Poll vault: Argentina’s Peronist surprise

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Hello and welcome to the Intelligence from the Economist. I'm your host Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. The murder in June of a Sikh separatist activist in Canada brought with it accusations of cross border foul play. Political killings are as old as politics itself, but their incidents may be rising and states are becoming bolder in carrying them out. And Ophir Libstein was an Israeli mayor who founded a flower festival largely to prove that there was more to life in his modest patch of land near the Gaza Strip than just the threat of Hamas. Our obituary's editor reflects on how he died defending it. But first, For months, Argentina's presidential race seemed to be dominated by one man, Javier Milei. The libertarian economist and television personality broke through in the primaries earlier this year and has led opinion polls since. He's got radical plans to cut through the state. He's often seen holding a chainsaw as a promise to do things like dollarize the economy and take state owned companies private. All that couldn't be more unlike the current ruling party, which subscribes to the principles of Peronism, a left wing brand of populism that's been Argentina's dominant ideology over most of the past seven decades. So Mr. Milei's swift rise made it look like Argentina was set for sweeping change. That is, until the polls closed last night.

Several polls had predicted that Xavier Milei would either win the election outright or at least be the frontrunner in any runoff. But that's not what happened.

Ana Lankes is our Latin America correspondent.

So there appears to have been a surge in support for the incumbent left wing Peronist movement in a country where the economy is in crisis. The economy minister, Sergio Massa, who was the one running to be president for the Peronists, came out on top with 37%. Milei, meanwhile, got just 30% of the vote, which is basically the same share that he got in the primaries. Candidates needed 45% of the vote to win outright. And what this result means is that the two leading candidates, Mahsa and Milei, will go to a runoff election in four weeks time.

And we've talked about Mr. Milei a lot on the show at various points, like a foregone conclusion that he would be the leader. This is something of a surprise then.

It is a surprise. Massa's turnaround is pretty astounding because since he became the country's economy minister last August, annual inflation has increased from 79% to 138% today. And the price of $1, which is the currency that Argentines prefer to save in because their own currency loses value so fast and has increased from 300 pesos to 1000 pesos today on the country's widely used black market. And since the vast majority of Argentines say that inflation is their top concern, it seems pretty surprising that it's Masa, who's been the economy minister for the past year, who got the biggest share of votes.

But let's wind back a little bit. How did the inflation get so bad? How did Argentina end up in this place?

So I think it's worth mentioning that Argentina's economic crisis is not something new. Argentina has faced economic crises for the past hundred years. Every few years it's had recurring crises, and this is just the latest one. And kind of one of the main problems is that there is no political consensus around some pretty basic policies, such as having an independent central bank. So what tends to happen under many Peronist administrations is that they turn to the central bank to print pesos in order to finance the country's fiscal deficit. What happens when some center right governments come to power is that instead of getting the central bank to print lots of money, they instead borrow lots of money from creditors abroad. And that leaves the country either with very high debt or with very high inflation. And right now it's got both things.

But the Peronists have been in power for so long. Surely the voters realize that they have been the architects of this current crisis, at least.

Well, it's complicated. When Juan Domingo Peron first came to power in the 1940s, he's the founder of this movement called Peronism. He created his support base by expanding welfare handouts and giving workers lots of rights and implementing the eight hour workday and paid holidays and these kinds of things. And initially it seemed to help create a really solid middle class in Argentina. But then loads of those things have become very expensive. And also many of the welfare handouts have since become very inefficient. And so for many people, they've become quite dependent on high government spending. But the state is no longer able to collect as much revenue as it used to. So I'll give you an example of a few things that the Peronists have been doing in recent weeks. In order to maintain support, which is good in the short term, but pretty bad in the long term. They abolished income taxes for 99% of registered workers just in the past few weeks. This current Peronas administration has also created or increased at least 27 taxes, often by decree.

And so do you reckon that it's these sort of recent boosts to the handouts that have given Mr. Masa the turnaround that he's seen?

I definitely think the handouts do help. On voting day, I visited a poor district in the province of Buenos Aires, which is the cradle of Peronism. And several people I spoke to suggested that they really, really, really relied on government handouts and government support in order to get by and that they were worried that if Milei won, they would no longer get that money. People in the city of Buenos Aires told me that they believed that Masa was the only candidate that could really unite the whole country behind him, whereas Milei and Bulrich they felt were too divisive. There were other things that played a role here. So between the primaries and the first round of the presidential election, Masa received four and a half million extra votes and Milei lost around 750,000. And I think an important part of this is also fear mongering. The government built a narrative that many voters would lose a lot of the resources that they currently get from the state if a free market president came to power, or more than free market, in this case, a libertarian president came to power. So two, two days before the first round of the presidential election, bus and train stations began showing customers how much their tariffs would increase if subsidies were removed. So I think that these are some of the tactics that worked in Massa's.

Favor, but also show a loss for Mr. Milei. This is. It sounds as if a kind of better the devil you know kind of scenario.

Definitely. I think that Milei's loss is not just explained by Mahsa's gains. I also think that Milei put off a lot of moderate voters because he's quite a divisive person. So he uses quite aggressive rhetoric. Some of these inflammatory comments might work with some voters. I spoke to a 16 year old who was voting for the first time and he Said he really liked it when Milei called his opponents left wing pieces of shit. However, this language also doesn't work for more moderate voters. Milei is not a classic right wing candidate. He says he ascribes to a philosophy that is called anarcho capitalism, which is a right wing strand of libertarianism. And as a libertarian, Milei believes in a minimal state and in a very free market. I met him last month and in our interview he told me that the state was a criminal organization because it finances itself through taxes that people usually pay involuntarily. So he wants to scrap most taxes, he wants to privatize state owned companies, he wants to cut public spending by 15% of GDP, and he wants to swap the local currency, the peso, for the dollar. And in the. He says that would blow up the central bank. So take all of these reforms together and combine them with some of his social reforms. That really marks quite a radical change from what Argentines are used to. And I think that those proposals frighten many voters.

But I suppose it's worth asking, apart from the divisive rhetoric, whether after a century of crisis after crisis, Perhaps some of Mr. Milei's policies might be good for the country.

I definitely think many of the free market ideas that he has would be good for the country. It's important for Argentina to slash public SPE, which has doubled in the past 20 years. It's also important for Argentina to simplify its tax system, for example. But a big problem with Xavier Milei is the question of governability. The Peronists have a huge machine that operates all across the country. Javier Milei, however, his coalition is pretty new. He doesn't have a single governor that supports his coalition. And after this election he will only get around 39 seats in the lower house of Congress and around six seats in the Senate. So that means that it would be very difficult for Milei to pass many of his most radical policies.

That is, if he were to get in. I guess the question is what happens now with the runoff election in four weeks time?

That's right. And I think for now the runoff is pretty wide open. So I think for now it's too soon to say what the outcome will be. And I also think that this is actually kind of one of the worst outcomes that investors were hoping for, because it's the most polarizing situation. And for the next month there's still going to be a lot of uncertainty in Argentina, which means that the economic situation will probably just get worse.

Anna, thanks very much for staying up so late to speak to us.

Thanks for having me. Jason at 4am.

Foreign. Hey, quick programming note here. Economist Podcasts plus our new subscriber service begins tomorrow to keep listening to all of our weekly shows and plenty of delicious new content like Boss Class, our new series on management that launches later today. You're gonna need to sign up if you haven't yet. You still have a few more days to take advantage of our half price offer. It's been extended to the end of October, just a couple of dollars or pounds a month if you listen on Apple Podcasts or Spotify. You'll need to link your Economist subscription to your podcast app to unlock all of our shows. Don't worry, it's just a couple of clicks if you don't use Apple or Spotify. Go to the FAQ page in the Show Notes for details of how to access Subscriber only episodes on your preferred podcast app. And you'll get an email with all this, so don't fret. Just follow the easy steps before Saturday when we'll publish our first episode of the weekend edition of the Intelligence. Sign up now and you won't miss a thing. More on this later in the week or check out the Show Notes now or just search for Economist Podcasts. Last month, Canada's Prime Minister Justin Trudeau kicked off a diplomatic frenzy by suggesting that India could have been behind the murder of a Canadian Sikh in Vancouver. There are credible reasons to believe that agents of the government of India were involved in the killing of a Canadian on Canadian soil. Hardeep Nijar Singh was gunned down in June and spent his day to day life working as a plumber, but he had also been described as a terrorist by the Indian government. We are unequivocal around the importance of.

The rule of law.

We call upon the government of India.

To work with us to allow justice and accountability to be served.

India dismissed Mr. Trudeau's claims as absurd and maintains it had no part to play in the killing. But if the allegations proved to be right, it would be just the latest in a long line of high profile political murders that themselves seem to be changing.

I think the latest alleged assassination is a sign that states are becoming more brazen about killing foes abroad.

Anton La Guardia is the Economist's diplomatic editor.

It's very difficult to come by hard data. It's hard to identify killings as assassinations sometimes, and it's hard to know what the causes or culprits might be. But there is a sense that the norm against Assassination is eroding.

So what is it that gives you the sense that there is increased brazenness going on here?

If you believe the Canadian allegation, and there is reason to believe it, that India was behind the assassination of a Sikh activist? One thing that is striking is that a democracy supposedly has reached out across the world to strike down a enemy. In another democracy that is really unusual. And we've seen instances of autocracies striking down enemies at least twice. Russia has killed or attempted to kill former intelligence agents who have defected to Britain. We've seen Saudi Arabia kill and dismember and dissolve in acid the body of a journalist who had sought exile in America. And of course you've seen America itself strike down terrorists through drone strikes or through special operations. For instance, the killing of Osama bin Laden, the head of Al Qaeda, and the killing of Qassem Soleimani, a senior Iranian figure.

And what are the factors behind that seeming shift, do you think?

I think one phenomenon is that it's easier to travel, so it's easier to get around. It's easier for states to strike down their foes. And drone technology has also made a difference, at least for the countries that own drones, because it allows you to do long term surveillance and to do a remote strike without having to endanger your own people, particularly if the surrounding population is hostile.

But there is a general disapprobation of this stuff, right? There have been, there are consequences.

At one level, killing somebody in the territory of another country is an act of violence, or indeed possibly an act of war. And in any case, there is this general norm that you don't do this sort of thing abroad. So countries that do it do it in one of two ways. They either do it by covert means, cloak and dagger, which is why you see poisons used. And then you have the United States, which has a formal prohibition against its agent assassinating people abroad. This was something that was brought in by gerald ford in 70s. And instead what it has done is to redefine the law surrounding self defense. In other words, in international law you're not supposed to commit acts of violence abroad, but you are allowed to defend yourself. And therefore clever lawyers have found ways to stretch various definitions to cover especially the war against terrorism.

So there is at least some attempt to do a kind of legal justification, at least on the part of America.

Yes, there is much of it copied from the Israelis. And they've done it in one of two ways. One is to redefine sovereignty. So they say that where countries are Unable or unwilling to deal with terrorists, then they have a right to resort to the use of force. And they've also designated certain parts of the world as areas of active conflict where they give themselves a freer hand. The other way they have done this is to redefine and stretch a definition of the right to self defense, which can include defending yourself against attack by non state actors as well as attacks by states. And it also includes this idea of anticipatory self defense. If somebody's planning an attack on you, you're allowed to strike back. The question then is, well, how soon and in what circumstances can you strike first? And there is this legal debate about what imminence means. You're only supposed to do it when an attack is imminent. Imminence in this context is sometimes taken to mean, well, you are, for example, a terrorist who's done a series of attacks. And therefore, even if you're not actually in the midst of an attack, I know you're the sort of person that will do another one, therefore I can strike you down. This is an Israeli concept the Americans have. This idea of imminence also includes the window of opportunity to act, that if you don't act then something bad will happen.

Yeah, but all of this does sound like a kind of legal fig leaf in particular for the Americans.

Yes, and it's precisely what international lawyers say, which is that the Americans and the west in general are giving themselves a new set of rules that is in contravention of international law. I think most people would accept that terrorism lies somewhere between policing and full on war. And that international law is enshrined in the UN Charter does not fully capture it. So there is a problem and the west may have exceeded in how it is trying to deal with that problem. And it certainly gives its critics the opportunity to say this is all double.

Standards and may in fact encourage other states to carry out these kinds of killings under the same pretenses.

This is the worry that you hear from a lot of people and not just lawyers, which is that there's a general breakdown of norms against assassination. The case of India here highlights a lot of the issues. This is the question about whether India did it or didn't. If it did, it could argue, well, this is no different to what the west does. Sikh separatism has had its very violent phases and it's not entirely abated. This particular person is accused of being a terrorist, although his supporters claim he's a peaceful activist. And the Canadians in the west in general have been very lax about clamping down on Sikh separatist activity. India's not making this argument formally. Sympathetic newspapers are saying this sort of thing.

But quite apart from or more broadly than the India question, there is seemingly this global trend. Where do you see it going?

I think it will continue, and the question will be whether it's seen as a rough but necessary covert defense of democracy, or whether it becomes another repressive tool of the state that exports its violence to suppress critics and dissidents abroad.

Anton, thanks very much for joining us.

Thank you, Jason. Good to be with you.

Ophir Libstein was the mayor of Sha' ah Hanegav, a region in the northern Negev of Israel, very close to the border with Gaza.

Ann Roe is the Economist's obituaries editor.

His patch was not large. It was about 180 square kilometers, 6,000 people living in 10 kibbutzim, or agricultural villages. But as he walked around it, his head was always buzzing with ideas to make businesses work better, to make the traffic flow better. And especially if he saw any old building, like a disused mess hall or a deserted factory, he wanted to see it filled with entrepreneurs, all bringing money and prosperity into the. He was an entrepreneur himself, he felt that was always his calling. He started off at school by opening a branch of his uncle's shop there. Then when his father went into repairing wheelchairs, he joined the business with him. Later on he moved into office equipment, then into online coaching, and everything he touched seemed to do well. There was always something going on in of Philippstein's life, some project or other bubbling. But what he was most famous for around his region was starting an anemone festival, and this was to celebrate the wonderful scarlet flowers that bloomed every year in late January, early February. These flowers had always drawn visitors from far and wide to his region, but he realized that there was nothing there for visitors to do. So he brought in country lodging, farmers markets, craft fairs, bike tours, all kinds of things to bring in money and give jobs to the local people. He had founded that festival largely to change the discourse, as he put it, about his part of Israel, although he was right on the border with Gaza, he wanted to prove it was not all Hamas and shooting there. He wanted to prove there was beauty there, too. But it was a fairly hard case to make. In 2018, Jutsingaza tied incendiary devices, two kites and balloons and let them float across the border, where they set fire to the gardens and fields of his region, and he watched with horror as everything exploded into flame. There were very constant rocket bombardments. Once, for 11 straight days, rockets fell on the region, although everyone in the kibbutzim had safe rooms made of concrete and steel in their houses. When the rocket fire got too bad, he would send the mothers and children up to the north or the Dead Sea so they would be safer. And one study had found that in fact, most of the children in the region suffered from post traumatic stress. However, he insisted that living in the region was only 5% hell. 95% of it, he said, was paradise. On his Facebook page page, he put a picture of the view that he saw. The wonderful green rolling hills planted with all kinds of crops, with avocados, melons, vines, olives, wheat and barley. It was a prosperous place, and those crops were not all that grew there, because he had enormous hopes for the tech startups that he wanted to attract. In the five years that he had been mayor, 40 companies had come into his enterprise zone. He was devoted, of course, to Israel, but as a kibbutz dweller, he also felt quite strongly the socialist ideals of the founders of the movement. And therefore it seemed to him that the most effective way of bringing protection to his region was actually to bring the Gazans on board. Prosperity had to involve everyone. And he was very sure that Gazans wanted exactly what Israelis peace, well paid jobs, care for their families. And that was what he set out to provide. What he wanted to set up was an industrial zone near the Erez crossing, one of the few places where you could cross the border into Gaza. And in that enterprise zone, there would not only be jobs, but there would also be a medical center offering the Gazans the sort of care that they couldn't get back home. Envisage that as many as 10,000 Gazans would come across and that they would eventually have such a stake in this industrial zone that they would not want Hamas to attack it. They would not tolerate any behavior like that. And in that way, Gazans would help to protect Israel. The two communities would start to mingle, and perhaps one day he would even find a way of incorporating the Gazans into his anemone festival. This was his great dream. But then came October 7th, and very early in the morning, the terrorist fighters from Hamas breached the border fence and attacked his kibbutz. There had been an order sent round by text that people were not to go outside when there was an attack. But he disobeyed his order and rushed out with his gun to answer fire with fire. When he did this, he was not only defending his family, not only defending his kibbutz, but also defending his dreams. His dreams of a region living at last, at peace.

Anne Roe on Ophir Libstein, the mayor of Shaar Ha Negev who was killed in the hamas attacks on October 7, aged 50. That's all for this episode of the Intelligence. Don't forget to learn more about Economist Podcasts plus, which launches tomorrow. And sign up for that sweet, sweet half price deal before Saturday. You know where to go. We'll see you back here tomorrow, Sam.