In the last decades of the 20th century, there were some “achievements” for Argentine progress, which had been long delayed. The first and most notable was the democratic recovery at the beginning of the 80s, after the long cycle of coups d’état, which made it a significant event that the successive governments elected according to constitutional norms could complete their mandates without interruption from the military rebellions that had usurped power time and again.
Now, this democratic recovery achieved from the social-democratic government of Raúl Alfonsín in 1983 went beyond the continuity of elections; it reaffirmed the separation of powers, dialogue, and the search for agreement among different parties and sectors of opinion and sectoral interests, as well as the progressive realization of new rights, including the legal consideration of civil divorce. And this was even more so with the constitutional reform of 1994 in agreement with the Peronist party – which was then in charge of the executive power – that seemed to seek more totalitarian formulas in which the elected government concentrated all power. This reform reaffirmed the separation of powers, republican control, greater strength of the federal system with more autonomy for the provinces, in short, a greater institutional intensity, in addition to the incorporation into the normative framework of environmental protection, gender equality, among other advances.
Of course, this new regime was put to the test during the first two decades of the 21st century, when Peronism attempted to monopolize power again and even sought possible new reforms to limit or alter the separation of powers. But the political system and civil society managed to uphold constitutional validity and the logic of alternating governments. On the other hand, it was not possible to avoid a growing skepticism about the capacity of the democratic system to respond to various basic concerns of the population.
But returning for a moment to the previous stages of the second half of the 20th century, the other advance I wish to highlight from Argentina in that previous century was the progress of the industrialization process, although always incomplete and fraught with difficulties. Historically, the country had an agro-exporting economy as the basis for generating foreign exchange with a very competitive primary sector. But at the same time, to avoid structural unemployment, it was necessary to focus on the service economy on one hand, but also on manufacturing activities that had room to grow, the easiest being those based on the use of raw materials, and later others that were more complex and required specific direct and indirect protection and incentives.
It is not simple to summarize those characteristics of the Argentine development process under the leit motiv of the “import substitution” prevailing in Latin America from 1960 to the late 80s. I highlight two of them: one, the classic direct incentive given by high import tariffs as well as a devalued exchange rate (viewed from the complex comparison of the cost of the local basket with an international one or, if you will, from the simpler one with the McDonald’s Index of the cost of a hamburger); the other, an incentive that operated through the application of export duties on those primary products that lowered the local cost of food, in addition to the subsidy to public services, which together allowed for a lower industrial wage to facilitate competitiveness and incentivize the use of labor, maintaining an acceptable purchasing power in relation to the basic consumption basket of families.
Demolishing the existing
The conservatives and the Argentine right in general have always viewed with horror this system of incentives for industry to generate employment. They prefer market laws without controls or any regulatory intervention, regardless of the social cost of that laissez faire. Under that model, Javier Milei promised to transform Argentina. In that regard, it should be acknowledged that the current president did not hide any of his intentions during his electoral campaign, including the expected timeframe for that method to yield tangible results in terms of general progress, a timeframe set at 50 years or half a century. Subsequently, already in power, Milei reduced the horizon of that possible visualization of improvements at the population level to a generation, that is, between 15 and 20 years. A constitutional government in Argentina is elected for four years and with re-election can last up to eight, so no one should ask Milei for results while he is in government, even if he were re-elected.
To implement that transformation, he emphasized that the country should intensify its primary activities, that is, apply the classic extractivist model by adding to traditional agricultural production mining and fuel extraction. And that is what the government is currently focused on.
The Argentine gross product is still below the level of 2022, and even more so in a more detailed analysis we find that the per capita product has stagnated so far this century. The GDP fell with the Milei adjustment in 2024, and had a recovery from that drop in 2025 and crawls in a quasi-stagnation in 2026, with a sharp decline in industrial activity, partially compensated in terms of global added value by the growth of grain harvests and the increase in oil and gas production. But the employment situation worsens, incomes do not advance, there is a record of closures of manufacturing and commerce companies, while construction also suffers from low demand and to make matters worse, investment continues to decline, private investment due to not seeing good prospects (except in extractive sectors, although not all), and public investment due to the significant cut in public spending, which Milei calls “chainsaw” action due to the severe adjustment made.
The government, meanwhile, is pleased to highlight the economic balance achieved in the budget and in the exchange market, which is still not fully liberated since access for companies is limited on the demand side, with a relatively stable dollar that has become the main anti-inflationary tool. Of course, the drop in the inflation rate is the other achievement highlighted by the authorities, which is very visible. Indeed, an increase in the cost of living of 400% and constantly rising at the end of Fernández’s government at the end of 2023, with Sergio Massa as the “savior” minister in Economics, has now dropped to 2% monthly, a rate still very high by international standards but significantly bearable in local terms.
On that stability, the government reaffirms its program and attributes social and employment problems to the ills of transforming the productive system into a more efficient and competitive one and of course without state intervention, not only in direct terms because one should not “interfere” in the market, but also in terms of active policies, such as subsidies, incentives or promotions, some instruments like those that Donald Trump proclaims in his America First program. Of course, there is a clear exception to that “non-intervention” with the creation and parliamentary approval of a protection system for “large investments,” the “RIGI.” With this institute, capital is granted tax exemptions, reduced tax on profits, accelerated depreciation, exchange rate protection as the currencies generated by those investments remain in the producer’s hands who has no obligation to pass them through the exchange market, in addition to the relaxation of applicable environmental regulations, among the most notable actions. The protected sectors for those possible investments are already oil and mining, although now it is intended to add activities of technological innovation such as digital developments, software, and even AI if there are any.
This direct promotion, different from a free market policy, generates for those activities a kind of specific framework of the “enclave economy” type, with its own monetary, exchange, tax, and regulatory norms applicable.
But the regime has not been tested in court. That is to say, due to the excessive prerogatives granted, a different government with other ideas could in the future review and cut or even cease those advantages and face the legal process against the expected claims of those affected. And that insecurity is greater following the recent ruling of the U.S. courts that accepted that the majority state-owned Argentine company YPF (oil company) violated the internal statute based on the regulations of its host country. The case was brought to that judicial instance because YPF is a company listed on the New York Stock Exchange and yet the Yankee judges considered themselves unable to act as it was a matter of another jurisdiction, Argentina. And the Argentine Judiciary is not precisely the one that enjoys the greatest recognition for its independence, an institutional issue that we will address later.
Meanwhile, for the industry, nothing, even the significant impact that the recent agreement between Mercosur and the European Economic Community could have is overlooked at least for now. The Milei government not only seems to ignore it but, contrary to the rules of Mercosur itself that establish the need to act as a bloc, Argentina seeks on its own new direct trade associations with other highly industrialized countries, possibly to improve its access to export markets for raw materials, in exchange for importing manufactured goods.
With an agreement with the EEC, Mercosur can be the basis for development in the southern cone of America for new industries with international capital seeking greater access to the old continent, whether from China, India, or any other nationality. But that opportunity does not seem to be on the horizon of the current Argentine government. We will see. For now, the visible process is only the dismantling of industries and the closure of companies.
The concentration of the boom in extractive activities is so great that looking at all of Argentina, only productive and employment euphoria is observed in one province, Neuquén, located in the Andean region, where the largest shale oil and gas deposit is being exploited using the method known as fracking (fracturing of the rock where the fuel is found). The rest of the territory seems to suffer, including the central pampean region, the major producer of meat and grains, in this case due to the lethal effect of the undervalued exchange rate (cheap dollar not rewarding for traditional exporters).
The Milei aspiration is that in the long term a mining and oil country replaces its past sources of employment without a compensatory plan, whether for retraining or any cushioning for the workers affected in that structural evolution. That said, he created by law a compensation fund for layoffs, this expense being borne by employers in the previous system, and which from now on is financed with resources from the pension system, which on the other hand are already scarce to face the payments of pensions.
As we see, the economic deconstruction attacks not only the historical productive base but also the basic manifestations of the welfare state. Indeed, in addition to the previously mentioned issue of pensions (cut by more than 40% in real terms), there is also a cut in similar amounts of remuneration for public servants, payments of subsidies to the disabled, and -without exhausting the list- to education in public universities.
The institutional deconstruction
There were many doubts at the beginning of Milei’s government about the level of governance to impose his strong reforms, especially following his systematic attack on traditional political parties which he labeled as the “caste” enemy of the people, certainly drawing on the old vices of the system, corruption, latent nepotism, and often explicit, and the serious differences between action and discourse or promises, in addition to the frustrations regarding social progress.
But surely the fear of a vast sector of that old guard of being displaced was very well exploited by the outsider who knew how to gather support, despite the will of their leaders, partly through the use of spurious instruments, fraud, tricks, blackmail, and even abuse of power, such as tying Treasury contributions to the provinces to the support of their respective representatives in Congress, in addition to the outright purchase of loyalties.
Milei cannot be blamed for inventing the method, but its application quickly recalled other forms of extortion and particularly totalitarianism in the management of other governments, although possibly taken to greater extremes.
A more than delicate issue is the cautious but already evident advance on the judicial system, first with the attempt to place in the Supreme Court of Justice – which currently has two vacancies out of a total of five positions – a lower court judge, well known for his lazy handling of corruption cases affecting officials or former officials, as a way to systematically achieve the expiration (expiration without any sanction) of the same. There the National Senate did not dare to accept the nomination. When it seemed that the judicial issue was coming to an end, the recent appointment of another Minister of Justice gave rise to a negotiation for the placement of judges in the more than 300 existing vacancies, proposing several names without regard to the levels of merit established by the Council of the Judiciary, an institute taken from the Spanish legal system and introduced in the constitutional reform of 1994.
It should be understood that the knowledge of these advances over the other two powers by the Executive is sufficient to configure an offense to institutional integrity, but that aggression was already present in Milei’s systematic attitude disregarding any form of agreement with the opposition, in addition to repeatedly criticizing those who hold different opinions.
To this reality present in daily life is added, with ups and downs, a conflictive relationship with the free press, with assertions such as “95% of journalists are criminals” (sic), explicitly accusing them of “poisoning the people”. At the same time, his audiences with the press are reserved for party-affiliated media, sometimes spending hours talking on radio or streaming programs where he unleashes his excesses of language, of which his presentations during his visits to Spain are sufficient evidence. So far, it does not seem that he has had much success in silencing critical voices, but those voices find his personalized and often disqualifying replies quite unpleasant.
Argentina paid a high cost for institutional instability, for fifty years from 1930 when the constitutional government of Hipólito Yrigoyen fell until 1983 when Raúl Alfonsín took office.
But that does not seem to be within Milei’s spectrum of concerns. For now, he presented to Congress a “political reform” project that, in addition to proposing the cessation of the popular election system for party candidacies (open and mandatory primaries “PASO”), seeks to eliminate public funding for political parties and replace it with private contributions without limits or controls. Private contributions are currently allowed but with ceilings and transparent declaration. Depending on the extent of that possible reform, the degree of weakness that political parties experience will be, already in crisis due to the institutional landscape itself and the other symptoms of frustration observed in Western democracies.
An uncertain future
Beyond the disillusionment of the population with politics, the growing economic hardship is still evident, employment problems, in short, all that we mentioned earlier and without prejudice to the existence of pockets of boom and prosperity, and these facts are detrimental to the government’s popularity.
The establishment is currently supporting projects that ultimately reduce burdens, taxes, and contributions, although the industrial, construction, and commerce sectors are beginning to demand actions to boost activity that can achieve some reversal of negative trends. And at the same time, this group faces another internal debate about the advisability of continuing a Milei government or stimulating some alternative within the pro-business center-right, which offers a less confrontational social position and with less image wear.
But on the other side, the opposition appears dismembered, without sensitive leadership and damaged by the turncoat friends of power who changed allegiance, in a process in which some observers visualize a situation similar to that of Peru, which presented in the last elections and in its Congress a constellation of parties or political factions, none of which reached a significant percentage of support (except, of course, when the two most voted reach a ballotage or second electoral round).
Whether this non-extremist opposition from the center to moderate left can unite in a joint front to present itself as an alternative, or on the contrary, will remain fragmented, is the first unknown. The other is whether the right will make a change or will unite again behind Milei, or will divide just like the opposition.
This political uncertainty extends today to the economy, not only in terms of “country risk” that is, the measure of confidence in the regular payment of the due dates and interests of Argentina’s external public debt, confidence that increases (risk decreasing) as the holdings of foreign exchange by the Central Bank increase, but in terms of the future performance of the domestic economy. And this uncertainty would explain why private investment does not react, despite the fact that the government may soon access the voluntary debt market, in addition to granting greater incentives for capital inflows.