Machado is the new Milei

Argentina has positioned itself as poster child par excellence for why Venezuela must shun hard right politics.

Much of Argentina is riding a tumultuous current of political support for Javier Milei ahead of the final round of elections on November 19th. One of Milei’s banner policies is to cool inflation by dollarisation. Hyper-inflated Venezuela, whose voters are currently being courted by challenger Maria Corina Machado ahead of scheduled elections next year, should pay attention. 

Milei is pushing a dollarisation policy which would threaten living standards and the government’s ability to print more currency and maintain debt repayments in an economic slump. With the Federal Reserve in control of printing money, Milei is effectively promising a constriction in the supply. Despite his notably hostile attitudes to China, such a strategy would force a dependence for Argentina on its $20 billion swap line with China. Xi Jingping has shown little clemency in relaxing sums owed to it by previous debtors such as Sri Lanka or Zambia.

This is not entirely unfamiliar ground for Venezuela, whose largest creditor is China and whose hard-working middle class also faces a slump. Under Machado’s pushes for dollarisation, any default on payments back to China would leave the country, along with its oil supply, in a much more vulnerable position, as the world’s largest oil importer. It is much more practical for Venezuela to pursue its interest in financial partnerships with initiatives set up by BRICS’ New Development Bank. 

An election victory for Machado would shatter the current strategy of restraining price rises and protecting the working class from Chinese influence. This would allow dollars to be used only for certain transactions, with a restrained central bank and reduced autonomy, external pressures will see the people of Venezuela suffer more, not less.