Milei’s win in Argentina hits hopes for EU’s Latin America trade deal
BRUSSELS — The victory of a Trump-like president in Argentina could deliver a knockout blow to already teetering hopes of wrapping up a trade deal between the European Union and the Mercosur bloc of South American countries before the end of the year.
Javier Milei, an anarcho-capitalist outsider nicknamed El Loco — the Crazy One — won Argentina’s presidential run-off on Sunday, coming from behind to beat Economy Minister Sergio Massa by 56 percent to 44 percent.
The result stunned many in Brussels who fear that Milei’s victory spells further trouble for already-difficult talks on a landmark trade agreement between the EU and Mercosur that has been two decades in the making.
Among the many inflammatory statements he made during his campaign, Milei has threatened to quit Mercosur — which groups Brazil, Uruguay and Paraguay with Argentina.
The former tantric sex coach, who has no government experience, called Mercosur a “phenomenal failure” and described it as a “customs union of poor quality that creates trade distortions and hurts its members.”
Milei also served notice that he would not engage with “communist” countries, such as Brazil under President Luiz Inácio Lula da Silva and China under Xi Jinping — even though they are Argentina’s top two trading partners.
Lula pointedly avoided congratulating Milei by name in a post on X, saying instead that “democracy is the voice of the people and it must always be respected.” Milei’s earlier jibes led a Brazilian minister to demand an apology on Monday before the two leaders talk.
Milei may want to take action first on other, more pressing elements of his disruptive agenda — such as ditching the peso for the U.S. dollar, shutting the central bank to end “the cancer of inflation,” and slashing public spending.
“It’s a bit of a tsunami in terms of the number of radical economic proposals that Milei has,” said Oscar Guinea, a senior economist from the ECIPE think tank.
It’s complicated
A European Commission official, speaking ahead of the run-off, said “the picture is going to be more complicated” in the event of a Milei victory.
Despite hopes that Brussels and the Mercosur countries could clinch a deal by year’s end, negotiations have stalled over a call by Brussels earlier this year to add extra sustainability standards to the accord.
In their counteroffer, the South American countries have sought €12.5 billion from the EU in cooperation aid, dealing another blow to any speedy resolution.
Milei’s victory is likely to influence negotiations in several ways. For starters, it will put further pressure on negotiators as they seek a compromise before he is due to be sworn in on December 10. A high-level summit of Mercosur leaders on December 7 might represent the last foreseeable opportunity to lock in a political deal.
Forming a new Argentinian government could then take longer than usual, given Milei’s campaign-trail pledge to slash the number of government ministries. Diana Mondino, an economist on Milei’s team, is set to play a key role, and is being considered as future foreign minister.
“Working to shrink the state and eliminate taxes,” Mondino wrote on X on Monday, posting a picture of a working meeting.
First things first
Others in Brussels hope that ripping up the EU trade accord won’t be Milei’s top priority, and that he will focus instead on fixing the economic situation at home first.
“He was campaigning on a platform of protest and radical reform. What we will see is that, after the December 10, there will be new policies and new directions, but it will take time,” Guinea said, adding that the president-elect was a proponent of free trade.
The political realities of building a government and working with lawmakers could blunt Milei’s agenda at the outset, argued one European diplomat.
“Given the concessions he’s had to make to the right and his immediate priorities, he won’t be blocking negotiations just yet. He will have to deal with the center-right to secure a parliamentary majority, and we’ll have to see how he appoints his government,” said the diplomat, who was granted anonymity to speak candidly.
EU foreign affairs chief Josep Borrell said the incoming government in Argentina “can count on the EU to further strengthen our partnership to deliver positive results for our societies, including by finalizing negotiations as soon as possible on the EU-Mercosur Association Agreement.”
On critical raw materials, Milei may also abandon the ambitions of earlier governments to build up domestic supply chains — above all for the lithium used in electric vehicle batteries — rather than extract and export the materials directly, chiefly to China.
“Don’t pick the winners. Let the batteries be made wherever people want to make them,” he has said.
But leaving the door open to Beijing’s extractivist approach won’t sit well with Brussels, which is counting on the Mercosur deal to give it access to the region’s raw materials wealth while offering to help build up local processing capacity.
Nicolas Camut contributed reporting. This story has been updated.
