Is Argentina’s President Turning the Economy Around?

 By Henry Srebrnik, [Fredericton, NB] Daily Gleaner

Argentina’s libertarian President Javier Milei is often derided by western media as a political kook. But is that a really fair assesment?

When Argentina elected him in October 2023, the economic and political establishment confidently predicted he would only last a few weeks. And yet, not only has Milei managed to stay in power, but the evidence also suggests that he is turning Argentina around.

Under Milei, Argentina has achieved a historic milestone by eliminating its fiscal deficit for the first time in 123 years, an achievement attributed to several aggressive economic reforms and austerity measures implemented since he took office.

Milei’s administration, promising to pull Argentina out of a dire economic crisis, undertook substantial reductions in government spending, which included slashing financial transfers to provinces and eliminating subsidies for energy, transport, and other sectors. These cuts were part of a broader strategy to stabilize the economy and restore fiscal balance.

As part of the austerity measures, several government agencies were dissolved, including the Ministries of Culture, Health, Labour, and Social Development. This move aimed to streamline government operations and reduce public sector employment by the thousands.

Last March Milei announced a cut of 70,000 employees from Argentina’s public sector workforce; and by June, about 25,000 of those job cuts had been accomplished. Then, in early June, he laid off an additional 50,000, as part of his plan to “reduce the state in half.”    

When Milei assumed the presidency, as inflation was heading towards 200 per cent, he warned that he had no alternative to a sharp, painful fiscal shock to fix the country's worst economic crisis in decades.

He faced rising poverty and a polarized population as challenges for his presidency. As well, his political party, La Libertad Avanza, was in a weak position in Congress, with only 40 seats in the 257-member Chamber of Deputies and seven of 72 in the Senate.

“There is no alternative to a shock adjustment,” he stated on the steps of Congress after taking office. “There is no money.”

During the first six months of his presidency, poverty did increase, but it was already rising under the previous administration, and hyperinflation accelerated both before and after his inauguration, making it unclear to what extent the increase in poverty was directly linked to his policies. In any case, by the end of 2024, it was decreasing.

As well, the monthly inflation rate had slowed to 2.4 per cent, the lowest in over four years, according to the official INDEC statistics agency. This decrease in the rate of inflation was driven primarily by the government’s elimination of deficit spending, leading to a decrease in monetary expansion.

There’s still a long way to go. The economy has taken longer to reactivate, squeezing many consumers, especially in the public sector where Milei’s spending cuts have been the hardest.

“I don't know much about inflation, but I know that when I get my salary, it’s gone in a couple of days,” teacher Aida Segot told Reuters. “Each month it used to run out on the 20th; now it runs out on the 12th.”

Milei’s approach has garnered attention both domestically and internationally, with figures like Elon Musk praising his efforts. However, the long-term sustainability of these measures remains uncertain as Argentina continues to grapple with inflation and social challenges.

Still, after a year in office, the political outsider’s support remains robust, with many remaining more angry with the mainstream politicians he replaced after years of rising prices and economic distortions. And a recent economic forecast for 2025 published in the Buenos Aires Times predicts Argentina’s GDP growth to come in at 8.5 per cent this year.

Argentina is an enigma -- a country with great promise ruined by a terrible political culture. At the beginning of the 20th century, it was the seventh-richest country in the world, but it declined under authoritarian rule, military coups, and corruption. Milei has a steep hill to climb.

Although some people have voiced concerns regarding a potential authoritarian vein among Milei and his followers, so far he has been respectful of the democratic process and institutions. Anyhow, his weakness in Congress makes it extremely unlikely that he could pass any measures that may weaken the democratic order.

Meanwhile, Milei has recently been granted Italian citizenship while on a visit to Rome, where he held talks with Italian Prime Minister Giorgia Meloni. The decision is based on Milei’s Italian ancestry. He has expressed a strong connection to his Italian roots, stating that he feels “75 per cent Italian” due to his family’s heritage.

It is estimated that at least 25 million Argentinians, more than half of the country’s population, have some degree of Italian ancestry.

Like other political outsiders around the world, Milei had accurately identified many of the country’s real problems: inflation, high and inefficient public spending, political capture, and corruption. He has reached the milestone of one year in office surrounded by a sense of triumph.

Milei has also projected this optimism, saying in a speech from the Casa Rosada on Dec. 10 that the country can look forward to a “future of prosperity” that for many Argentines was still “unimaginable.” With Donald Trump now entering the White House, Milei will have a strong ally in Washington.

 

What’s With Trump and Greenland?

  By Henry Srebrnik, [Charlottetown, PEI] Guardian

Incoming U.S. president Donald Trump insists he want to buy the world’s largest island, Greenland, from Denmark. He said “ownership and control of Greenland is an absolute necessity” for U.S. national security.

Trump added that Greenland and its people “will benefit tremendously if, and when, it becomes part of our nation. We will protect it, and cherish it, from a very vicious outside world.” He also posted a video featuring an unnamed Greenlander telling Trump to buy Greenland and free it from “being colonised” by Denmark.

Is Trump serious? Delirious? Or is there method in this madness?

Donald Trump Jr, the president’s son, is heading for Greenland, two weeks after his father repeated his desire to take control of the autonomous Danish territory.

Greenland has wide-ranging autonomy, but its economy is largely dependent on subsidies from Copenhagen and it remains part of the Kingdom of Denmark.

It does lie on the shortest route from North America to Europe, making it strategically important for the U.S., and is also home to a large American space facility.

In response, Danish King Frederik X changed the royal coat of arms to more prominently feature representations of Greenland and the Faroe Islands. He used his New Year’s address to say the Kingdom of Denmark was united “all the way to Greenland,” adding “we belong together.”

But do they? Some have seen this as a rebuke to Trump, but it could also prove controversial with Greenland’s sovereigntist movement. The island’s prime minister, Mute Egede, used his own New Year’s speech to push for independence from Denmark, saying it must break free from “the shackles of colonialism.”

So the Danes are caught between the U.S. and the Kalaallit Nunaat – the indigenous name for Greenland -- nationalist movement. Most of the island’s population of 57,000 people are Inuit.

In the early 17th century, Danish and Norwegian explorers reached Greenland. When Denmark and Norway separated in 1814, Greenland was transferred to the Danish crown and was fully integrated in the Danish state in 1953, which made the people in Greenland citizens of Denmark.

In a 2008 referendum, they voted for the Self-Government Act, which transferred more power from the Danish government to the local Greenlandic government.  Under this structure, Greenland gradually assumed responsibility for a number of governmental services and areas of competence. The Danish government retains control of citizenship, monetary policy, and foreign affairs, including defence.

Does Trump know all this? Maybe not. But this may really be a bargaining ploy. What he’s really doing is embarrassing Denmark, along with many other NATO members, for not pulling their weight in the alliance. Danish defence spending as a per cent of GDP is about 1.65 per cent – below the two per cent NATO considers necessary, and which Trump demands of all its member states. And it’s working.

Not coincidentally, the Danish government announced a huge boost in defence spending for Greenland, hours after Trump repeated his desire to purchase the Arctic territory.

Danish Defence Minister Troels Lund Poulsen said the package was a “double digit billion amount” in krone, or at least $1.5 billion. “We have not invested enough in the Arctic for many years, now we are planning a stronger presence,” he stated. He described the timing of the announcement as an “irony of fate,” but no one believes that.

It would also include funding for increased staffing at Arctic Command in the capital Nuuk and an upgrade for one of Greenland’s three main civilian airports to handle F-35 supersonic fighter aircraft.

Army Major Steen Kjaergaard of the Danish Defence Academy suggests it may have been Trump’s intention to pressure Denmark into such a move. “It is likely to be sparked by the renewed Trump focus on the need for air and maritime control around Greenland and the internal developments in Greenland where some are voicing a will to look towards the U.S. -- a new international airport in Nuuk was just inaugurated,” he told the BBC.

“I think Trump is smart. He gets Denmark to prioritise its Arctic military capabilities by raising this voice, without having to take over a very un-American welfare system,” Kjaergaard added, referring to Greenland’s heavy dependence on subsidies from Copenhagen.

So is Trump crazy, or crazy like a fox? Call it the “Trump Effect.”

 

Houthis are Playing With Fire, Literally

 By Henry Srebrnik, [Fredericton, NB] Daily Gleaner

The Houthis struck the Israeli community of Ashkelon on December 25, the fifth such attack on the Jewish state in that week.

A Zaydi Shi’a Muslim armed movement in Yemen, they have advanced weapons that include cruise and surface-to-surface missiles, as well as drones. These assets are spread out over large areas and are difficult to reach, making it challenging for Israel to create a bank of targets.

Israeli airstrikes in turn have targeted the international airport in the capital, Sana’a, and ports at Hodeida, Al-Salif and Ras Qantib, along with fuel depots and power stations. The Israeli strikes were carried out by fighter jets, refuelers, and spy planes. Prime Minister Benjamin Netanyahu warned that Israel would act against the Houthis with the same force it used against Iran’s other “terrorist arms.”

Ranked 183rd out of 191 nations in terms of its economy, Yemen is a poverty-stricken state. It has an annual per capita income of just $477 (compared to $3,372 in the Palestinian territories). Around two-thirds of its population – roughly 30 million people – live with food insecurity or outright hunger.

Today, the Houthis rule over northwestern Yemen, controlling approximately one-third of the country’s territory and two-thirds of its population of 34 million, following a vicious civil war that began in September 2014 when their forces captured the capital, Sana’a, followed by a rapid takeover of the government. Ties between Iran and the Houthis expanded markedly when the United Arab Emirates and Saudi Arabia, regional rivals of Tehran, launched a military campaign against the Houthis in 2015.

But since the start of the Gaza war, these Yemeni militants have turned their weapons on Israel, both via missile attacks and by a maritime blockade in the Red Sea. During that time, the group, which is in control of northern Yemen, has launched over 1,000 projectiles at Israel, at international shipping in the Red Sea, and at the Western coalition seeking to defend both Israel and the shipping.

A proxy of Iran and a member of its Axis of Resistance network, the Houthis have fired on ships, seized one vessel, and sunk two others in the Red Sea and the Gulf of Aden. They have upended shipping routes, cut sharply into the revenues of the Suez Canal in Egypt, and have had a negative effect on the global economy.

Iran is ultimately at fault because it supplies the Houthis with weapons and encourages them to behave like pirates. But so far the various navies in the region, including the American Fifth Fleet, whose area of operations includes the Arabian Gulf, the Gulf of Oman, Red Sea, and parts of the Indian Ocean, have done too little to break it.

Until these recent strikes aimed at Israeli territory, the most significant damage the Houthis have caused to Israel has come from cutting off the Eilat port’s Red Sea lifeline.

Deterrence vis-à-vis the Houthis would have some important benefits -- ending the groups missile and drone fire on southern and central Israel as well as re-opening Eilat’s port for business -- but it will be fleeting.

If the Houthi regime is allowed to continue to build up its military power and entrench its control, future confrontations will be at the time and place of their choosing. So Israel must set realistic aims for the extent to which it can reshape Yemen’s strategic environment or remake its political order.

The Houthis, however, remain defiant. “We will not stop until the aggression against our people in Gaza ceases,” Hazem al-Asad, a member of the Houthi’ political bureau, insisted Dec. 24.  “The Houthis are stronger, more technically proficient, and more prominent members of the Axis of Resistance than they were at the war’s outset, Michael Knights, a senior fellow at the Washington Institute for Near East Policy, wrote in October.

“The Houthis have arguably weathered the year of war without suffering major setbacks,” he pointed out in “A Draw Is a Win: The Houthis After One Year of War,” in the CTC Sentinel, published at the United States Military Academy at West Point. “They appear to have lost no senior leaders and no terrain since the war began, nor have they been notably economically damaged and the Houthi currency remains more stable than that of the internationally recognized government of Yemen.”

Their drones, missiles and other projectiles are highlighting a dilemma: how to defeat an enemy armed with a relatively cheaper and comparatively ample stockpile of weapons.

As a result the Houthis are becoming more prominent members of the Axis of Resistance and their leader Abdul-Malik Badruldeen al-Houthi is even being touted as potentially taking the place of Hezbollah chief Hassan Nasrallah, who was killed by Israel last September, and acting as a symbolic head of the pro-Iran alliance.

“In the absence of Nasrallah, Abdul-Malik al-Houthi has moved swiftly to fill the void,” remarked Mohammed Albasha, a U.S.-based security analyst who specializes in the Middle East and Yemen. “The Houthis have seized the spotlight.”

Meanwhile, the U.S. Department of the Treasury announced penalties Dec. 19 on Hashem al-Madani, the governor of the central bank in Houthi-controlled Sana’a, along with several Houthi officials and companies. He was described as the “primary overseer of funds sent to the Houthis” by Iran’s Islamic Revolutionary Guard Corps.