Javier Milei promises to use a chainsaw to end Argentina’s statist inflation.
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“Long live freedom, damn it” was a campaign cry by Javier Milei, and a sentiment he repeated on Sunday night when he was declared the winner in a second round of elections for the presidency of Argentina. Milei, 53, a former economist and congressman, promises “limited government, respect for private property and free trade. The model of decline has come to an end. There is no way back.”
Known for his unruly mop of hair and four giant mastiffs, Milei in a previous life was the frontman of a Rolling Stones cover band called Everest. On the campaign trail he sang La Traviata while wearing a yellow and black superhero costume as General AnCap, in honor of anarchist capitalism, as he calls his movement.
This free-market hero has referred to his Argentine colleague, Pope Francis, as a “communist moron” and is interested in expanding private gun ownership. His favorite object is a chainsaw that he lights up and waves to demonstrate his determination to cut into pieces Argentina’s legendary regulatory apparatus and welfare state, where just six million private sector workers support 20 million government employees and pensioners. .
“Today the reconstruction of Argentina begins,” he stated. “Today the end of Argentina’s decline begins. Today the impoverishing model of the omnipresent State ends, which only benefits some while the majority suffers.”
He intends to eliminate taxes on exports, especially on Argentina’s large agricultural products, such as soybeans and beef, and is interested in “dynamiting” the Argentine Central Bank, which, according to him, is the worst in the world. and one of the main causes of the country’s 140% annual inflation. rate. To avoid another bailout from the International Monetary Fund (which occurred most recently in 2018 to the tune of $57 billion), he wants to abandon the peso and dollarize.
But the biggest impact of a Milei presidency will likely be the rise of a powerful energy industry. Shares of Argentina’s semi-nationalized oil champion, Yacimientos Petrolificadores Fiscales, or YPF, rose 25% Monday on Milei’s victory and anticipation of renewed enthusiasm for drilling, baby, drilling.
“YPF must be an instrument for the transition, while economic imbalances are corrected,” Milei said in June. The company posted a net profit of $3 billion last year and Milei intends to fully privatize it.
Argentina produces around 600,000 barrels per day of oil. According to Oswald Clint, an analyst at Bernstein Research, much more could be extracted from a prodigious untapped energy endowment, including the world’s second-largest shale gas basin called Vaca Muerta, on 9 million acres in Patagonia. Like the Eagle Ford or Permian fields in Texas, Vaca Muerta potentially has 300 trillion cubic feet of natural gas and is less than 10% developed. Expectations are already so high for Vaca Muerta gas that YPF and Malaysia’s Petronas are developing a $10 billion LNG export terminal.
The big guys like Chevron
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, BP, Total and Equinor are there too, and have already been drilling in Argentina, both onshore and offshore, where the geology beneath the waters of the Atlantic is analogous to that found thousands of kilometers away in the country of Namibia, in West Africa (the landmasses were connected many millions of years ago). Recent exploratory drilling in Namibia resulted in large oil finds, which the oil majors hope to replicate in Argentina. ExxonMobil
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Earlier this year he announced that he was reviewing his half a million aces in Argentina for a possible sale; Milei’s ascension may convince them to stay.
It’s still early, but one of the biggest potential individual winners in an Argentine oil boom is likely to be Marcos Marcelo Mindlin, 59, president and 17% owner of publicly traded Pampa Energía (NYSE: PAM), a leader in power generation, wind energy. agricultural and petrochemical. Pampa produces 50,000 barrels of oil per day and says it has land to drill 2,200 wells. Pampa shares rose 18% on Monday after Milei’s victory, raising the value of Mindlin’s stake to more than $400 million.
There is pressure to perform. Milei intends to cut $12 billion in annual energy subsidies, end price controls, fuel shortages and ensure Argentina no longer has to import natural gas from its neighbors ($5 billion a year past).
Without a doubt, Argentina has much more to offer than just fossil fuels. Analyst Clint sees potential for 300 gigawatts of onshore wind turbine operations, and there are about 30 mining projects in the works to tap the world’s third-largest lithium reserves.
Although Milei says he doesn’t believe human activities can cause climate change, this is an all-of-the-above type of person. As she said in a presidential debate: “As a libertarian liberal, I believe deeply in international trade and its openness. Basically, those countries that are most open to the world have a per capita income nine times higher than those that are closed. I also believe that the State should not interfere in commercial relations: it does not have to interfere and say who I should trade with and who I should not.”
Milei goes so far as to suggest that people should be able to sell their organs and has promoted economist Murray Rothbard’s idea that parents should be free to sell their babies.
Milei with Fátima Florez after winning the presidential second round on November 19.
Luis Robayo/AFP via Getty Images
Milei, single, childless and separated from his own parents, is now dating comedian Fátima Florez, who rose to popularity a decade ago for her impersonations of then-president Cristina Fernández de Kirchner.
There’s a lot to make fun of about Milei, who claimed to have hired a medium to help him communicate telepathically with his late dog Conan (d. 2017). According to Milei’s biographer, it was Conan who revealed to Milei his mission to become president.
Milei has done everything she can to replace her best friend and now keeps four English mastiffs, all clones of Conan and named after free-market economists like Rothbard and Milton Friedman. To reverse decades of statist and Peronist rule in Argentina, she will need the advice of all of them.
