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A fragile economy and Milei’s stated plans to severely reduce public spending mean that a prolonged period of violent unrest is likely at some point during his four-year term (2024-2028).

This assessment was issued to clients of Dragonfly’s Security Intelligence & Analysis Service (SIAS) on 21 November 2023.

  • Right-wing libertarian Javier Milei won comfortably in a presidential runoff on 19 November
  • We do not anticipate any major upheaval before he takes office on 10 December, but his plans to privatise state-owned firms will probably spur protests and strikes in the coming months

Argentina has voted for radical change. Right-wing libertarian Javier Milei secured a resounding victory in a presidential runoff on Sunday, 19 November, beating the outgoing economy minister Sergio Massa by more than 11 percentage points. Milei has promised to enact major liberalising economic reforms as soon as he takes office on 10 December. Taken alone, many of these would probably help local and foreign businesses in Argentina and slow the rate of inflation. The annual rate is currently around 142%.

Nevertheless, Argentina will face a tumultuous few years. Milei will have to manage a highly fragile economy and the very real danger of hyperinflation. Attempting to enact his economic reforms in these circumstances risks worsening the situation. He will also govern from a weak position. His party will only control a small number of seats in Congress, limiting his ability to engender confidence in the Argentine economy among investors – and the Argentine public.

Milei has no experience of governing. His public appearances during his career as a TV pundit and the campaign have raised questions about his temperament and his ability to deal with adversity. There are already signs that activists and trade unions will also try to prevent him from passing his reforms. We therefore assess that the chances of an acute crisis during his four-year term will remain reasonably high. This would probably take the form of a period of violent civil unrest leading to government instability.

Peaceful transition likely

We anticipate a peaceful transition period. The losing candidate Sergio Massa quickly conceded defeat on Sunday, 19 November, and promised an ‘orderly transfer of power’. The public reaction to the result has also been relatively calm. We have seen only one plan for a march since the runoff; a left-wing group intends to march in Buenos Aires tomorrow, 22 November. And given the extent of Milei’s victory, we also do not anticipate large or unruly demonstrations around his inauguration next month.

The main trigger for major upheaval during the transition would be, in our analysis, a severe run on the peso that leads to a sudden worsening of living standards. This currently appears unlikely. In his victory speech, Milei did not mention replacing the Argentine peso with the US dollar, implying that it will not be among his first moves (economists have warned that initiating this suddenly would provoke a run on the peso). Massa has dismissed rumours that he will resign as economy minister before the transition. And the government has said that it will not devalue the peso before 10 December.

Milei’s reform plans likely to face obstacles

Milei has signalled that he plans to move quickly with enacting some of his other proposed economic reforms. In his victory speech, he declared that there would be ‘no room for gradualism’. He has yet to publicly provide a full list of his priorities (we suspect he will not do this until he puts forward his economy minister). But on 20 November, he confirmed that he would move to privatise various state-owned firms, including the national oil company. Public sector layoffs also seem likely in the first few days of his term; he reportedly plans to reduce the number of government ministries from 18 to eight.

He is unlikely to enact his most radical proposals, such as dollarising the Argentine economy and closing its Central Bank, before well into 2024 – if at all. There are two reasons for this: first, to prevent panic in financial markets; omitting this from his victory speech implied he was aware of this. Most mainstream economists cited in the international press agree that adopting the US dollar is scarcely feasible due to Argentina’s low foreign reserves, among other issues.

A second obstacle to Milei’s more radical proposals is his weak position in Congress. His party fell well short of gaining majorities at legislative elections in October, and it will not control any provincial governments – another key lever of political power. Milei did gain the backing of some influential members of the centre-right Juntos por el Cambio coalition, which will be the second-largest bloc in Congress. But it is still far from clear whether the coalition will agree to work with Milei; several of its key members refused to back Milei in the runoff. Argentine press has suggested that these divisions will lead to its breakup.

Near-term risk of civil unrest is moderate

Disruptive protests will almost certainly remain the main security risk in Argentina over the coming years. Demonstrations and roadblocks over poor economic conditions have been very common under the outgoing government, particularly in central Buenos Aires. All the signs are that this will not change under the next government.

Several leading activist groups warned the president-elect on 20 November that they would take to the streets if Milei delivers on his pre-election promises to cut welfare spending, lay off civil servants and privatise state-owned firms. A public sector trade union has also threatened to ‘build trenches’ to prevent him from destroying the state.

While disruptive (and such fighting rhetoric aside), demonstrations in recent years have largely been peaceful. But the likelihood of these turning violent will probably be higher after 10 December. Milei has already signalled that he will not tolerate disruptive protests; he said on Sunday that ‘in the new Argentina there will be no space for violent people, or those who break the law to defend their privileges’. This suggests that he will permit the police to forcibly disperse activists who intentionally cause movement disruption.

Even so, we assess that a prolonged period of violent unrest is unlikely during most of 2024; given this, we have reduced our countrywide civil unrest rating from high to moderate. The vast majority of anti-government protests next year will largely involve members of established activist groups rather than the wider Argentine public. This is largely because of his resounding election victory.

As has been the case elsewhere in Latin America recently, we suspect that many Argentines will grant the new president time to see whether his policies improve living standards. Given the political obstacles he faces and his lack of experience, there is a good chance that he will fail.

Triggers for major unrest

There are some conditions in which prolonged widespread unrest would become likely during the second half of 2024. Specifically, that would be if the Argentine economy does not improve, and in particular Milei fails to bring down the rate of inflation. Nearly all similar episodes in Latin America in recent years have been preceded by large demonstrations prompted by the sudden introduction of economic reforms that the population perceives as unfair or that prompt a severe and sudden deterioration of living standards. The most probable ways this could occur include:

  • The government announces immediate and significant cuts to social spending
  • Hyperinflation takes hold, preventing people from buying basic goods
  • Negotiations between the IMF and the new government break down and/or the IMF refuses to release further funding to Argentina
  • The government prevents people from withdrawing their money from banks

Of these, the most probable over the coming year would be significant cuts in social spending; prior to the election, Milei said that he would do this, albeit gradually.

Nevertheless, the potential for large anti-government protests to escalate into widespread civil unrest would depend on the reaction of the authorities. Most recent instances of prolonged unrest in Latin America were triggered by an unusually violent police response. Another probable trigger for an escalation would be if Milei were to announce a national state of emergency. The Argentine government used both in late 2001, leading to the country’s most severe period of unrest in recent history.

Images: (1) Argentine presidential candidate for the La Libertad Avanza alliance Javier Milei waves to supporters after winning the presidential election runoff at his party headquarters in Buenos Aires, Argentina, on 19 November 2023. Photo by Luis Robayo/AFP via Getty Images. (2) Police officers stand by a security barrier in the surroundings of the Legislature of the City of Buenos Aires, Argentina, on 4 September 2023. Photo by Luis Robayo/AFP via Getty Images.