For Argentina to become a more appealing and business-friendly emerging market, it needs to implement a more practical foreign policy along with macro-level structural reforms and suitable incentives for particular sectors, leveraging its abundant natural resources.
Since becoming the first libertarian president in history, Javier Milei has not only brought a dramatic change to Argentine politics but has also garnered substantial global interest in a country that had been somewhat isolated from significant discussions in the West. Milei’s distinctive approach, compelling narrative, and intended comprehensive reforms to overhaul Argentina’s economy have made him a noteworthy figure among citizens worldwide.
Among the factors that have elevated his profile is his substantial engagement in international affairs. By mid-June 2024, the president has undertaken seven foreign trips, including four visits to the United States. His forthcoming European journey to participate in the G7 summit will establish him as the Argentine president with the highest number of international trips within his initial six months in office. However, his dynamic approach to diplomacy exhibits several unique and innovative aspects that distinguish him from earlier administrations.
Most of these visits align with one of Milei’s main goals: attracting substantial flows of foreign direct investment (FDI) enable his administration to update the country’s production infrastructure, increase its exports, and thereby fully integrate it into globalization. Although this agenda heavily relies on significant domestic reforms – such as his pledge to adopt the ‘Irish Model’ and the contentious ‘RIGI’ regime in the Omnibus bill – his diplomatic initiatives also play a crucial role in his strategy to enhance investment.
A notable strategy involves prioritizing interactions with business leaders and CEOs over adhering to traditional diplomatic protocols with heads of state and government. During his four visits to the U.S., he did not meet with President Joe Biden, Vice President Kamala Harris or any administration officials Instead, he focused on prominent business figures, such as Elon Musk (CEO of Tesla and Starlink, among other companies), whom he visited twice, and Meta’s Mark Zuckerberg, along with CEOs of other tech giants like Apple, Alphabet (Google’s parent company), and Open AI. Although Milei has engaged with White House officials during their visits to Argentina, his travels indicate a clear preference for engaging with business executives.
This distinctive diplomatic strategy raises several important questions: why has Mile chosen such a unique approach? Is it consistent with the present trends in the global business landscape, which is marked by growing instability and competition in geopolitical matters? Essentially, will this ‘CEO diplomacy’ succeed in attracting substantial foreign direct investment to a country that is urgent need?
Milei’s Libertarian Ideas and Their Influence on His Foreign Policy Views
Milei’s choice to implement a ‘CEO diplomacy’ is deliberate. To comprehend, one must consider his ideological roots, which shape his views and understanding of the world, thus influencing his foreign policy strategy. In this context, Milei’s diplomatic approach is grounded in the doctrines of the Austrian School of Economics, which greatly inform his perspectives and interpretations.
In his highly regarded 1973 publication, For a New Liberty: the Libertarian Manifesto, Murray Rothbard presents several concepts that have profoundly shaped Milei’s perspective. In a recent conversation, the President even referred to Rothbard as ‘his guiding star’. The book focuses on one of the fundamental principles of Rothbard and the Austrian School: the dissolution of the state, which they view as a coercive force that restricts personal freedom.
Regarding foreign policy, Rothbard argues that “in a perfectly libertarian world (…) there would be no foreign policy, because there would be no states, no governments (…)”. Understanding the impact of these ideas on Milei’s development is essential to comprehend his actions as president. This does not imply that he completely rejects traditional foreign policy; indeed, he has met with ideologically similar foreign leaders such as Nayib Bukele of El Salvador, Giorgia Meloni of Italy, and Benjamin Netanyahu of Israel. However, it is clear that his most notable and praised encounters have been with business leaders. The importance of these figures in Milei’s approach to international relations was apparent even during his campaign. For instance, after his interview with Tucker Carlson, which was well-received by Elon Musk, his close advisor and current foreign affairs minister declared that Argentina had returned to the geopolitical arena.
Milei and his administration appear to consider the international system as a domain where states and governments are not necessarily the most significant players. Instead, given his strong ideological beliefs, he views influential figures such as tech company CEOs as crucial for driving Argentina’s economic success by attracting investment.
Milei’s ‘CEO diplomacy’
The issue of whether Milei’s ‘CEO diplomacy’ will be effective in its goal of attracting substantial foreign direct investment remains a crucial one. To address this question, it is essential to analyze the global landscape of the 2020s, as the international environment consistently acts as a significant constraint on the foreign policy achievements of any nation, particularly those on the periphery. Is the world moving towards a ‘Technopolar Moment,’ as Ian Bremmer proposed, where major technology companies will increasingly become the most influential players in the geopolitical arena?
The question of whether Milei’s ‘CEO diplomacy’ will succeed in drawing significant foreign direct investment remains pivotal. To address this, it’s crucial to examine the global dynamics of the 2020s, as the international context consistently imposes substantial limitations on any nation’s foreign policy achievements, especially those on the periphery. Ian Bremmer has suggested that the world may be approaching a ‘Technopolar Moment,’ where major tech companies become increasingly influential in the geopolitical sphere. According to a recent IMF working paper, there’s considerable evidence suggesting that trade and FDI flows are rapidly evolving due to geopolitical tensions and a rise in trade-distortive measures implemented by governments to bolster supply chain resilience and economic security. The key takeaway is that as states increasingly influence FDI flows with national security and supply chain resilience in mind, an effective diplomatic strategy to attract investment should prioritize state-to-state relations.
Will the efforts of the CEO in diplomacy yield positive results?
Considering the available evidence, a diplomatic approach that diminishes the significance of heads of states and governments in attracting FDI flows appears impractical in today’s global landscape. Milei’s extreme perspectives pose a barrier to the effectiveness of his plans, especially given current global dynamics. The strong influence of his ideology on his foreign policy and diplomatic approach is likely to result in failure because it inadequately appreciates the critical role of modern states in driving economic priorities and investments.
Although this analysis primarily examines Milei’s diplomatic efforts and foreign policy actions on his worldview, it is important to recognize that even a more sophisticated foreign policy, by itself, would not necessarily make Argentina an appealing destination for foreign direct investment (FDI). Instead domestic economic challenges remain the primary obstacle to achieving this goal, while foreign, though increasingly significant, continues to play a secondary role.
To fundamentally reshape Argentina, including attracting significant FDI, Milei’s administration must first address the pressing domestic issues at hand. Improving the macroeconomic landscape involves significantly cutting public spending, tightening monetary policy, removing foreign exchange controls, and establishing a fiscal framework that encourages investment. Additionally, a microeconomic strategy aimed at stimulating specific sectors to draw more investment should be prioritized. Focus should be given to tradable goods sectors to enhance exports, especially in areas related to natural resources and biotechnology, where Argentina holds comparative advantages.
To fully engage with globalization by increasing its inward FDI and upgrading its productive infrastructure for sustainable development, Argentina must implement numerous changes. This includes a necessary reassessment of the administration’s foreign policy. Milei’s approach, known as ‘CEO diplomacy,’ fails to maximize the available global opportunities due to a misunderstanding of current international dynamics. A more practical foreign policy should be combined with structural macro-level reforms and targeted incentives for particular sectors to make Argentina a more business-friendly and attractive emerging market, capable of leveraging its rich natural resources.
