AS/COA Insider: Juan Cruz Díaz on Javier Milei's Legislative Win

AS/COA Online: What are some of the major points in the bill? 

Díaz: One of the most salient issues is a specific regime for investment promotion. Investments above $200 million in specific areas—like oil, gas, and mining—will involve certain incentives, such as in the area of taxes. Most importantly, investors received assurance that they can get access to dollars, which right now are subject to the FX restrictions. Of course, in order to get this incentive, Milei and his team had to make a lot of concessions to governors around the promotion of local small- and medium-sized businesses.

Another provision that is very important involves the privatization of state-owned enterprises. The government initially wanted a comprehensive mandate to basically privatize most of the state-owned enterprises. And after negotiations, several visible companies, such as the national airline, were removed from the list. It's now restricted in terms of the companies that the president can actually move forward to privatize.

AS/COA Online: You mentioned that Milei has maintained a steady approval rating, despite some troubling economic indicators. What factors do you think will determine how long he can maintain his approval rating? 

Díaz: That’s the million-dollar question. As I was saying before, this president is a president of contrasts, but let’s remember one thing: his approval is connected with people’s frustration and anger with the situation and the traditional political establishment. Remember that Argentina has been under a huge inflationary process in the last several years, and one of his biggest mandates has been to stop inflation. 

After a very tough first month in which inflation reached 25 percent—and we're talking about almost 300 percent inflation a year—inflation has been decreasing consistently. That cements in a way some of his approval because, actually, he's fulfilling his first mandate.

But in this presidency of contrasts, there are several other indicators that are getting worse, like poverty and employment. Economic activity is suffering a lot. 

The president believes he can hold inflation under control, that he can improve the fiscal situation of the country. He and his team believe that that's the basis for an improvement of the situation in the second half of this year and next year. So, if that's the case, and if the perception of the society goes in that direction, he will probably be able to increase his approval rating and face the midterm election next year in a better position. 

Before the passage of this law yesterday, Milei was able to claim that Congress didn't give him the tools to pursue his policies. And now he will have to show that with the tools that Congress just gave him, he will be able to pursue his policies and get concrete results around the day-to-day lives of the people.

Nobody can claim that the president is responsible for the inflationary process or the economic crisis that Argentina has. But, as the months go by he will be more subject to scrutiny from the population.

AS/COA Online: In his first months. Milei has spent a fair amount of time focused on international travel. Why do you think he's taken this approach? 

Díaz: The most important asset that President Milei has is his connection to the people because he doesn't have a political infrastructure that other politicians have. He doesn't have a strong party. He doesn't have governors. He doesn't have legislators. He doesn't have a national structure. So his main political asset is this constant connection with the people, which he takes advantage of very well through the media, especially social media. In a way, he's still a president that is campaigning all the time. And at the same time, he enjoys very much the situation of having this international prestige. He’s put himself as a global leader of a new political style that is more connected to a new conservative right. 

By increasing and cementing this international footprint and leadership, he believes he also reinforces his position locally. So I think he's a president campaigning at both the international level and local level because that gives him political strengths to push forward his reforms and reinforce legitimacy. 

That's why, since the return to democracy, he's probably the president who has traveled the most in the first months, and it’s included a lot of private sector diplomacy. He was in Silicon Valley a few weeks ago joining CEOs, meeting with businessman Elon Musk. But he’s also at political events like CPAC in the United States where he met former U.S. President Donald Trump, as well as participating quite actively in European political campaigns with the Vox Party while criticizing Spanish Prime Minister Sanchez. 

He believes that this international footprint not only reinforces his legitimacy and his political capital, but also helps put Argentina at the center of the attention. 

AS/COA Online: What do you think are some of the less-discussed factors affecting the success of Javier Milei’s presidency? 

Díaz: I think a big challenge he has is the effectiveness of the capabilities of a government to manage the everyday business of the state. The technical capabilities of the bureaucracy are quite challenging. 

He has some of the tools that Congress will approve because we anticipate that the lower chamber will approve this modification of the Senate. He will have legitimacy and a level of approval of the people. He will have some international support, as in the case of the news of the renewal of the debt swap agreement with China. So even with countries that he had tension with, such as China, he’s getting traction. 

But the big question here is how Milei's administration will manage effectively the day-to-day operations of the government to make the people feel the changes are affecting their lives. And I think the role that Minister Francos will have here is very important because he has been competent in building these political alliances to get things through Congress. And now in his new role as chief of staff, he will have to put his footprint in getting a more efficient administration of governance. This, I think, will be critical to make people feel the changes happening. 

This interview has been edited for length and clarity.