June 17, 2024

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The global business elite is infatuated with Javier Milei

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There was a slight gasp among my headset-wearing neighbours in the World Economic Forum’s congress hall when Javier Milei blamed all political movements except his own for the west’s woes.

“Whether they proclaim to be openly communists, fascists, Nazis, socialists, social democrats, national socialists, Christian democrats, neo-Keynesians, progressives, populists, nationalists or globalists, there are no major differences. They all say the state should steer all aspects of the lives of individuals,” Argentina’s libertarian president told the well-heeded crowd last week.

Corporate executives exchanged amused gazes. There was sporadic laughter. It was only one among many astounding lines in Milei’s 20-minute speech in Davos — his first trip abroad since taking office in December. WEF participants, whom the economics professor labelled the “heroes” of the capitalist world, had been “co-opted” by neo-Marxists, radical feminists and climate activists, he warned.

The address drew substantial applause. Walking past me towards the exit, one European private equity veteran confided in being “impressed”. Later that day a fund manager insisted that beneath Milei’s provocative veneer lay “some truths”. The Davos elite had been lectured about losing its way and had loved it.

It was not just Milei’s staunchly pro-business stance that struck a chord. “People are intrigued because he managed to get elected on an austerity platform, by telling voters he would cut their benefits and state subsidies,” said one WEF attendee.

The warm reception echoed positive comments from the IMF, a big creditor to Argentina. The Washington-based institution agreed to disburse funds after the Milei administration sought to slash the deficit and devalued the peso. The new administration “has moved boldly to correct several of the misalignments that are there in the economy”, the IMF’s deputy managing director Gita Gopinath said in Davos.

JPMorgan’s number two Daniel Pinto, an Argentine and WEF regular, was also bullish. Milei’s administration was “addressing all the right things in the economy”, he said, hoping that the measures could bring “an end to 80 years of economic deterioration”.

A few participants likened the business elite’s support to that of Wall Street for Donald Trump, triggered by the prospect of free market policies. But somehow Milei — who was seen brandishing a chainsaw during his campaign to symbolise his plan to shrink the state — seemed a more credible deregulation champion because of his academic background, one suggested.

Others speculated that some of the praise might be part of a cynical move for a share of Milei’s planned privatisations of dozens of state-owned companies. “I’ve been surprised by how positive some bankers are about Milei’s ‘economic theories’,” said Allianz chief economist Ludovic Subran after the speech. “I am wondering if it’s not pure vested interests — the smell of a big privatisation wave coming and its investment banking mandates.”

But, perhaps naively, many found comfort in the belief that Milei’s most radical ideas would be tempered by a grown-up team around him. A private meeting between CEOs and foreign minister Diana Mondino, chief of staff Nicolás Posse and economy minister Luis Caputo made a good impression, according to one executive in attendance. “They came across as professionals,” he said.

Sure enough, back home from the Swiss Alps, the Argentine president was forced to make concessions on his sweeping reform bill currently being debated in congress, in which Milei’s party holds a minority of seats. The privatisation of state-owned oil major YPF no longer features in it — a sign that the libertarian politician might have to compromise with the neo-Marxist forces he was so quick to decry in Davos.

This article was amended to reflect the fact that Davos was Javier Milei’s first trip abroad since taking office as president, not since his election.


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