Plus: Watch of the day
IN TODAY’S EDITION
1️⃣ A Milei win in Argentina |
2️⃣ Tips for the weekend |
3️⃣ Watch of the day |
Hi Intriguer. I don’t remember the 1980s (I was born then), but from leafing through dusty history tomes in mahogany-lined libraries while chewing thoughtfully on my glasses, I gather the 80s was a time rich in synth, denim, mullets, and inflation.
Around the time I was born, a young kid in Argentina watched as inflation hit his homeland, eroded people's savings, made it too hard to plan, and made it too uncertain to invest. And, so the story goes, that inflation also made this young kid in Argentina decide to become an economist.
Four decades later in 2021, he did a chin-first swan-dive into the shallow end of Argentine politics. And two years after that, he became president: we’re talking Javier Milei, the current president of Argentina. Yes, the guy with the sideburns, chainsaws, rock music, colourful language, and a penchant for privatisation.
And today’s briefing leads with his intriguing legislative win this week, six months into his polarising-but-still-popular term.
P.S: A huge shout-out to Patrick in Geneva, who’s now referred 100 friends and colleagues to Intrigue! To say thanks, some very fancy luggage is headed his way. If you’d like to earn some sweet perks, simply use your unique referral code down below!
G7 agrees on $50B loan for Ukraine.
The money, raised from the proceeds of frozen Russian assets, will help finance Ukraine’s economy and war effort. Russia claims its retaliation will be “extremely painful”. In the margins of the G7 in Italy, US President Joe Biden and his Ukrainian counterpart also signed a 10-year security deal that includes long-term US military support and training.
Last-minute South Africa coalition talks continue.
The new South African parliament is due to meet today (Friday) for the first time since the general elections, and its first task will be to elect a president. Hoping to ensure incumbent President Cyril Ramamphosa remains at the helm after today’s vote, his ruling ANC party is trying to form a unity government with all parties, though the details are still being hammered out. It could be close.
Tesla shareholders back Musk’s $56B pay deal.
Overcoming opposition from Norway and other major shareholders, the result is a vote of confidence in Musk as CEO and underscores his popularity with Tesla’s retail investor base. But it’s not pay-day yet: his unorthodox remuneration package will still likely be the subject of more court battles in Delaware.
US journalist Evan Gershkovich to stand trial soon.
Russian authorities arrested the Wall Street Journal (WSJ) reporter over a year ago on espionage charges. They’re now saying he’ll soon face trial, including on accusations around collecting information on a key arms factory. The WSJ and the White House reject the accusations (reporters are meant to collect information), and say his arrest is political.
TOP STORY
Milei drags his reforms through the senate
With protests roaring outside, 13 hours of debate came to an end inside Argentina's senate yesterday (Thursday) when Vice President Victoria Villarruel broke a tie, passing a package of watered-down economic reform bills, 37-36.
And that’s a bitter-sweet win for Argentina’s libertarian president, Javier Milei.
But before we dive into why, let’s retrace our steps. Milei won the presidency in December 2023, with a historic 55.7% of the vote. He campaigned on an unorthodox platform to “chainsaw” state spending as a way to tame inflation and pull Argentina out of its rolling economic crises.
But as a political newcomer with few friends in congress, he’s had to push through many of his ‘shock’ reforms using executive powers. In six months, he’s:
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Laid off 50,000+ state employees
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Devalued the peso by 50%
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Cut fuel and transportation subsidies
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Axed price controls for food and rent, and
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Halted publicly funded projects.
The result? He’s turned December’s monthly 2 trillion peso fiscal deficit into April’s 265 billion peso surplus. Monthly inflation also cooled for the fifth straight time in May (though from one of the world’s highest bases).
And yet… tapping the brakes on all that spending has also meant that poverty levels are up, and soup kitchens are busy.
Milei’s refrain is “no hay plata” (there’s no money): the short-term pain will be worth it, he says, to put Argentina back on a growth path. And if we’re to believe the polls (below), many folks believe Milei.
So when yesterday’s vote passed, his vice president cast an eye at the cacerolazos outside (protesters banging casserole pots), and said “today, we have two Argentinas”: those respecting voter wishes, and those railing against them.
As for the details of the reform package? It’s a behemoth by name (Law for the Bases and Starting Points for Argentines’ Freedom) and by nature (~230 articles). Locals refer to it simply as the ‘Bases Law’.
After earlier failed attempts and revisions, Milei’s reform package is now around half its original size, and aims to…
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Privatise two state companies (he wanted 40)
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Grant emergency powers to the president
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Incentivise more investment, and
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Further trim Argentina’s fiscal deficit (though the senate rejected his attempt to reinstate income taxes)
Foreign investors have welcomed the news, driving up Argentina-linked bonds and stocks (plus the black market peso). But that bump, while welcome, wasn’t huge, reflecting a few different possible market signals:
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Some investors might’ve seen this week’s developments as proof Milei can pass legislation and reform Argentina’s economy
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Others might’ve seen it all as proof of the difficulty of Milei’s plans, with this watered-down bill now Milei’s high water mark, and
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Many will have already priced it all in either way.
Still, those positive market numbers might help him maintain another key number: his approval rating. Notwithstanding all the drama, he’s still above 50%. And among those that voted for Milei, he’s soaring at 75%.
But the longer it takes Milei to tame inflation and put the country back on a growth path, the more he risks losing both his market and approval numbers.
INTRIGUE’S TAKE
Here’s the thing: investors don’t just want reforms passed by a single vote while protestors clog the streets, only for someone else to come along next election and hit ctrl-z on the whole thing. Investors want those reforms baked in, with broad support, for the long haul.
So maybe Milei thinks okay, the sooner he rams his reforms through, the sooner they work, the sooner they then get baked in, and the sooner investment returns. But the risk is, the quicker he rams it all through, the more pushback he gets from his country, and the quicker he’s turfed out. There’s no easy option.
And that’s the thing about his legislative win this week – it lands him awkwardly (uffff so awkward) right in the middle: maybe enough progress without triggering too much pushback? Or maybe not enough progress, but still triggering pushback.
Also worth noting:
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Milei’s reform package now goes back to the lower house where it seems likely to be approved, though the government is hoping to reinstate some of the articles it lost in the senate.
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The International Monetary Fund, which has a $44B loan program with Argentina, unlocked another $800M in funds for the country yesterday after applauding the program as being “firmly on track."
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MEANWHILE, ELSEWHERE…
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🇨🇳 China: Beijing is urging the EU to “immediately correct its wrong practices” after the bloc announced import tariffs of up to 48% on China-made electric vehicles (EVs). Shares in European carmakers fell again yesterday, reflecting fears that China will now retaliate.
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🇭🇺 Hungary: The EU’s top court has fined Hungary $216M after finding the country breached the EU’s asylum policies, including by illegally detaining applicants. The court will continue applying a $1M per day penalty until Budapest amends its policies.
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🇳🇿 New Zealand: China’s premier, Li Qiang, has landed in New Zealand, becoming China’s first premier to visit the Kiwis since 2017. Li, who heads to Australia tomorrow, has signed deals on trade and climate change with the prime minister of New Zealand, Christopher Luxon.
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🇨🇴 Colombia: A US court has ordered Swiss-domiciled US banana giant Chiquita Brands to pay $38M in damages to the families of eight Colombians murdered by a paramilitary death squad. The company had previously admitted to financing the group between 1997 and 2004, at the height of Colombia’s conflict.
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🇬🇭 Ghana: Cocoa producers in Ghana are flagging they’ll need to postpone up to 350,000 tons of bean shipments to the next season due to poor crop yields, sending cocoa prices skyrocketing. Ghana is the world’s second-largest cocoa producer, but the sector has been hit by adverse weather, plant disease, and unauthorised gold mining.
EXTRA INTRIGUE
Some recommendations from Team Intrigue for the weekend ahead
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Read: Ever wondered what Excel championships look like? Take a peek behind the scenes of the Las Vegas Excel spreadsheet competition (you can change the article’s colouring to normal on the bottom right).
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Listen: China’s rise has been one of the defining geopolitical events of the last half a century. But will it be so for the next 50 years, too? China-watcher Oriana Skylar Mastro shares some thoughts in this podcast.
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Watch: Check out the docuseries ‘Home’, for a peek inside some of the world’s most visionary dwellings located everywhere from Sweden and South Africa to Iceland and Indonesia.
WATCH OF THE DAY
Courtesy of @WatchesOfEspionage (Insta)
This here is a photo of a former CIA officer in Bogota, Colombia, taken about a decade ago. He now runs an intriguing Instagram account called Watches of Espionage, which uses timepieces as a way to tell the stories of the spies and generals wearing them throughout history.
Btw, the watch in this photo is the Breitling Aerospace, but it’s not just any old Aerospace. This one was a gift from Jordan’s King Abdullah II bin Al-Hussein, and features the kingdom’s gold royal crown plus the monarch’s name in Arabic (عبدالله بن الحسين). We can’t help but wonder what a spy did to score a royal gift like that.
FRIDAY QUIZ
Today (June 14th) the UN celebrates ‘World Blood Donor Day’, so that’s as good a trivia topic as any, right?
Which of the following blood types is most sought after?(ie, everybody can receive donations from this blood type)
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In 1667 a human received the first blood transfusion. Where did the blood come from? |
How many units of blood are donated every year globally? |