Milei's Argentina, facing the long shadow of Kirchnerism
From the YPF affair of Kicillof and the Kirchners to the triumph of Gildo Insfrán in Formosa and from there to the cursed economic prophecy as Cristina Kirchner 's preferred political tool: between the weekend and this Monday, the long shadow of Kirchnerism hanging over Milei's Argentina has just come to the forefront . Yesterday, this dark legacy acquired new relevance from the latest news, the order by Judge Loretta Preska to the Argentine State to divest 51% of its shares in YPF and thus compensate the Burford and Eton Park funds for the expropriation of YPF during Cristina Kirchner's presidency, with the Ministry of Economy in the hands of Axel Kicillof.
Of all the fortuitous events that could hinder Argentina's economic recovery, both external and internal, the least expected was a court ruling that, if enforced, could take away one of Grandma's jewels . YPF and its role in unlocking the potential of Vaca Muerta are a central part of Milei's Argentina's productive model, built for now on dollars from energy and mining sources and agricultural commodities.
The three episodes—YPF, Insfrán, and Cristina Kirchner's curse on Javier Milei's economic model—are the tip of a giant iceberg that keeps Argentina stuck in a difficult question that still has no answer: how to bring about a change in the political regime that breaks the tie between an irrational Argentina, at odds with the most developed countries in the region, and an Argentina rising at a logical and sustained pace, based on the experience of the countries that most resemble it? How to arrive at a political, economic, and social logic that contemplates ideological alternation in power without jeopardizing a necessary cycle of hope without disenchantment, driven by macroeconomic and microeconomic rationality? If Argentina finds that answer, each political force in power can bring about important but marginal changes in relation to that foundational foundation.
The necessary pact isn't made up of politically correct and "sweet" rhetoric. It's a tacit or explicit agreement on a constant and resounding vision: the principles of macroeconomics that should govern Argentina, the consensus of all consensuses . A macro rationality that isn't called into question even with the ideological alternation in power . Once that launching pad is reached, all the agreements around the visions of beautiful souls can then be carried out. But without turning nature into a shared vision of the macro, it's difficult to move on to the second.
The mirrors of Chile and Uruguay are within reach. Both share a clear awareness that macroeconomic order with fiscal balance and growth is the key to development and quality of life, and the reduction of poverty and inequality. Chile took this to the extreme: with the return of democracy in 1990, the Chilean Concertación failed to adhere to the macroeconomic guidelines established in the 1980s by the second generation of Chicago Boys, who managed to lower inflation and embark on a path of growth. Since then, center-left, center-right, or left-wing presidencies have shared these foundations. Gabriel Boric himself, with a coalition further to the left than ever, which includes the Communist Party, enshrined a principle as soon as he took power in 2022: “From the left, we must stop thinking that fiscal responsibility is a right-wing issue. Fiscal responsibility must be a state policy.”
In Uruguay, from the left of the Broad Front between 2005 and 2020 to the center-right of Lacalle Pou, there is a conviction that the way out of poverty lies in a fair combination of orderly macroeconomics and growth, as well as efficient, intelligent social policies, free from any clientelist disposition or the patrimonial desire of politicians concerned with coffers and personal enrichment.
The YPF case is an example of the opposite. A chain of spurious agreements, motivated by personal gain and power, intersecting the interests of Néstor and Cristina Kirchner with those of the Eskenazi family and the Petersen Group, and a Kicillof ready to make macroeconomic misjudgments in plain sight, without considering the legal consequences . "We're not going to pay them what they say, but the real cost of the company. The idiots are those who think the State has to be stupid and buy everything according to the YPF statute," Kicillof said in 2014. This was the justification for violating a clause in the YPF statute that today provides the Burford and Eton Park funds and Judge Preska with the central argument for ruling in his favor. YPF was the Kirchnerist break from a cycle of privatizations. The Kirchnerist narrative claimed to be based on a desire to recover energy sovereignty. It was more of a disguise needed to empty YPF, first, and then to add it as a cash fund that was both personal and discretionary.
In the best-case scenario, Javier Milei's government will appeal and reverse Preska's decision, allowing it to capitalize politically and electorally on the Kirchnerist legacy. The intricate process that led to the nationalization of YPF and Kicillof's plan to ignore YPF's statutes expose the Buenos Aires governor in the midst of the provincial and national legislative elections that La Libertad Avanza is challenging.
With Cristina Kirchner in prison, the new challenger to Mileiism is Kicillof: the shadow of YPF puts him at the center of debate and discredit . Yesterday, as soon as the judge's decision was announced, President Milei continued firing heavy ammunition at Kicillof: "It is the direct responsibility of the useless Soviet," he said.
From the Burford fund, they maintain frequent dialogue with Argentine leaders and government officials to discuss points of progress. Or at least that's what one source stated, while others warned that those meetings have not yet materialized.
The person in charge of the negotiations is an acquaintance of Milei and his circle. He is Gerardo "Gerry" Mato , an Argentine Wall Street expert who has been based in New York for years and the former head of Global Banking Americas at HSBC. Burford hired him in May 2024 to handle negotiations with the Argentine government in the YPF case. Months earlier, when he was not yet working for Burford, in September 2023, Mato hosted Darío Epstein and Juan Nápoli at his New York home. At that time, in the midst of an election campaign, they were serving as Milei's advisors and emissaries. At Mato's home, they presented Milei's economic ideas to around eighty investors. Today, Mato and his team make regular visits to Argentina to represent Burford's interests.
The YPF case epitomizes many of Kirchnerism's economic conceptualization problems and many of the flaws of an opaque, if not obscure, power structure . That squinty view of the macroeconomy is returning these days as the only political tool Cristina Kirchner has left in prison: the politicization of prophecy, the ominous prediction that "the model is collapsing." A dystopian prediction that in another era of Argentina would have sounded like a dismissal. Today it sounds like a slap in the face of political desperation . An interpretation of Milei's economic model that loses sight of the obvious perception that, for now, plays in the government's favor and opts to interpret everything in light of a political wish that won't necessarily come true. Kirchnerism, imprisoned in a blindness that prevents it from adapting and changing, and gambling on a future that looks like a curse. Proof that it doesn't have much to offer.
Insfrán 's victory in Formosa's legislative and constituent elections on Sunday points to the same pattern: an extreme case of the sustained accumulation of power dreamed of by Néstor and Cristina Kirchner , and all the ills that stem from that old "statality," in Cristina's words, dominant: a hypertrophied State co-opted by eternal political power, and a society held hostage to that power . The province with the fewest employees in the formal private sector: Formosa only has 57 registered private sector workers per thousand people of working age. Capitalism liberates, but State capitalism generates clientelism and dependency: it is the logic of the current State taken to the maximum expression of its harmful effects.
A province governed uninterruptedly by Peronism since the return to democracy forty-two years ago, and by Insfrán since 1995, also without interruption. It's the Kirchnerist model turned into state policy that's more enduring than Kirchnerism itself.
Insfrán's victory raises the big question: with this inelastic vote against the crisis, the worst legacy of Kirchnerism, is there a chance of a lasting macroeconomic regime change that would lead to growth and development? The answer remains to be answered.
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