Posadas, Argentina, February 6, 2024 --  

Argentina's new libertarian president has had a strong start. He'll need the support of his yerba mate-swigging countrymen for long-term success.

To understand Argentina’s obsession with their national drink of yerba mate, start at the monument to the drink in the capital of Missiones province. As you walk past the statue, you will notice people all over town sipping the beverage from metal "bombilla" straws in ornately decorated gourds. Like most all Argentines, residents of Posadas carry elaborate cases holding thermoses of hot water and dry mate leaves so a refill is always at the ready.

Even as summer temperatures soar to 100 degrees Fahrenheit, people drink the boiling hot tea morning, afternoon and evening. Missiones state is the main source of mate production, and the heartland of the indigenous Guarani people who first cultivated the plant in the age before Columbus. While the Jesuits converted the Guarani to Christianity, the Gurarani converted the Jesuit missionaries to mate drinkers. They later did the same with the Spanish and other European colonists who followed.

The National Obsession Photo by David G. Young

Today, Mate production is one of the many flashpoints in the proposed reforms of Argentine’s new "anarcho-capitalist" President Javier Milei. Almost immediately after taking office, Milei ended the government program making cash payments to support mate farmers outside the harvest season.¹

Some farmers from Missiones travelled to Buenos Aires to march on Congress during a general strike two weeks ago, but otherwise the streets have been surprisingly calm. At a Sunday craft market near Posadas’ old train station, a booth manned by Milei’s La Libertad Avanza party faced no angry protesters. Indeed, it earned no more attention than the Jehova's Witnesses who set up across the path.

Milei has surprised observers by trading the bombast for which he is known in favor of early pragmatism to achieve his agenda. After taking office in December, his early decrees were followed by a sweeping omnibus reform bill introduced to Congress. When its prospects looked shaky, his government withdrew included spending cuts to boost its chances.² With only 386 of the original 664 articles remaining³, the bill passed its first reading on Friday in the lower house⁴.

Details of the surviving articles still need to be individually approved before it goes to the Senate. Until final passage, further consequences for the mate industry and the Argentine economy in general are still up in the air. An earlier decree ending mate price controls was suspended by a court pending passage of the omnibus law.⁵

Even with these compromises (indeed, perhaps because of these compromises), Milei's government has been surprisingly effective to date. Remember that Milei's free-market reforms are extremely radical for Argentina, which has typically been ruled by Peronist politicians overseeing a system of heavy state subsidies and protectinism to secure the interests of a broad range of special interest groups.

The fact that Melei has been able to surround himself with effective pragmatists and maintain traction two months into his term may seem a minor accomplishment. But remember that the last free-market administration to be elected in the West was Prime Minister Lizz Truss' government in the United Kingdom. It lasted just 50 days before she was forced to resign in the face of step declines in the British Pound caused by fears over fiscal imbalance. Who would have thought that the government of an "anarcho-capitalist" from an upstart Argentine party could prove more stable that a Conservative Party government in the United Kingdom?

Of course, a similar downfall may come eventually for Milei. Unlike Truss, he probably won't be blamed for losses in value of the national currency (such losses have long been going on and stopping them was Milei’s primary campaign pledge), but he may face public backlash for treading on popular groups and products.

And idolized football players aside, it's hard to think of anything as popular with Argentines as yerba mate. If Milei hopes to acheive long-term success, he'd be best advised to tread lightly on the national drink.

Related Web Columns:

Who is Javier Milei? August 22, 2023

Notes:

1. CNN, For the Workers Behind Argentina’s National Drink, Milei’s Reforms are Turning Sour, February 1, 2024

2. Bloomberg News, IMF Says Milei Move to Delay Argentina Spending Cuts Is ‘Pragmatic’, February 1, 2024

3. Buenos Aires Times, Omnibus Law: What’s In and What’s Out as Bill Goes to Congress?, February 1, 2024

4. Associated Press, Argentina Lawmakers Have Approved Milei’s Sweeping Reform Bill but Much Negotiating Remains, February 2, 2024

5. CNN, Ibid.