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Pres. Milei Must Win Argentine Votes 10/17 06:18
BUENOS AIRES, Argentina (AP) -- The factory floor used to roar.
Walking around his textile mill in southern Buenos Aires, Luciano Galfione
pointed out the up-to-the-minute machines that once whirred and clattered as
200 employees churned out fabric to be transformed into athleisure and other
apparel for Argentina's vast middle class.
But on Monday afternoon, the factory was so quiet that Galfione's footsteps
rang clear through the compound. A handful of workers at the Galfione Group
factory in Argentina's capital spooled yarn and dyed cloth.
Almost two years after libertarian President Javier Milei stormed to power
on a promise to rescue Argentina's crisis-stricken economy through harsh
austerity and free-market reforms, falling orders and surging competition have
forced Galfione to cut operations by 80%, lay off or suspend half his staff and
use his own savings to keep his family's 78-year-old firm afloat.
Other companies have simply closed their doors. Over 17,600 businesses --
among them 1,800 manufacturers and 380 textile companies -- have folded in the
last year and a half, according to Fundacin Pro Tejer, a nonprofit
representing textile manufacturers.
"We're seeing an industry in crisis, and it's about to go bankrupt," said
Galfione, who also runs Fundacin Pro Tejer. "Not only textiles. Textiles are
just the first and fastest to fall."
As Argentina heads to Oct. 26 midterm elections widely seen as a referendum
on Milei's policies, Galfione's troubles reflect bigger shocks jolting the
country. The economy has sputtered. Cheap imports have gutted manufacturing.
Spending has stumbled, squeezed by higher unemployment and lower wages.
Trump gushes as Argentines groan
The turmoil engulfing Argentine financial markets began when voters in the
manufacturing belt of suburban Buenos Aires -- a region that for decades
represented the dream of national industry nurtured by tariff protection --
punished Milei in a provincial election last month.
The scale of Milei's humiliation triggered a sharp peso sell-off and sent
officials scrambling to secure $20 billion in financing from a friendly Trump
administration.
President Donald Trump, who sees a kindred spirit and fellow culture warrior
in Argentina's chain saw wielding leader, shocked Argentines and Americans
alike Tuesday by warning that the $20 billion was contingent on Milei's success
in what is shaping up to be a hotly contested legislative election.
Treasury Secretary Scott Bessent went further on Wednesday, saying that the
U.S. could tap investment funds to provide Argentina with up to $40 billion.
"Just helping a great philosophy take over a great country," Trump explained
after meeting Milei at the White House.
Thousands of miles away, many Argentines are losing patience with that
philosophy.
Those interviewed on the streets of Buenos Aires Wednesday had no illusions
about Trump's lifeline fixing their problems.
"Let's say they give us this money from abroad. What am I going to do with
it?" asked Walter Willatt, a 56-year-old newsstand owner whose son was just
laid off from a local Toyota dealership. "If the economy revives it will have
to be through domestic consumption."
Milei's abrupt reversal of fortunes
Over a year ago, markets cheered as Milei fulfilled his flagship promise to
reduce the runway inflation that he inherited from his populist predecessors.
Many Argentines -- who had grown accustomed to supermarkets revising prices
upward everyday -- hailed Milei's program as a miraculous outbreak of normalcy
in a notoriously topsy-turvy economy.
But today, price stability is old news as Argentines contend with a
lengthening list of worries.
Unemployment in Buenos Aires Province climbed to 9.8% in the second quarter
of this year, compared to 7.3% during the same period in 2023, before Milei
entered office. Salaries nationwide haven't kept up with inflation. Milei's
major subsidy cuts mean that even if prices have stabilized, Argentines are
paying more for bus fares, utility bills and healthcare.
"Milei's challenge is that the public now assumes inflation has gone down,
that's a given," said Marcelo J. Garca, Director for the Americas for the
Horizon Engage political risk consultancy firm. "There's a new generation of
demands. The economy needs to grow, there needs to be job creation. I'm not
sure that government is prepared to meet those demands."
Rodolfo Nez, a 43-year-old former factory worker in Pilar, outside Buenos
Aires, said he voted for Milei in 2023 because he wanted change. Then the blows
began to fall. His daughter's epilepsy medication shot up in price. His retired
parents struggled to afford groceries on their $300-a-month pension.
On Aug. 29, the ceramic factory where he worked for the last 18 years shut
down. The company, ILVA, fired all the plant's 300 workers in a WhatsApp
message that cited the economic crisis, leaving Nez and his colleagues in
limbo, without severance pay or health insurance.
ILVA did not respond to a request for comment.
"What Milei promised, he didn't do. He messed with retirees, he messed with
my daughter and he messed with the workers," he said from outside the padlocked
ILVA factory where dozens of dismissed employees now camp out in protest, the
air filled with smoke from burning tires and roasting chicken.
"What do I tell my landlord? That I can't pay her next month? Where am I
going to go?"
Nez said he voted for the opposition in last month's regional elections.
Argentine consumer confidence shot to pieces
Government statistics show poor and middle-class households cutting back on
all but essential spending. Clothing sales, for instance, fell 10.9% in
September compared to the year before. The collapsed consumption reverberates
down the supply chain.
"We're reducing costs as much as we can, trying to survive with very low
production and without making money," said Alejandro Schvartz, owner of Visuar,
a household appliance vendor and producer whose sales dropped roughly 25% in
the first half of this year.
Other policies that Milei depends on to fight inflation -- such as high
interest rates and central bank interventions to defend the peso -- further
erode the competitiveness of Argentine industry.
The peso has become so strong that shoppers now get more bang for their buck
by splurging anywhere but Argentina -- from Chile's malls to Brazil's beaches.
A flood of cutthroat competition
Upon taking office, Milei tore down trade barriers and relaxed import
restrictions, opening Argentina to an avalanche of cheaper industrial and
textile products. Chinese e-commerce companies like Temu and Shein pay no
import duties for products valued below $400.
But Milei maintained sky-high taxes for Argentine manufacturers, giving
local companies no choice but to pass on the cost to consumers.
"This is not a fair playing field," said Pablo Yeramian, director of the
Argentine textile company Norfabril, who has already cut 20% of his staff.
As scenes of Milei beaming beside Trump in Washington flashed across
Argentine televisions on Tuesday, some manufacturers couldn't help wishing that
the similarity between the two presidents was, in at least one way, more than
just rhetorical.
"No developed country in the world surrenders its industrial sovereignty,"
said Galfione, pointing to Trump's "Made in America" ambitions for the U.S. "I
think instead of doing what the U.S. tells us, we should do what they do."
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