Javier Milei never professed to be humble. But publishing a book about his presidency entitled Constructing the Miracle? Fronting a rock concert to launch it? Singing ‘I am the king’ to the crowd? He did all this on 7 October, and well, it was a step up.
Perhaps Milei should be more humble. In recent weeks he borrowed some $20 billion from Donald Trump and the United States to prop up the remnants of his ‘miracle’. Despite being lauded internationally for much of his first two years as president for reining in inflation and delivering a fiscal surplus, the cracks Milei has been papering over have now become chasms.
Milei is facing a serious battle to deliver in this weekend’s midterm elections, where Argentines will elect representatives to Congress, with several analysts warning of potential disaster if his party stumbles to defeat. Milei’s party currently has only a handful of seats, limiting somewhat his ability to govern and forcing him into passing laws by decree. The midterms were supposed to be the moment that the good economic management of the past two years would pay off and Liberty Advances, Milei’s party, would storm home victorious and in control.
Instead he seems on the brink of disaster. Polling earlier this month found that 64 per cent of the public now disapproves of Milei’s presidency, a mighty fall from earlier this year when he ranked as one of the most popular leaders in the world. What began as a routine defeat to the opposition Peronists in September provincial elections in Buenos Aires has fast turned into a mini economic crisis.
Argentina is no stranger to economic trouble. In fact, it was a looming fiscal crunch that catapulted Milei to power with the country teetering on the edge of hyperinflation. His success in warding that off is notable. Although, even that reading relies on an unprovable counterfactual.
The truth is that Milei’s brutal austerity and hacking at the state has simply led to thousands of people out of work, industry grinding to a halt and the growing discontent of Argentina’s sizeable middle class. The cost of living has increased, while social spending has been cut to ribbons. Textile factory owner Luciano Galfione told AP this week that he has been forced to cut operations by 80 per cent and suspend or sack half of his staff. ‘We’re seeing an industry in crisis, and it’s about to go bankrupt,’ he said, ominously adding: ‘Textiles are just the first and fastest to fall.’
Much of Milei’s success with international markets had largely been based on confidence. And the electoral loss in Buenos Aires, home to 40 per cent of the population, shattered that confidence. Since then, the effect of Milei’s stubborn reluctance to continue using currency reserves to prop up the value of the peso saw him go cap in hand to Donald Trump earlier this month. He had already borrowed billions from the International Monetary Fund earlier this year.
The Trump factor is very much at play in this weekend’s elections. Neither Milei nor the US President are officially on the ballot on Sunday, when Argentines will vote for representatives in Congress, but the influence of both will be keenly felt. The US has a long history of meddling in Latin American politics, but it has been some time since it was done so openly. Trump has warned that his financial support for Argentina is dependent on Milei’s success in the polls, a statement that is unlikely to play well in the streets of Buenos Aires. The word cipayo – a word used in Argentina to refer to someone who serves foreign interests over their own country – has been increasingly thrown in Milei’s direction on social media. Trump has his reasons (competition with China) for wanting Milei to succeed, but the impression of many increasingly squeezed Argentines is that Milei is too in thrall to his friends in Washington.
Milei will take solace in the fact that, as he is starting from such a low base of congressional support, he doesn’t need to produce another ‘miracle’ to emerge from the midterms in a stronger domestic position. What his vote share does to international confidence in his government, however, is a different matter.
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