The Kirchners reversed some of these privatizations, notably buying back control of state oil producer YPF from its majority shareholder. (The process has resulted in lawsuits from minority shareholders which are still pending.) Air carrier Aerolineas Argentinas, which was initially sold to Spanish interests, has also been returned to state ownership, where it remains a chronic money loser. And the state railway corporation, partially privatized earlier and also returned to the state, remains massively over-staffed, employing over 30,000 people, making it larger than any single private enterprise in Argentina.

The Likelihood of Pushback

The task of macroeconomic stabilization, rationalizing the welfare state, and addressing state-owned enterprises is enormous. There is much to be said for the argument that if done, it will need to be done quickly, before opposition can build up. Shock therapy—“surgery without anesthesia” as Menem termed it during his era of reform—has the benefit of creating building credibility among both foreign and domestic investors.

And the next president will doubtless remember Mauricio Macri, whose administration proved to be only a parenthesis between populist governments. He had started out strongly, only to find that, when he loosened his inflation targets, investor confidence disappeared immediately and he was forced to seek a huge loan from the IMF.

The IMF itself, which throughout the current administration has had to negotiate repayment plans with a government whose main goal has been to put off as much pain as possible until after the elections, will be hungry for a more serious approach. It is likely to be supportive as far as continuing to roll over Argentina’s debt, although it may find any request for additional lending to be a bridge too far, at least until there is evidence that real reforms have been implemented.

But any new president will find that the genius, if one can call it that, of the Kirchner administrations is that they created powerful counterweights to any effort to dismantle the oversized Argentine state. The “social movements,” subsidized by the state welfare system which they administer, are capable of bringing huge numbers of people out on the street for extended periods of time.

Argentina could conceivably see a sustained campaign of resistance that would look like the multi-month “social explosions” which wracked Chile and Colombia if the welfare system is reformed and price controls are eliminated. Additionally, Argentina’s labor unions, historically strong, though weakened with the decay of the economy, are forces to be reckoned with. Privatization and reform of Argentina’s rigid labor laws could make them join in any anti-government campaign.

One sign of what such confrontations might look like has been in the northwestern province of Jujuy where Governor Gerardo Morales, who is also the running mate of Horacio Rodríguez Larreta, has been locked in a confrontation with protesters over constitutional changes which would limit their ability to engage in disruptive activities.

They have engaged in a sustained series of roadblocks, seemingly enjoying the support of the Peronist central government where President Fernández has denounced Morales’ alleged authoritarianism. Headlines were made when a roadblock prevented a woman from getting needed medical treatment, leading to her death.

Ready for Change?

Key elements of any reform campaign will require legislative action. Much will depend on the composition of Congress. If the “Together for Change” coalition has a majority, perhaps along with representatives from Milei’s libertarians, the next government may be able to get legislation passed. But ultimately, it will depend on the underlying climate of opinion among Argentina’s people.

If the miseries of recent years, with high inflation and economic stagnation, leave the public feeling that it simply cannot take any more short-term pain, reform will founder. But if the public truly has come to recognize that real change, not merely doing the minimum to get past the crisis of the moment, is required, it may have a chance. To justify what remains the emblematic effort at conservative reform, that of Britain in the 1980s, Margaret Thatcher was fond of saying: “There is no alternative.” Whether the Argentine public has reached a similar conclusion remains to be seen.

Richard M. Sanders is Senior Fellow, Western Hemisphere at the Center for the National Interest. He is also a Global Fellow at the Woodrow Wilson International Center for Scholars. A former member of the Senior Foreign Service of the U.S. Department of State, he has served as the Director of the Office of Brazilian and Southern Cone Affairs and at embassies throughout Latin America.

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