Navigating Uncertainty: Argentina’s Economic Turmoil, Political Upheaval, and the Surge of Populism

Argentina finds itself at a critical juncture. Recent years have seen the country grapple with an unrelenting economic crisis.

Argentina finds itself at a critical juncture. Recent years have seen the country grapple with an unrelenting economic crisis, pervasive political corruption, and a wave of social discontent, casting a cloud of uncertainty over its future. The 2023 general elections were a watershed moment in the country’s political history, marked by a shift towards populism and a resounding rejection of traditional political parties. Javier Milei won the presidential election with 55.69% of the votes, defeating Sergio Massa who received 44.31% of the votes. This represents a difference of 11.38%. Milei, who will take office on 10th of December, is a far-right economist and outsider, emerged victorious, tapping into a wave of popular discontent fueled by economic hardship and political disillusionment. His victory signals a new chapter for Argentina, one that will be shaped by his radical economic proposals, his unconventional approach to governance, and his populist stance.

The Argentinian economy has been on the edge of collapse for decades, plagued by soaring inflation, currency devaluations, and recurrent recessions. In 2018, the nation endured its most severe economic downturn in recent history, with a staggering 22% contraction. A perfect storm of factors, including plummeting global commodity prices, surging interest rates, and a loss of investor confidence, triggered this crisis. The aftermath has left indelible marks across the country—widespread poverty, soaring unemployment, and a palpable sense of despair among society. The national currency, the peso, has sharply depreciated against the dollar, amplifying financial uncertainty and diminishing purchasing power.

Amid economic tumult, political corruption scandals have further eroded public trust in governmental institutions. The 2018 conviction of former President Cristina Kirchner on corruption charges serves as a stark reminder of the deeply ingrained graft within the Argentinian political system. The “Cuadernos Scandal that emerged in 2018  involved allegations of widespread corruption within the government during the presidency of Cristina Fernández de Kirchner (December 10, 2007 – December 9, 2015). The scandal revolved around a series of notebooks that detailed alleged bribe payments by business leaders to government officials. Several high-profile individuals were implicated, and the revelations sparked investigations and legal proceedings, contributing to a climate of political tension and public discontent. Among those accused were Julio De Vido, a former Minister of Federal Planning; José López, a former Secretary of Public Works; and Carlos Wagner, the former head of the Argentine Chamber of Construction. These scandals, and the fact that to this day nobody has been convicted of any crime, dealt a severe blow to the political establishment, intensifying public cynicism towards the government, its institutions and traditional political parties. They have also spawned instability and gridlock.

The fabric of Argentine society has unravelled under the strain of economic hardship and political disillusionment, giving rise to protests. In 2017, massive demonstrations erupted following the announcement of austerity measures, resulting in violent clashes and high-profile resignations. The economic crisis and political corruption have disproportionately affected vulnerable segments of society, heightening social inequalities and fostering discontent. Argentina is currently facing a severe economic crisis, with inflation rates skyrocketing to 83.6% as of October 2023. This sharp increase in inflation has led to a devastating impact on the country’s economy, resulting in a significant rise in poverty. According to the national statistics agency, INDEC, the poverty rate in Argentina reached 40.1% in the first half of 2023, representing an increase of 0.9 percentage points from the second half of 2022. The situation is even more dire for children under the age of 15, with a poverty rate of 54.2%.

Against this backdrop, the ascent of populism has emerged as a formidable political force in Argentina. Javier Milei, a libertarian economist and outsider, rode a wave of popular discontent to secure the presidency in the recent elections. Milei’s unconventional economic proposals, including plans to dollarise the economy, have elicited mixed reactions. While some hail him as a potential saviour, others fear his policies could further destabilise the economy. He also advocates for the privatisation of all state-owned enterprises, including energy companies, transportation providers, and public utilities. Additionally, Milei proposes a significant reduction in government spending, proposing to slash the public sector by up to 70%. He believes that this will lead to lower taxes and a smaller, more efficient government.

Privatisation and spending cuts could lead to a number of negative consequences. Privatising state-owned enterprises could lead to increased prices, decreased quality of services, and job losses. Reducing government spending could lead to cuts to important social programs and further increase inequality. While it might be true some of these policies could lead to increased economic efficiency and growth, that they could also worsen inequality and harm the most vulnerable members of society.

Milei’s triumph will have consequences beyond Argentina’s borders, sending shockwaves across the Latin American political landscape. It signals a broader trend of populism in the region as voters seek alternative solutions to chronic economic problems and political corruption. His election also may bring increased political polarisation and instability, as populist leaders challenge traditional institutions and norms. Javier Milei’s ascent to power, poses substantial risks to Argentina’s democracy, institutions, and human rights. Populist leaders often leverage charismatic rhetoric and anti-establishment sentiments, tapping into the frustrations of a disillusioned electorate. However, the consequences of populist governance can be dangerous.

Populist leaders erode democratic principles by concentrating power, weakening checks and balances, and diminishing the role of civil society, jeopardising the foundations of democracy. Populism thrives on rejecting established structures, leading to a dismantling of existing institutions, creating a void that may be filled by leaders, like Milei, who prioritise personal interests over national well-being. Populist economic policies, like Milei’s proposal to dollarise the economy, could exacerbate instability, impacting income distribution, social services, and overall economic well-being.

Populism also thrives on dividing society, hindering constructive dialogue and impeding the development of inclusive policies, making it challenging to address shared challenges and pursue collective progress. Internationally, Milei may adopt isolationist stances, straining diplomatic ties and potentially isolating the country globally and regionally. For example, should Donald Trump win the 2024 US Presidential Elections, Javier Milei could see a strengthened relationship with the US. Their shared goals of tax cuts, regulatory rollbacks, and immigration restrictions, along with their criticism of mainstream media and use of inflammatory rhetoric, suggest a potential alliance. This could lead to increased trade and investment between the US and Argentina, along with Argentina adopting more pro-US policies. Javier Milei has also reignited tensions with the UK by asserting Argentina’s “non-negotiable” sovereignty over the Falkland Islands, known to Argentina as Malvinas. His pledge to pursue diplomatic means to reclaim the islands has been met with firm resistance from the UK, which maintains its control over the territory and supports the islanders’ right to self-determination. Milei’s rhetoric has drawn parallels with previous Argentine governments’ claims, but his assertive stance has heightened concerns about the possibility of renewed conflict over the Falklands. The long-standing dispute remains unresolved, and Milei’s actions have exacerbated the strained relationship between Argentina and the UK. How these two events will pan out and shape Argentina’s foreign policy will depend on the ability of Milei to pass legislation and keep popular support.

While the rise of populism may initially respond to legitimate grievances, the long-term consequences can be detrimental to the any country’s health. Argentina will now face the challenge to navigate economic and political challenges while safeguarding democratic values, protecting institutions, and upholding human rights to ensure a stable and inclusive future. Argentina stands at a crossroads, facing an uncertain future shaped by economic challenges, political turmoil, and the rise of populism. Successfully navigating these complexities requires leaders to address underlying issues, rebuild public trust, and foster unity to pave the way for a more prosperous and equitable future.

Lisdey Espinoza Pedraza
Lisdey Espinoza Pedraza
Lisdey Espinoza Pedraza is a politics and international relations tutor at the University of Aberdeen, Scotland. She gained her Bachelor's in International Relations at the Universidad Iberoamericana, Mexico City and her MA in International Relations and World Order at the University of Leicester, England. She holds a PhD in Politics and International Relations from the University of Aberdeen, Scotland. She has spoken at numerous international conferences and has written on topics such as democracy, migration, European politics, Contemporary Mexican Politics and the Middle East. Her research interests include: Democratisation processes, governance and theories of the state, contemporary Mexican politics, Latin American politics, political parties, international relations theories, contemporary USA-Latin America foreign policy.