Argentina’s Neighbor Offers Fantastic Opportunities for Savvy Investors

Independance square in Montevideo
©iStock/ivotheeditors

The South American nation of Argentina is about to see how far and how fast political revolutions can go… and the biggest beneficiaries could be outside the country’s borders. 

On November 19, self-described “anarcho-capitalist” Javier Milei prevailed over the Peronist ruling party’s candidate to become the country’s president. Milei, a political newcomer who, like his idol Donald Trump, was once a television host, promises to upend the political, economic, and social order that has characterized the country since the 1940s. 

That order is in chaos. Inflation is over 140%. Public debt is 90% of annual gross domestic product. The budget deficit is 10% of GDP annually. The central bank’s balance sheet is $10 billion in the red. Its sovereign bonds trade at 33 cents to the dollar. The government owes the International Monetary Fund $44 billion and cannot expect any bailouts. 

Milei wielded a chainsaw on the campaign hustings to illustrate his intentions: he plans to slash the government budget by 65%, close the central bank, sell most state-owned businesses, and eliminate all subsidies, including those on which 40% of the population depend. Despite his “libertarian” cachet, Milei plans to smash unions, ban abortion, and criminalize homosexuality. This doesn’t appear to reflect religious concerns, however, since he has referred to Argentina’s own Pope Francis as a “communist bastard.” 

Milei’s most ambitious plan is to “dollarize” the economy by abandoning the Argentine peso and adopting the U.S. dollar as official currency. Given that there are few dollars in circulation and little prospect of more from abroad, that would usher in extreme deflation and a collapse of economic activity. Eliminating exchange controls as an alternative would lead to a dramatic increase in inflation, which is already in triple digits. 

Milei may struggle to achieve these goals, however. His “Liberty Advances” coalition only has 38 of 257 seats in Congress and 7 of 72 in the Senate. That means he will have to form alliances with other right-wing parties, which are unlikely to support his more extreme intentions. 

But the biggest challenge comes from the working class and the farming sector, prime beneficiaries of decades of economic populism. 

Argentina's trade union movement is notorious for its aggressive street-level radicalism. Peronist operatives in working class areas control networks of patronage and mobilization that could put millions on the street instantly. And Argentina’s heavily subsidized farming sector is one of the only sources of foreign currency, which could dry up entirely under Milei’s policy framework. 

From the perspective of my Global Citizen service, Milei’s ascent raises questions about the country’s ability to attract and retain foreign residents and investment. At only two years, Argentina has one of the world’s shortest periods to citizenship by naturalization, its short length designed to attract foreigners and their money. Paradoxically, despite its populist political traditions, Argentina has traditionally attracted foreign libertarians who have created enclaves in the country’s farming interior. 

Given the political balance of forces, Milei is unlikely to succeed in the long term. But his attempts to impose a radical free market on Argentina are likely to benefit the country’s neighbors… including peaceful and prosperous Uruguay, a country I profile in my November Global Citizen report. 

Uruguay’s economy is quite like Argentina’s, particularly in its focus on agricultural exports. Unlike its larger neighbor, however, Uruguay has been exceptionally well run for decades, and enjoys a stable economy, low inflation, and well-managed public finances. 

Uruguay’s stability has made the country a Plan B for middle class and wealthy Argentines, who have invested millions in its residential and agricultural property sectors. Ownership of property on the other side of the Rio de la Plata, the river that divides the two countries, is a perfect way to hedge against hyperinflation and economic and social disorder at home. 

That’s why I’m calling the situation in Argentina an opportunity for savvy investors. As I explained in my November report for members of my Global Citizen service, Uruguay has fantastic deals available for both residential and farmland investors. And the country—whose constitution guarantees the right of any foreigner to acquire Uruguayan citizenship if they qualify—is one of the most immigrant friendly on the planet.

Click here to learn how to become a member of my Global Citizen service and read my November report on everything Uruguay—and explore the opportunities in Argentina’s prosperous smaller neighbor