Monday, June 17, 2024

OPINION AND ANALYSIS | 25-05-2024 06:23

Gulliver Milei needs to engage with the Lilliputians

Even the Lilliputians in Jonathan Swift’s 'Gulliver’s Travels' were clever enough to feed their giant alien visitor before using him for their own advantage.

Happy May 25. This was meant to be the day that President Javier Milei was having his first formal photo-op with the country’s political establishment, notably most of the country’s 24 governors, to sign a “May Pact” as a symbol that he could rally Argentine politics around his small government, ultra-liberal ideas. But it’s not happening.

When Milei delivered his State-of-the-Nation speech to Congress on March 1, he was under pressure because the tiny, ruling La Libertad Avanza party had failed to pass any legislation through Congress after three months in office. Then he called the ‘May Pact’ – an attempt to embrace the political “caste” he detests. The lawless month-count has now doubled to six.

The prerequisite for the pact was congressional approval of two pieces of legislation, the ‘Ley de Bases’ bill and accompanying fiscal package. They passed through the lower house Chamber of Deputies on April 30, but the Senate is still debating them – and amending them. Milei could have got the picture taken nonetheless, as a gesture of goodwill for the last chunk of the congressional debate. But he decided not to.  

The President faces the temptation of reclining into his comfort zone of political seclusion, his natural posture. Recent public lines point to an ego-trip period of isolationism. Only just this week, we’ve had: “I am the greatest representative of liberty in the world”; “I am in a different league. Local politicians are Lilliputians [compared to me]”; “Argentine politicians are insignificant”; “Wherever I go, I generate a sensation… [ politicians] would love to be in my position”; and “I am one of the world's top five leaders… I am the world’s second-most important leader.”

It’s not clear whether this is a good narrative arc to get something from the political establishment. But if the polls are right and Milei is as honest as the public sees him, it may be the case that the President believes in what he says. In any case, he continues to push his luck, which entirely depends on his administration delivering good economic results and on the fragmentation of an opposition that is at a total loss, rather than on his wildest celebrity dreams becoming true.

Meanwhile, having not been called to a photo-op in Córdoba today, the country’s governors are busy minding their own business, which is not always fun. As the Senate vote count approaches (three senators per province), most eyes are either on the hydrocarbon-rich Patagonian provinces, the mining-eager provinces in the country’s northwest or the farming powerhouses of the central pampas. But the breaking news, surprisingly, came instead from the ‘Lilliputian’ northeastern province of Misiones.

An unusual combination of trades gathered in protest there, notably including the local police force. The conflict is over wages: workers want a 100-percent increase (roughly the inflation figure since Milei took office in December); the government is offering 20 percent. The gap is wide and the differences seemingly insurmountable. Provincial authorities said they cannot offer more because the Milei administration has cut off all aid. Representatives from Misiones in Congress supported the Casa Rosada’s bills. 

This is now a riddle for Milei and his team: if they send cash to Misiones to quench the fire, there will be an avalanche of similar demands. The contrary is also bad: let the conflict grow and risk contagion in other parts of the country.

We have contemplated similar thoughts here before: the massive adjustment of the economy that Milei has delivered, with its impact on the purchasing power of wages and pensions, only makes sense if the public begins to see there is a light at the end of the tunnel. Some, however, can’t even see the tunnel ahead yet. The heating of the foreign exchange market this week, with the peso hitting its weakest ever in nominal terms against the US dollar in the ‘blue’ parallel market, is never a good sign for greenback-crazy Argentines. 

There is only so much reality the Milei administration can bury under President Milei’s verbal barrage against everything that moves – this week, the focus of the ire being the prime minister of Spain, Pedro Sánchez. 

The next two weeks should illustrate a renewed dose of pragmatism in the Milei administration, at least if it is to produce a minimum viable result in Congress. Further delays – let alone a new defeat in the legislative chamber – would place too many question-marks over the general direction of the Milei government, including his willingness to govern. 

Even the Lilliputians in Jonathan Swift's Gulliver’s Travels, after all, were clever enough to feed their giant alien visitor before using him for their own advantage. ​

Marcelo J. Garcia

Marcelo J. Garcia

Political analyst and Director for the Americas for the Horizon Engage political risk consultancy firm.


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