Economist Federico Sturzenegger: ‘Freedom will restore prosperity to Argentina’

The economist Federico Sturzenegger is regarded as the brains behind Javier Milei's economic policy SWI swissinfo.ch

Javier Milei’s economic adviser defends the Argentinian president’s controversial policies and shares his views on the political situation in the country.

During the election campaign, Javier Milei liked to appear brandishing a chainsaw. This powerful cutting tool was intended to convey a message: here is someone who wants to clean up. He promised to shut down such essential institutions as the health ministry, among other measures.

Since becoming Argentina’s president, Milei has started to implement his austerity policies, which are intended to bring high inflation under control.

Milei’s party holds a mere 14%External link of seats in the National Congress of Argentina – the country’s legislative branch – so the government is dependent on the votes of others. And it gets them. A version of Milei’s “Omnibus Bill”, which seeks for instance to privatise the postal service and sewage systemsExternal link, was recently adopted by the Congress.

“There is no money” is written on the poster of this caricature of Javier Milei at a demo on May 1 Keystone

Although Milei still has many supporters, demonstrations are also on the rise. In April hundreds of thousands of people took to the streets to protest the plight of public universities, which are set to lose some two thirds of their spending power because of Milei’s policies.

In addition to economic policy, the new government’s handling of Argentina’s history – especially the crimes of the military dictatorship – has drawn criticism both at home and abroad. “Javier Milei wants a new past,” ran a headline in the liberal Neue Zürcher Zeitung on May 2, for example.

The economist Federico Sturzenegger – who, among other roles, is a former president of the Argentinian central bank – is regarded as the architect of Milei’s economic programme.

In an interview with SWI swissinfo.ch, Sturzenegger defends the president’s controversial policies and shares his views on the political situation in Argentina.

SWI swissinfo.ch: Federico Sturzenegger, you are economic adviser to Javier Milei’s government. What is the best first step to bring down inflation?

Federico Sturzenegger: The poorest people in society pay the highest price for inflation. It is like an unfair tax. Any attempt to reduce inflation is therefore worthwhile.

Javier Milei has decided to tackle the budget deficit, which is the heart of the problem. The old government had to distribute money through the central bank to cover the tax deficit. This led to inflation.

Milei is extraordinarily committed to a balanced budget. Although there was still a deficit in January and February, he has already achieved a surplus. Once the fiscal deficit has been solved, there will be nothing to push up inflation anymore.

This will also put an end to payment defaults and the recurring negotiation of the international debt. When Milei took over government, Argentina’s country risk was rated at 2,500 points by the World BankExternal link – it has now practically halved. To me this is a promising sign.

The cabinet of Javier Milei in an official photo. Federico Sturzenegger stands directly to Milei’s right. X/Argentinian government

SWI: Some of Milei’s recovery plans, intended as a kind of shock therapy, ignore or disregard the legal situation in Argentina. Do you think democratic rules should be set aside in view of the current situation?

F.S.: Not at all. I think we are all deeply committed to respecting our democracy. Without a doubt. In fact, Argentina is currently experiencing an extraordinary democratic momentum.

I was congressman for a party led by conservative politician Mauricio Macri from 2013 to 2015, when the supporters of Cristina Fernandez de Kirchner had a majority in both parliamentary chambers. We said back then, “Congress is merely a secretariat”, as it rubber stamped whatever the government wanted.

There was no separation of powers. In my opinion, Kirchnerism was a systematic attack on the judiciary.

Néstor Kirchner (died 2010) and Cristina Fernández de Kirchner both left their mark on Argentina as president. They belonged to the Peronist party family and stood for a left-wing approach to spending money that brought support to the poorest sections of the population. This coined the term “Kirchnerism”. In 2022 Cristina Fernández de Kirchner was convicted in the first instance of embezzling public funds. Keystone

We have just come through a very dark period, with a government that did not believe in democracy and did everything it could to destroy it for 20 years.

But now Javier Milei’s situation is interesting. His government has relatively few seats in the two chambers, both the Chamber of Deputies and the Senate. This obliges the government to constantly struggle for majorities, to be a real democracy. Today Argentina is experiencing one of the most vibrant democratic moments in its history.

Democracy means that the people elect a government, replace half the lower house and a third of the Senate – and the judiciary does not change. The various pillars of democracy act as buffers: the government pushes for what society demands and comes up against these buffers, which ensure that the changes develop at a pace that society can digest or tolerate.

I think we have a very healthy and multifaceted relationship with these institutions.

SWI: And all these laws that are intended to reform Argentina are decided in parliament. Or does the government simply rely on emergency decrees and rule with de facto power?

F.S.: No. For instance, we submitted our “Omnibus Bill” to Congress. This law has now been reformulated through the democratic process. The government continues to send proposed legislation to Congress.

Argentinian President Javier Milei speaks at a conference in the US at the beginning of April. Keystone

SWI: Because even in hyper-presidential Argentina, the people elect the parliament.

F.S.: Of course. We enter the parliamentary debate with great enthusiasm.

SWI: How do you think society will react? I’m referring to the reactions to social impoverishment. 

F.S.: Social impoverishment has already come about. When Argentina started out with this interventionist model of the regulatory state that was supposed to solve everything, there was 5% poverty, whereas today it stands at over 50%. What led us into poverty was the model of state intervention. It led to stagnation, made us become a mediocre country that our children are now leaving as they have no future here.

We must change that. It is a terrible fallacy to believe that the state can fix society’s problems. If the state spends more, where does the budget come from that the state is supposedly using “for the good of the people”? Who comes up with it?

SWI: It comes from the taxes paid by the citizens.

F.S.: Exactly. And what used to happen was that the state kept the money that the citizens gave it. For its own benefit.

The people said: “That’s enough! I don’t want a system, a country where my children have no future and are forced to emigrate.” So they gave the president a mandate to change things.

I therefore believe that people understand that the president is fighting this battle for them. The results are good. We believe that freedom will bring prosperity back to Argentina.

SWI: What about the anti-government protests that keep taking place?

F.S.: I’m not surprised that those who see their privileges under attack are angry. But these privileges are now falling away, to the benefit of the vast majority.

A union worker demonstrates against Javier Milei’s policies in Buenos Aires on May 1 Keystone

SWI: Many people with Swiss roots live in Argentina. You are one of the few with political influence. What is your relationship with Switzerland?

F.S.: I mainly travelled to Switzerland as president of the Central Bank – especially to Basel, where the Bank for International Settlements is based.

I no longer have any family ties to Switzerland. But I do have admiration for this well-organised, prosperous and productive country. My grandfather was Swiss. The name Sturzenegger comes from the village of Reute in Appenzell Outer Rhodes. It is the most common surname in the village cemetery today.

My great-grandparents emigrated to Argentina back in the 19th century. So the Swiss part is not that big. I have 50% Italian, 25% Spanish and 25% Swiss roots. This makes me 100% Argentinian – a descendant of various European communities.

Edited by Benjamin von Wyl. Adapted from German by Julia Bassam/ds