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Orthodox Adjustment Shock and All the Eggs in Washington's Basket


Highlights: President-elect Javier Milei signed a deal to buy 24 F-16 aircraft from the U.S. The purchase was part of Milei's promise to align his government with the United States and Israel. Milei knows that political spending is not enough so that people do not suffer the weight of the inevitable and profound adjustment of devaluation and liberalization of tariff and fuel prices. The new president arrives sustained by a resounding election and a very perceptible popular illusion, writes Ruben Navarrette.

The worst government in 40 years of democracy leaves behind an unprecedented trail of poverty

One of the first tasks that Javier Milei carefully but discreetly took pains to ratify during his brief visit to Washington was the purchase of 24 F-16 aircraft. It was a decision straightened out by his promise to align his government with the United States and Israel. For the White House, which is still trying to understand this particular and two-year-old political figure who will preside over a chaotic country but with a lot of weight in the region, this ratification dissolved the concern that Argentina would be inclined to accept the Chinese offer to re-equip the Air Force, whose aircraft anemia has not yet recovered from the losses suffered in the war with Great Britain in 1982!. The joke that ran these days is that there was a lack of equipment to comply with the authorization to shoot down aerial threats – planes, drones – during the presidential inauguration. That is to say, an abstract order because it cannot be carried out, unless it is carried out by others.

The choice of the American F-16s, which are in Denmark, had an important significance because changing military suppliers, as proposed by a wing of the outgoing government headed by Cristina Kirchner, was not a mere change of mechanic but of strategic orientation in a very delicate matter. Sabino Vaca Narvaja, the outgoing ambassador to Beijing and a late Maoist, pushed that option a lot. Vaca Narvaja is a Kirchnerist with a black palate and appealed to all the levers – and the Chinese have many – to tip the balance in his favor, but the weight of Washington and the persuasion of Jorge Argüello, outgoing ambassador to the US, who was dismissed by Biden's team with honors at a breakfast at Blair House, were more powerful. a prime spot in the White House for illustrious visitors. Delicate diplomacy at the service of politics.

Milei, then, will continue the efforts of the previous government in charge of Jorge Taiana, former Minister of Defense. It was a gesture by the president-elect to continue softening hearts and for Washington to throw a new financial noose in the middle of this economic quagmire.

With a very discreet profile, important figures from Washington's permanent staff will disembark in Buenos Aires: Jay Shambaugh, assistant secretary of the U.S. Treasury; Michael Kaplan, a powerful bureaucrat in the line of that ministry, who is always met by Argentinian beggars ministers, invariably greedy for fresh funds; and Mike Pyle, Biden's direct representative to the G-20 and G-7, the club of the world's most powerful nations. A catch-all deduction is that the officials come to take the temperature of the local situation and to make contact with the staff of Luis Caputo and the new administration, in need of urgent bridge loans to skip what are predicted to be the crucial period for Milei and his government: the first four months. But, not surprisingly, there are many doubts in the Treasury Department and the same in the IMF. However, the sending of these influential emissaries is indicative of an interest in helping. As well, the possible presence of Ukrainian President Volodymyr Zelensky at the inauguration, only possible by an American gesture, they deduce here.

"Seeing is believing," they say in the U.S., resigned to the ever-outstretched hand of a country without direction and confused, with a new head of state who declares himself a follower of Trump, but begs an administration at odds with the one admired by Milei. One of the travellers has already said this to show his flexibility. The IMF "must be willing to withdraw if a country doesn't take the necessary action," Shambaugh said.

Despite the apprehensions aroused by Argentina and Milei himself, the fact that they carefully take into account there is that the new president arrives sustained by a resounding election and a very perceptible popular illusion. Of course, as they always say in politics, it's one thing to talk about death and another thing to die. Translated: it's one thing to talk about adjustment and another to put up with it.

The speech that Milei will make to those who approach Congress, the first gesture of ignoring the legislators and Congress, will ask for effort and sacrifice to face the crisis. Turning his back on politics in his first contact as president is only symbolic. Milei knows that political spending is not large enough so that people do not suffer the weight of the inevitable and profound adjustment.

The forecast of a strong devaluation (80%?) and the liberalization of tariff and fuel prices – before the end of the year there will be another increase – and, in addition, of wheat, which will take the price of bread and noodles, popular consumption, much higher, will have an impact that Milei supposes will serve to open the doors of external financing. Inflation in January and February is expected to exceed double digits. It is also estimated that the fall in subsidies will increase transport and pensions are in the crosshairs, as well as social plans. Interest rates will rise and there will be a recession. An orthodox shock all the way down the line.

The adjustment will then have a strong social impact and it will be politics that will have to weave the support. The new president of the Chamber of Deputies debuted with logical incompetence before a plenary session in which the radicals ended up imposing Julio Cobos and the PRO could not nominate its third vice president because the oven there is not for buns: Ritondo, Macri's frustrated candidate for the Chamber, could not prevent another bloc promoted by Miguel Pichetto from sprouting. Monzó, Lospenatto and Massot, a sector to which they attribute an affinity with Horacio Rodríguez Larreta, and it is not yet known if the purest followers of Patricia Bullrich will remain in space.

There is still no coordination and that is obvious. The elected cabinet is a combination of officials from different political backgrounds; some who meet for the first time. The challenge is thus even greater and so are the misgivings. Karina Milei, the central figure of the new administration, concentrates internal power and exercises it. She also concentrates the hatred aroused by the personal moods she transmits to her brother, of whom she is a jealous caregiver.

The telluric movements in the stormy summits of La Libertad Avanza determined the reduction of power of Victoria Villarruel, the vice president who when she spoke on television during the campaign said "the formula opines," as a way of putting herself on the same level as Milei. It is said that Villarruel had arranged with Miguel Angel Toma, who would be the chief of the spies, and that he would have presented him to Marc Stanley, the U.S. ambassador. Milei, aware of this, fulminated against the candidate, distanced himself from his vice president and made sure that this misstep of his running mate was known.

The challenge that begins today in the country is enormous and faces enormous difficulties for the common man. And not just for him.

Milei will fully understand the irony that Sergio Massa left in his ears at his last meeting, when the president-elect complained about the pressures from different sectors: Welcome to reality, Javier! Of course, the departing administration also leaves a trail of unprecedented poverty, as the indisputable balance of the worst government of the forty years of democracy. End of story.

Source: clarin

All news articles on 2023-12-10

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