Argentina’s Javier Milei Talks Up His Peso Plans, China, Trump and Israel

(Bloomberg) -- Argentine President Javier Milei sat down Thursday for an exclusive interview with Bloomberg News Editor-in-Chief John Micklethwait at the Casa Rosada in Buenos Aires.

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After just over 100 days in office, the libertarian leader discussed his fiscal and monetary plans, his approach to one of his country’s biggest trading partners and creditors, and much more.

Watch the full interview:

Mire el video completo en español.

Here are the key takeaways from their conversation:

Pushing Back on Quicker Peso Devaluation

Milei conceded he is adjusting his ambitious agenda to account for Argentina’s political and economic reality.

Consumer subsidies that make a subway ride cost pennies will take as long as three years to be removed, crippling currency controls will only be lifted after a clean-up of the central bank’s balance sheet, and dollarization has been thwarted by Argentina’s “dishonest” politicians, he said at the presidential palace.

“We have to separate short-term problems from long-term problems,” Milei argued. “We said the situation was complicated and required very strong medicine in the short term. We will have suffering and then we will get out of it.”

He deflected repeated questions about a specific timeline for floating the currency and denied any plans to accelerate the peso’s gradual depreciation, known as the crawling peg.

“No, it makes no sense,” he said. “Why should I make the exchange rate jump today if the depreciation matches the rate? It is stupid. The exchange rate is in line with the market.”

His administration currently devalues the currency at a 2%-per-month pace, a policy set after Milei’s December inauguration together with a one-off 54% devaluation. The president’s comments defy market an economist expectations that the crawling peg would be sped up as soon as this month.

Given that “Argentina is an economy that’s very decapitalized after 20 years of savage populism,” Milei expects to be able to generate growth in short order. And he said the public is willing to tolerate his government’s shock therapy because they see light at the end of the tunnel.

“When you look for the word that reflects the sentiment of Argentines, do you know what it is? Hope,” he said. “Even though we are making the biggest fiscal adjustment in history, my popularity is increasing because the people know that I’m telling the truth.”Read more: Milei Sees Long Slog Ahead to Bring Argentina Reforms He Pledged

Hands-Off Approach to China

As a candidate, Milei vowed to curb ties with China. “Would you trade with an assassin?” he asked. As president, he’s taking a far more pragmatic tone.

“We have always said that we are libertarians,” he said in the interview. “If people want to do business with China, they can.”

The president said trade relations between China and Argentina hadn’t changed “one bit” since he took office. Milei also said he has no intention of touching the $18 billion currency swap line — which happens to be the largest source of foreign reserves in the central bank’s depleted coffers.

The reality is that if Milei wants to take a wrecking ball to Argentina’s highly regulated economy, part of his plan to pull the nation out of poverty and damp inflation, he’ll be hard-pressed to do it without China.

Chinese trade and investment now drive large swaths of Argentina’s economy, ranging from commodities and energy to banking. Dozens of infrastructure projects have been funded by the superpower, which in exchange is securing supplies of food, critical minerals and a new market for its heavy industries.

Milei also said the Argentine government was beginning negotiations with China to inspect its Patagonia space station, which the US has said could pose a threat to itself and its allies. “We are going to study the situation,” he said. “That also isn’t a problem.”

Read more: Anarcho-Capitalist Milei Transforms Into a Pragmatist on China

Still Singing Trump’s Praises

Asked whether his libertarian ideology and admiration of free markets was in conflict with his support for Donald Trump given the former US president’s protectionist policies, Milei lauded the current Republican nominee. “The most valuable thing Donald Trump did was to identify who the enemy is,” the Argentine leader said. “The enemy is socialism.”

It was an echo of Milei’s keynote speech to the World Economic Forum in Davos, Switzerland. It also was also in line with his decision to speak at a pro-Trump political convention outside Washington in February, where he embraced the former president backstage and told him he hoped to see him re-elected.

Milei argued in the interview that Trump’s policies couldn’t be properly evaluated without taking into account Beijing’s reluctance to float its currency during the global financial crisis. “Since China didn’t want to do that, Trump’s response was to put up trade barriers” and that was fully justified, Milei said. “Would you recommend to the president of the United States that he stop having his own monetary policy? I don’t think so.”

Israel on ‘Correct’ Path

Even as the US, a longtime ally of Israel, starts to take a harder line after an air strike killed relief workers from World Central Kitchen, Milei continued to voice full-throated support for Benjamin Netanyahu’s government.

“My position has always been the same,” Milei said, citing his condemnation of terrorist acts by Hamas and his “absolute” solidarity with the people of Israel. “What’s more, I am in favor of the right to self-defense. And the strategy that Israel is following is the correct one.”

He added: “Can errors occur? Well, life has its problems.”

Musk Meeting in the Works?

Milei also praised Elon Musk, one of the world’s richest people and a fellow libertarian. Noting that the Tesla Inc. chief executive’s Starlink satellite internet service is now active in Argentina, the president said he expected to meet with him soon. Musk didn’t respond to an email seeking comment.

“I have no doubt that Elon Musk will be an active player with an important role in the new Argentina that is emerging from the decadence of 100 years of populism,” Milei said.

Canine Nomenclature, Explained

During his defense of Trump, Milei also opened up about the cloned dogs he refers to as his “four-legged children” and who bear the names of the president’s economist heroes: Milton Friedman, Murray Rothbard and Robert Lucas Jr.

Milei, however, insisted the dogs picked their own monikers. “With some names I proposed, they didn’t respond,” he said. “The names were chosen by them as a result of whether they came near when I said the name.”

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