The big news out of South America is that Argentina has elected a new “libertarian” president, Javier Milei. So, what will this political shift mean for Argentina?
Since Milei won’t have enough parliamentary support from the Peronists, we should expect some unconventional tactics to bypass Congress. Milei also has a strained relationship with several BRICS countries – with China and Brazil topping that list – so hopefully they have some good translators.
The quick and dirty here is that Argentina will be the center of lots of drama for the foreseeable future. So you may want to hold off on your investments in this region and grab some popcorn while you’re at it.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Hey everybody. Peter Zeihan here coming to you from Central Park in New York City. And on the topic of Skating on Ice, let’s talk about what’s going on in Argentina. They recently had just about a week ago, had a new presidential election and they have a new president by the name of Javier Malay, who bills himself as a libertarian.
Now before you libertarians get too excited, a libertarian in Argentina does not mean the same thing that you’re probably thinking of. In fact, nothing politically in Argentina means the same thing that you’re thinking of. Argentina does things its own damn way and it’s always really weird. So for example, the ruling Peronist are often lumped into the socialist camp.
Leftist camp. But really what they’ve done is they’ve combined the most counterproductive and self-destructive aspects of socialism with some of a really, really sloppy version of fascism. So leftist they are not. They just like to print currency. And don’t let that go to your head. Same holds true for Malaysia’s own thing, and you shouldn’t expect him to fit any pattern.
He’s not the Argentine Trump. He’s not anything. He’s himself. He’s also never been in government. So he may have some grand ideas about what it comes to abolishing the central bank or dollar raising the economy and doing away from the peso. Just keep in mind that he does not have sufficient votes in parliament to get any of this done without cooperation from the Peronist.
So we’re going to see a lot of loud policies, a lot of attempts to do end runs around the Argentine Congress. And whether it goes anywhere, it’s just early days, too soon to know for sure. It’s going to have a much bigger splash when it comes to foreign policy in Argentina, like in most countries, the political leadership has a lot more freedom in dealing with foreign policy than they do with domestic policy.
So in the case of Malaya specifically, he’ll loathes President Lula of Brazil, who is a more classical leftist, if you want to use that category against not perfect, but it’s more it’s more fitting for Brazil than it is for Argentina. And so Lula has already announced that he’s not going to be at the inauguration, getting the relations off to the best possible foot.
And that means a Mercosur, which is the common market, the free trade zone of the Southern Cone that involves Brazil, Uruguay, Paraguay and Argentina is basically dead in the water from both an economic and a diplomatic point of view. Oh, hey, I got a visitor. Anyhow, we’re just going to crop him out. Sorry. Anyway. Or maybe not. New York.
What do you do? Anyway, this was one of the world’s great trade zones, and it’s basically on ice now. Beyond South America, things are also going to get fun because Argentina was just given admission is to the BRICS alignment. Now, BRICS is an association of Brazil, Russia, India, China and South Africa that has well, it’s never punched up to its weight.
It’s always been kind of an odd grouping. And Malaysia has made it very clear that he hates all things Chinese. And since China is Argentina’s largest trading partner and is the dominant power in the BRICS, this is colorful really soon. So the thing you have to keep in mind about all of this is when it comes to Argentina, there can be a lot of smoke without being fire and a lot of noise without anything real happening.
But when you apply Argentina, his own pension for drama to other groups outside the country who have more flavor than substance, things like BRICS, things like Mercosur, things can get really crazy really soon because he’s going to call a spade a spade and he’s going to throw a lot of monkey wrenches into the works. Probably the thing that is going to have the biggest single impact is going to be the Mercosur attempt to have a free trade zone with the EU.
Now, this deal has been under negotiation for how we’re pushing 20 years now, and they believe that they finally have it worked out. Now, Lula decided he wanted to get this all shoved through before Malaya was inaugurated, but then he flat out asked the Europeans for a multibillion dollar bribe to get it done. So pretty much that trade deal is done, too.
So if you’re looking at investment into Argentina or Brazil for the foreseeable future, anything that requires value added work and like manufacturing honestly should just kind of write off for the moment because the entire legal framework is going up in smoke right now.
