What the rise of Javier Milei does (and doesn’t) mean for Lula

Javier Milei will take office on December 10 as the new president of Argentina. 

His decisive runoff victory against the ruling Peronist coalition carries steep domestic implications. The self-proclaimed anarcho-capitalist outsider rode a wave of popular anger, securing 55 percent of votes.

Radical proposals to abolish the Central Bank, cut back social spending, and dollarize the economy all appealed to voters’ discontent with the Peronists’ handling of the country’s finances. The short-term future of Argentina’s institutions and foreign policy has been thrown into question following the defeat of Economy Minister Sergio Massa.

Much has been made of the regional and global implications of the incoming president in Latin America’s third-largest country. Indeed, Mr. Milei has recently insulted the governments of his country’s most significant trade partners, Brazil and China, as well as sworn to withdraw from the Mercosur regional trade bloc.

The latter, in particular, could deal a potentially fatal blow to the long-stagnant customs union, as the bloc faces deep divisions unlikely to be helped by the loss of its second-largest member country. And perhaps no one knows this better than Luiz Inácio Lula da Silva.

The Brazilian president is known as a longtime Mercosur proponent and someone who has enjoyed a close personal and working relationship with successive Peronist governments. 

The arrival of an ultraconservative firebrand to the helm of...