How Argentina’s radical new pro-US leader Javier Milei could rock Latin America – and the world

For a start, the new president wants Argentina out of trade blocs such as Brics and Mercosur, and to cut ties with socialist or communist states including China
Worryingly, his ideas could reflect a growing unhappiness globally with the geopolitical status quo and herald more fragmentation

Abishur Prakash

Published: 7:30pm, 22 Nov 2023

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As the pendulum of geopolitics swings in a different direction, driven by the Ukraine war and US-China rivalry, one of the new realities is that populism is back, with a fierceness unseen in modern times. Look no further than Latin America. As Argentina grapples with an unprecedented economic crisis, the populace has elected Javier Milei as president. His ideas, if implemented, could reshape global affairs.

When campaigning for president, Milei proposed bold changes to his nation’s relationship with the rest of the world.

He pledged to cut ties with “socialist countries” such as China; he called for Argentina to exit Mercosur – a regional trade bloc with Brazil, Uruguay and Paraguay – and to overhaul the trade relationship with Brazil; he pledged closer relations with the United States; and he said Argentina would no longer join Brics.

Should Milei follow through on these promises, his decisions would not only affect Argentina. They would also drive geopolitics in a new direction.

Let’s start with Latin America. Earlier this year, Brazil proposed a new approach to rebuilding sovereignty in the region, focused on introducing a common currency, energy market and even a unified approach to security and defence. It was seen as based on Latin America having had several governments that were either centrist or leftist. Behind these proposals was an idea, by Brazil, to relaunch the Union of South American Nations, which never came to fruition.

The election of Milei changes the calculus. Will he want to “plug into” a common energy market or common currency? Or will he take an “Argentina first” approach?

A Milei supporter with a fake chainsaw gestures during the closing campaign rally in Cordoba, Argentina, on November 16. Milei has vowed to take a chainsaw to the size of the state. Photo: AP

The more the nation pursues its own ideas, such as handling trade independently, instead of through a bloc, the more it could create friction between Argentina and Brazil, the region’s two largest economies. This would risk splitting Latin America, as nations either pick sides or also adopt the Argentinian model.

There is also Mexico, which has proposed a lithium alliance with Argentina, Chile and Bolivia. Unlike with Brazil, Argentina might find friendly footing with Mexico, creating a paradox of sorts, as Argentina pivots from one type of sovereignty to another.

Now, China. The new Argentinian government does not want to strengthen relations with “socialists” or “communists”. It is a clear return of ideology to national and global politics. And it marks a massive roadblock for China, which is eager to bring nations deeper into its orbit.

Except now, from Italy to the Philippines and now Argentina, nations are ditching China, eager to align with like-minded nations that share their values. Could Argentina lead a new band of countries in the region that also want to renegotiate their ties with China?

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Argentina’s changing attitudes towards China stem from its new belief that “common approaches” do not work, that unilateral deals are the way forward. It is with this mindset that Argentina is also rejecting Brics membership – a bold move considering the pivotal role the grouping could play in the coming years.

Finally, the United States. All of Milei’s proposals, if implemented, will indirectly move Argentina closer to the US and the Western world. Perhaps this is the new geopolitical strategy of Buenos Aires, to align with the West, with what it considers to be like-minded nations. Does this make Argentina the new beachhead of the West in Latin America?

Of course, a West-Argentina bromance would not be straightforward, either. While Argentina may wish to move closer to the US, Milei also wants to leave Mercosur – with which the European Union is negotiating a trade deal. This would create a strange set-up with Argentina moving closer to the US while also abandoning a trade bloc signing a deal with the West.

Why Argentina election could shake China-Latin America relations

Alongside this, closer relations with the West would point to great power competition reaching the shores of Latin America, as nations such as the US and China, and in Europe, compete for regional power and clout.

What does this all mean? First, Milei’s election is part of the shaping of a global consensus on whether the geopolitical status quo is working for everybody. For Argentina, clearly, it is not. And, Milei’s ideas could be echoed throughout the world, creating a domino effect of nations unhappy with how the world is functioning.

Shoppers browse nearly empty shelves at a wholesale supermarket in Buenos Aires, Argentina, on October 21, amid soaring inflation. Photo: Bloomberg

Second, Milei’s push to reassert Argentina’s sovereignty and national borders is likely to fragment an already fragile region and world: from China being out, to the US being in. Everybody else, from governments to businesses, will have to grapple with this fragmentation, as it bites into everything from economic flows to technological advancement.

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Lastly, nations are redesigning their trajectories at the speed of light. Changes that used to unfold over decades are now taking place in years. New national politics is redesigning the alignment, allegiances and attitudes of countries, often in the most unexpected ways.

All of this points to Milei’s election being not just about Argentina, but also about the state of the world. Some might interpret it as a one-off event, a glitch in an otherwise stable system. Others, however, might see the election as a referendum on whether the current design of the world – from paradigms to protocols – is still effective.

If the latter turns out to be true, then Milei’s election might be only the first of many such elections, upending geopolitics in a way few are ready for.

Abishur Prakash is the founder of The Geopolitical Business, an advisory firm in Toronto