist coalition, putting him in the lead to be the country’s next president. His election in October would generate shock waves across a region largely ruled by leftist leaders.
In his blanket refusal to do any kind of business with “socialists,” he lumped Communist China in the same category as Argentina’s biggest trade partner, Brazil, led by leftist President Luiz Inacio Lula da Silva. China is the second-largest buyer of Argentine exports and provides a crucial $18 billion swap line with the central bank that’s being used to pay the International Monetary Fund.
Brazil’s foreign affairs ministry didn’t immediately comment on Milei’s remarks and calls put to China’s Embassy in Buenos Aires went unanswered. Chinese Foreign Ministry spokesman Wang Wenbin said at a press briefing in Beijing on Thursday that if the candidate visited “he would have a completely different conclusion as to the freedom and security in China.”
A breakdown in relations with China could be damaging for Argentina — the central bank in Buenos Aires has been increasingly reliant on the currency swap to support the peso, with the government last month using yuan to repay some of the money it owes the IMF, amid a dwindling greenback supply.
Argentina could also see its existing trade deficit with China widen if Beijing decided to treat the South American nation like Australia, and stop buying its meat and other food products amid souring relations.
Milei described his foreign policy proposals as a global “fight against socialists and statists,” and revealed that he would appoint Diana Mondino, a trusted economic adviser, to be his top diplomat. She’s a former Standard & Poor’s director for Argentina and is running for Congress.
Not Involved
It’s not the first time a prominent Argentine politician has insulted China: In 2015, then-President Cristina Fernández de Kirchner caused a furor by mocking the Chinese accent in a tweet. Her comments came while she was on a state visit to China seeking investment.
Milei later appeared to at least partly soften his outspoken comments, clarifying he’d deem it up to the private sector to decide whether to maintain commercial ties with China, and other countries with leaders that he dislikes.
“I don’t have to get involved, but I won’t promote ties with those who don’t respect freedom,” he said, adding that he’d respect deals already signed in Argentina by Chinese companies, which include a contract to build twin dams in Patagonia and an agreement to set up a nuclear plant.
The biggest geopolitical beneficiary of Milei’s ideology would clearly be the US. He was adamant he would work with any president elected in 2024, regardless of their political stripes, though he has a preference for a conservative.
Donald Trump is now ahead in the polls to secure the Republican nomination but Milei isn’t especially keen on being oft-compared to the former American president. Asked if he would like Trump to return to the White House, he said cautiously: “That’s up for Americans to decide.”
“I may like the profile of Republicans better than that of Democrats, but that doesn’t mean I don’t consider the US as our big strategic partner,” he said.
At the same time, he’s put Lula, Mexico’s Andres Manuel Lopez Obrador, Chile’s Gabriel Boric and Colombia’s Gustavo Petro, the leftists who run Latin America’s top economies, on guard. Asked about how his relations with them would be, he said: “I don’t have socialist partners.” He described his relationship with Lula’s predecessor, Jair Bolsonaro, as “excellent.”
Milei was disparaging of the trade alliance that Argentina founded with Brazil, Paraguay and Uruguay more than three decades ago. The group, beset by internal divisions, has struggled to implement a free-trade deal with the European Union agreed four years ago.
“Mercosur is a customs union of poor quality that creates trade distortions and hurts its members,” he said.
Unsurprisingly, Milei was equally critical of Venezuela’s Nicolas Maduro, who he called a “dictator,” as well as the governments of Nicaragua, Cuba, North Korea and Russia. Argentina would again condemn Venezuela for its violation of human rights if he is picked president, Milei said, returning to the hard-line policy the country had until 2019 with President Mauricio Macri.
--With assistance from Simone Iglesias, Patrick Gillespie, Jonathan Gilbert, Philip Glamann and Colum Murphy.
(Updates with Chinese Foreign Ministry comment.)
Milei promises to pay Argentina’s debt and close the central bank
Thursday 17th August 2023
(Bloomberg Opinion) — Argentina’s leading presidential candidate Javier Milei has vowed to shut down the nation’s central bank and said he would do everything possible to prevent a default on the country’s sovereign debt if he wins the October vote.
Milei, a radical libertarian whose upset victory in Sunday’s primaries rattled markets, told Bloomberg News that his bold fiscal adjustment will boost Argentina’s reputation and credit profile, so default will not be necessary.
His plan includes cutting spending by at least 13% of gross domestic product by mid-2025 by drastically cutting public works, reducing the number of ministries, removing subsidies and capital restrictions, thereby that would allow companies to transact in US dollars. And even more drastic, he also plans to shut down the central bank, which he believes has no reason to exist, and dollarize the $640 billion economy.
“I’m going to do everything possible to avoid a default, obviously,” Milei said in a two-hour interview in Buenos Aires on Wednesday. “If the necessary fiscal adjustment is made, the financing will be there.”
Argentine assets fell after Milei — an outsider who, until now, few investors saw as a serious contender — took the lead in the primaries, which are seen as a barometer for presidential elections in a country where polls are notoriously unreliable. . The drop forced the government to devalue its official exchange rate by 18% when markets opened on Monday.
In her first interview with foreign media after her unexpected victory, Milei detailed her plan to exchange the Argentine peso for the US dollar as a way to reduce inflation, which is running at 113%, and intensified her criticism of the central bank, calling it ” The worst garbage that exists on Earth.”
Continue reading the story
“Central banks fall into four categories: the bad guys, like the Federal Reserve; the very bad ones, like those of Latin America; the terrifyingly bad; and the central bank of Argentina,” he said.
If Milei wins the presidency, he plans to hand over the keys to the central bank to economist Emilio Ocampo, his informal adviser on the dollarization program, to shut it down. Ocampo will also help in negotiations with the International Monetary Fund, which has a $44 billion program with the South American nation. The candidate says that he has no plans to ask for more money from the IMF.
“A fiscal deficit is immoral,” said Milei. “If you continually live with a fiscal deficit, you’re going to be insolvent.”-
Milei said she has already developed a plan to dollarize the economy, a move she promises will be one of the first if she wins the Oct. 22 election. Argentina would follow the model of El Salvador and allow people to voluntarily choose between currencies. Once two-thirds of the monetary base is converted, the economy would be fully dollarized, she explained.
Translated by Pauline Steffens.
“If nobody wants to have pesos in Argentina, the question is how much are the pesos worth in real terms? Nobody wants them, we are not talking about water in the middle of the desert. We are talking about something that nobody wants,” Milei said.
The former congressman won more votes than the pro-business coalition led by Patricia Bullrich and the ruling Peronist bloc of Economy Minister Sergio Massa, surprising pollsters who expected him to take third place. Investors are concerned that the country is headed for its fourth debt renegotiation in the past two decades.
One of the main concerns of the markets is that Milei, a political outsider, would not be able to get support for his plans. The 52-year-old, who does not shy away from criticizing politicians he says have been robbing Argentines for decades, said he would call referendums if he cannot reach a legislative consensus to pass his measures.
“If I lower the currency risk, and I lower the credit risk, that means that the country risk will plummet. It means the bonds are going to literally fly,” he said. “The truth is that it is a fairly simple operation. And if you buy and hold these bonds, for example, the returns in one year would be over 200%.”
In the wide-ranging interview, Milei also criticized leftist leaders in China and Latin America, calling them “socialists,” saying he would seek to leave the Mercosur trading bloc and would quickly move to deregulate commodity markets.
Original Note: Milei Vows to Pay Argentina’s Debt While Shuttering Central Bank
–With contributions from Patrick Gillespie and Sydney Maki.
©2023 Bloomberg L.P.
Thursday 17th August 2023
(Bloomberg Opinion) — Argentina’s leading presidential candidate Javier Milei has vowed to shut down the nation’s central bank and said he would do everything possible to prevent a default on the country’s sovereign debt if he wins the October vote.
Milei, a radical libertarian whose upset victory in Sunday’s primaries rattled markets, told Bloomberg News that his bold fiscal adjustment will boost Argentina’s reputation and credit profile, so default will not be necessary.
His plan includes cutting spending by at least 13% of gross domestic product by mid-2025 by drastically cutting public works, reducing the number of ministries, removing subsidies and capital restrictions, thereby that would allow companies to transact in US dollars. And even more drastic, he also plans to shut down the central bank, which he believes has no reason to exist, and dollarize the $640 billion economy.
“I’m going to do everything possible to avoid a default, obviously,” Milei said in a two-hour interview in Buenos Aires on Wednesday. “If the necessary fiscal adjustment is made, the financing will be there.”
Argentine assets fell after Milei — an outsider who, until now, few investors saw as a serious contender — took the lead in the primaries, which are seen as a barometer for presidential elections in a country where polls are notoriously unreliable. . The drop forced the government to devalue its official exchange rate by 18% when markets opened on Monday.
In her first interview with foreign media after her unexpected victory, Milei detailed her plan to exchange the Argentine peso for the US dollar as a way to reduce inflation, which is running at 113%, and intensified her criticism of the central bank, calling it ” The worst garbage that exists on Earth.”
Continue reading the story
“Central banks fall into four categories: the bad guys, like the Federal Reserve; the very bad ones, like those of Latin America; the terrifyingly bad; and the central bank of Argentina,” he said.
If Milei wins the presidency, he plans to hand over the keys to the central bank to economist Emilio Ocampo, his informal adviser on the dollarization program, to shut it down. Ocampo will also help in negotiations with the International Monetary Fund, which has a $44 billion program with the South American nation. The candidate says that he has no plans to ask for more money from the IMF.
“A fiscal deficit is immoral,” said Milei. “If you continually live with a fiscal deficit, you’re going to be insolvent.”-
Milei said she has already developed a plan to dollarize the economy, a move she promises will be one of the first if she wins the Oct. 22 election. Argentina would follow the model of El Salvador and allow people to voluntarily choose between currencies. Once two-thirds of the monetary base is converted, the economy would be fully dollarized, she explained.
Translated by Pauline Steffens.
“If nobody wants to have pesos in Argentina, the question is how much are the pesos worth in real terms? Nobody wants them, we are not talking about water in the middle of the desert. We are talking about something that nobody wants,” Milei said.
The former congressman won more votes than the pro-business coalition led by Patricia Bullrich and the ruling Peronist bloc of Economy Minister Sergio Massa, surprising pollsters who expected him to take third place. Investors are concerned that the country is headed for its fourth debt renegotiation in the past two decades.
One of the main concerns of the markets is that Milei, a political outsider, would not be able to get support for his plans. The 52-year-old, who does not shy away from criticizing politicians he says have been robbing Argentines for decades, said he would call referendums if he cannot reach a legislative consensus to pass his measures.
“If I lower the currency risk, and I lower the credit risk, that means that the country risk will plummet. It means the bonds are going to literally fly,” he said. “The truth is that it is a fairly simple operation. And if you buy and hold these bonds, for example, the returns in one year would be over 200%.”
In the wide-ranging interview, Milei also criticized leftist leaders in China and Latin America, calling them “socialists,” saying he would seek to leave the Mercosur trading bloc and would quickly move to deregulate commodity markets.
Original Note: Milei Vows to Pay Argentina’s Debt While Shuttering Central Bank
–With contributions from Patrick Gillespie and Sydney Maki.
©2023 Bloomberg L.P.
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