By Rodolfo Treber, Buenos Aires, Argentina*
In Argentina, the government of Javier Milei is implementing a series of delirious political measures that cannot be explained in any way from the logic of national interest, nor from any economic theory, no matter how liberal and absurd the latter may be.
Price liberalization, subsidy removal, devaluation of the local currency, indiscriminate opening of imports, energy price hikes… These summarize a series of actions aimed at diluting the income of workers, reducing domestic consumption capacity, destroying what remains of the national industry, and consequently, increasing the exportable balances of raw materials and energy.
Clearly, these events represent a rapid process of refocusing the national economy on raw materials, a process that in a short time already caused thousands of layoffs and a brutal increase in poverty by more than 10%, affecting 60% of the total population.
In parallel, the president’s insane plan of dollarization continues, feeding the Central Bank of the Argentine Republic with the currencies that Argentine savers are forced to sell as a result of the cruel adjustment to their purchasing power; a process that, if completed, would significantly worsen the structural problems of the local economy and only facilitate the dividend flow (capital flight) of large transnational corporations.
Without delving into the enormous problems that come with using a currency that is issued and controlled from other latitudes, the idea of dollarization is presented in a framework where that currency has lost 20% of its share in global trade in the last 10 years and is currently depreciating at an annual rate of 3%.
Additionally, there is a shift in Argentina’s trade relations, prioritizing agreements between private entities, totally contrary to the clear global trend towards increased state intervention, protectionism, and treaties of cooperation and development between nations. This change, devoid of any sense of national interest, jeopardizes existing Mercosur agreements which, currently, with Brazil as the main actor, represent 25% of Argentine exports, while if agreements between states with Brazil and India are included, the total of exports accounts for 40% of the total and more than 30 billion dollars. Undoubtedly, this distances Argentina from the possibility of increasing trade with a large part of the world, which today revolves around the BRICS, and limits us to unequal and highly unfavorable links, solely with the United States and its partners.
However, considering that the United States is a major food producer, Argentine exports will focus on raw materials, minerals, and natural common goods for energy (mainly gas, oil, and lithium), with the intention of exploiting and taking over the productive potential of the Vaca Muerta areas, the Argentine Sea, and the Andes Mountains.
As if all this were not enough, while there is a real adjustment in the year-on-year monetary circulation (the sum of the money in circulation of all Argentines and companies), hefty daily interest payments continue to be made to banks for their purely speculative holdings. In detail, current monetary circulation, 10.8 trillion pesos, grew by 106% year-on-year, while inflation in the same period was 220%. This indicates that there was a strong adjustment, exceeding 50%, in the real economy.
At the same time, the incessant dollarization of local profits continues along with its consequent capital flight, while the money held by banks and investment funds amounts to about 32 trillion pesos (three times the total of monetary circulation) and they are paid daily from the State 70 billion pesos of speculative income, while it is claimed that there is no money for social investment.
With the aforementioned aspects, we can identify who the main beneficiaries of this process of reprimarization and looting of the Argentine economy are.
Taking into account the partnerships of the current government and the extractivist model it seeks to deepen, the speculative group BlackRock (led by President Larry Fink), clearly aligned with U.S. geopolitical interests in the region, emerges as the main beneficiary of Javier Milei’s policies.
The maintenance of the speculative financial business, whose expenditure far exceeds all social investment budget items, in absurd coexistence with the discourse of austerity and lack of funds, is explained by BlackRock’s strong shareholding in the country’s main private banks (Galicia; Santander-Rio; BBVA; Macro; and HSBC). Additionally, it is the main interested party in the privatization and acquisition of the Banco de la Nación Argentina to finance its businesses in Argentina with the deposits of the bank that houses most of the national savings.
But, the area of business where the speculative fund is strongest is not the financial one but the extractivist one. It is for this reason that it promotes the export-oriented and raw-material-export orientation of Argentine production.
Currently, BlackRock has a dominant position over the wealth generated in the Vaca Muerta oil field (the largest in the country) due to the majority shareholding of its partners in Pampa Energía and Chevron, as well as the 5.7% stake in the national flagship oil company, YPF.
The same is true in the case of lithium extraction through the company NewCo (a merger of Allkem and Livent) and in gold, copper, and silver through the transnational Glencore PLC.
Regarding the export of food raw materials, BlackRock conditions sector policies due to its large shareholding in Viterra and Bunge, among which explains 22% of the total grain export from Argentina.
In terms of communication, an increase in U.S. interference is also foreseen as a result of total deregulation of the business and the authorization for the arrival of the satellite telecommunication service of Starlink (Elon Musk). In this way, the United States, hand in hand with the “successful entrepreneur” son of the Silicon Valley interventionism project, would have full access to detailed information about the Argentine population, as well as activate a strong tool of cultural domination to consolidate its over-colonization project on our soil.
The planned misery plan that has been implemented in Argentina with the government of Javier Milei, the systematic adjustment to the worker, has as its sole purpose the deepening of looting and exploitation of our common goods for foreign benefit.
* Rodolfo Pablo Treber is an economy analyst who works for the Central Bank of Argentina.