Javier Miley began his libertarian economic experiment to transform Argentina. In a series of reports, The Telegraph's global economics editor Ambrose Evans-Pritchard travels through what was once one of the world's richest countries to find out whether “shock therapy” might work. You can read the first part of the series here and the second here.
Argentina's abandonment of BRICS is more than a minor earthquake in world diplomacy. This has broken the spell of an ever-expanding bloc of states opposed to the Western liberal order.
Since the original quartet of Brazil, Russia, India and China created the bloc in 2009, the momentum has been one-sided, and then earlier this year expanded to South Africa and then to Iran, Saudi Arabia, Egypt, Ethiopia and the Emirates.
Finally, the country of the Global South (and this is a complex ideological construct) has retreated from a group that is increasingly becoming a cover for Xi Jinping's expansionist China and the creation of a Chinese-led financial system aimed at displacing the Bretton Woods institutions.
The defector positions himself as a staunch member of liberal democracies and the US military alliance, without any ifs and buts, based on moral and philosophical preferences and at some risk to his immediate economic interests.
The BRICS alliance is increasingly becoming a cover for Xi Jinping's expansionist plans. Photo: Per-Anders Pettersson/Getty Images
“The West is in real danger, so we must stick together,” said President Javier Miley.
“My priority is to be an ally of the United States. I will not negotiate with communists,” he said after winning the election in November. To almost everyone's surprise, his actions were quick, dramatic, and completely consistent with his words.
The Biden administration can hardly hide its satisfaction that the country, so often at the forefront of Latin American intellectual and political fashion, has switched sides. The White House bit its tongue over Miley's glowing praise of Donald Trump, focusing on the larger strategic goal.
The US Secretary of State and the head of the CIA rushed to Buenos Aires to seal the alliance. So did the four-star head of U.S. Southern Command. “President Miley, we hear you loud and clear,” said General Laura Richardson.
“This is a real blow for China after all the hype around the BRICS countries. If Miley can succeed and show that he doesn't need China at all, it will have a demonstration effect throughout Latin America,” said George Magnus of the China Center at Oxford University.
It was difficult to overstate the extraordinary spectacle when Javier Miley appeared last month in a naval uniform, side by side with Richardson, in the frozen Patagonian port of Ushuaia and announced the creation of a joint military base to patrol the Antarctic, with little advance warning and against angry forces. the disagreement of the governor of Tierra del Fuego, who declared the American general persona non grata and “accomplice to the British occupation of the Malvinas Islands.”
Argentina has applied for joining NATO as a “global partner” and bought 24 American F-16 fighter jets. Photo: EPA-EFE/Shutterstock
Days later, Argentina bought 24 American F-16 fighter jets from Denmark, with Washington's approval, to replace aging Mirage jets. The Defense Secretary called it “the most important purchase since the return to democracy in 1983.” Britain quietly withdrew its objections to ease the situation.
That same week, Argentina formally applied to join NATO as a “global partner”. The political piety of the Peronist leftist establishment is collapsing like ninepins. Even flights from Buenos Aires to Cuba have been suspended.
Javier Milea's admiration for the United States seems completely sincere, and at times almost mystical. It dates back to Argentina's golden age of prosperity in the late 19th century, shaped by the ideas of Juan Bautista Alberdi, an evangelist of the moral doctrines of Adam Smith and the Wealth of Nations.
“The US Constitution is very similar to our Alberdi Constitution of 1853, which in 35 years transformed Argentina from a barbarian country into a leading world economy. We share a common cultural DNA that goes back to our Founding Fathers,” he said.
“It was these ideas that lifted the vast majority of the world's population out of extreme poverty and made America into the power it is today. We strayed from the path, and it cost us 100 years of failure and economic suffering.”
Whether Argentina's golden age was ever that rich is debatable, but in 1901 the country was doing well enough to prompt a book by an Australian politician called Our Great Rival: The Argentine Republic. The statism of the clientelists put an end to this. Per capita income in Australia is now four times higher.
Cloned English mastiff dogs Miley named after his favorite economists: Murray Rothbard, Milton Friedman and Robert Lucas. Photo: MARCELO DUBINI (CARAS – PERFIL)
Mr. Miley calls himself an anarcho-capitalist, a storm trooper for the “Austrian” economy, but this is his act as a showman. His latest book, Capitalism, Socialism and the Neoclassical Trap, is best read as a celebration of Adam Smith, the Hidden Hand and the labor theory of value, even if the Scottish economist fails to join Miley's canine pantheon.
The four bred clones of Mile's beloved English mastiff Conan (RIP) are named Murray after Rothbard, Milton after Friedman, and Robert and Lucas after Nobel laureate Robert Lucas, representing the Austrian school, monetarism, and Lucas' critique of neoclassical economics.
He plays with the dogs for an hour every morning before he starts work, each clone being kept in a separate pen because they fight. How do dogs establish hierarchy among a pack of clones? It's a behavioral puzzle.
Mr. Miley's philo-Semitism is just as sincere and just as mystical. “It was when I read Moses in the second book of the Torah that I became a Taliban for freedom. Without a doubt, Moses is the greatest freedom hero of all time,” he said.
Fenómeno barrial… pic.twitter.com/LcltQ43ovy
— Javier Milei (@JMilei) February 6, 2024Raised in a Catholic family, Milei was fascinated “The History of the Jews” by Paul Johnson and gradually moved into the orbit of the Moroccan Sephardic synagogue in Buenos Aires.
One of his first presidential trips abroad was to pray at the Western Wall in Jerusalem, wearing a kippah and badge in solidarity with the hostages in the Gaza Strip. Last month, he revealed that his great-grandmother was the daughter of a rabbi.
Unlike the culture warriors of the American right, he is a defender of Ukraine, not an agent of Putin's propaganda. This makes him an unusual and more attractive figure on the Western stage along with the Italian Giorgia Meloni.
Will Argentina pay a high price for directly confronting the Russia-China axis and cozying up to Taiwan? The departing Peronists, seduced by the fallacy of extrapolating Chinese GDP growth, shouted from the rooftops that Argentina would lose millions of jobs and face “financial collapse” if it turned its back on the Belt and Road and Beijing's benefits.
Like Georgia Meloni, Miley’s anti-Putin stance makes him an attractive figure compared to the culture warriors of the American right. Photo: TIZIANA FABI/AFP
Javier Miley challenged this Latin version of project fear. Chinese and Argentine private companies are free to conduct any legal trade they wish, he said, but the state will not deal with Xi Jinping's communist regime beyond minimum protocol. But reality is already setting in.
Beijing has provided $18 billion in emergency swaps to cover foreign exchange reserves when no one else will touch the country. The final tranche of $4.9 billion is due in June.
It is unclear whether Argentina's central bank will have accumulated enough hard currency by then to meet the deadline, and failure to do so would amount to a sovereign default. . Much depends on the soybean harvest and the vagaries of the weather. Argentina's foreign minister and Argentina's central bank governor have been in Beijing in recent days to ask for an extension to the agreement. China is playing hardball.
Two giant $5 billion hydropower projects in Patagonia have been suspended in what many see as retaliation. Gezhouba Group laid off 1,800 workers and repatriated its engineers. Such Chinese infrastructure contracts and loans always contain secret clauses and penalties.
But at the end of the day, China's economic survival depends on importing food and raw materials. It sources 93% of its soybeans and nearly 100% of its sorghum and barley from Argentina. These are interchangeable goods.
Even if China stops buying Argentine products, it will have to buy animal feed elsewhere or its own meat industry will collapse. The world market will reshuffle grain trade until supply and demand return to balance. It's the same with lithium. So who's really in charge?
Next year will be a test of what will happen to emerging market economies that emerge from the Belt and Road and challenge China.
The experiment comes at a time when informed economic opinion no longer thinks China will overtake the US to become the world's largest economy by mid-century, and that it has probably already doomed itself to a middle-income trap under the neo-council of Xi Jinping. Maoist regression.
This comes as India gravitates towards the Quad and the US-led security hub in Asia, exposing the political inconsistency of the BRICS project. And it comes at a time when even Brazil is beginning to lose patience with China's beggar-thy-neighbor strategy of dumping its massive excess industrial capacity on the rest of the world.
Javier Miley may be unique personality, but he gained power by using TikTok and Twitter to infiltrate the libertarian currents of Argentina's post-Peronist youth. Far from being a passing anomaly on the far side of the world, he may be the harbinger of a free market counter-revolution against wokeness and the leviathan state. The West isn't done yet.
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