Is patience with Javier Milei finally wearing thin? The bombastic leader of Argentina was sent a clear message of discontent by the electorate last week when he lost the province of Buenos Aires in a landslide local election.
Although the contest has little consequence for the national picture, it will be causing consternation in Milei’s camp. The province, which does not include the capital city’s metropolitan area, is home to roughly 40 per cent of Argentine voters. Such a heavy loss just over a month before national midterms is a serious cause for concern. Milei is used to winning. He swept into power in 2023 with a crushing defeat of the Peronist opposition. This defeat is the first sign that a rejuvenated Peronist party – rallied by a resurgent Axel Kicillof, once a minister in the Cristina Kirchner administration – might yet have a sting in its tail.
Milei’s popularity has taken a hit in increasingly public ways in recent weeks. First, he was forced to flee a campaign event when protestors pelted him with stones. Then, his inner circle became engulfed in a corruption scandal when leaked recordings of the head of Argentina’s disability agency appeared to suggest that Karina Milei, the President’s sister, was receiving kickbacks as part of procurement deals. Karina has been described as ‘el jefe’ – the boss – by Milei, a signal of her importance as a confidante and chief of staff. Milei rose to power boasting that he would be different from the corrupt ‘casta’ who came before him.
Also grinding down weary Argentines are the effects of the brutal austerity unleashed by the Milei administration. Yes, the government is running its first budget surplus for decades. But this means little to ordinary people struggling to make ends meet. Just this week, Milei vetoed a bill that would have boosted funding to Argentina’s children’s hospitals. Doctors at the famous Garrahan Hospital in Buenos Aires have complained of supply issues and meagre salaries. A funding boost to public universities was also blocked.
Inflation, which had been teetering towards an eye-watering 300 per cent when Milei was elected, has been reigned in. But current rates – 2 per cent last month alone – are still such that they would trigger a full-blown meltdown if they were to be recorded in the UK. Argentines are more used to dealing with inflation than many other nationalities, but this is still a bitter pill to swallow.
In losing, Milei delivered a rare dose of contrition, acknowledging the ‘clear defeat’ and promising to ‘correct the errors’. But he was clear he would not be compromising on his project. Markets, which have been cautiously supportive of the Milei administration so far, have reacted badly to his defeat. The peso slumped, threatening some of the fragile economic stability which has been mustered over the past two years.
But, Milei’s supporters will take heart in a few factors which mean it is not time to abandon ship just yet. The province of Buenos Aires has always been a Peronist stronghold, and turnout was low. Milei’s 2023 election victory was in large part driven by rural areas like Patagonia where he performed well. Next month’s midterms will serve as the first test of whether these regions are still on board.
Milei also has not lost the support of the International Monetary Fund, which recently loaned the country up to $20 billion, and said on Tuesday it remains committed to the deal. Although, with so much already dished out to South America’s second-largest economy, it is hard to shift the feeling that the American-based bank may be in-too-deep to back out now.
Going into next month’s midterms, Milei’s party, Liberty Advances, currently has so few members of Congress that it would hardly be possible for it not to improve its standing. This has been a millstone around Milei’s neck as he has been forced to negotiate hard to be able to pass some elements of his wide-reaching agenda. Even a lukewarm performance which increases his representation in Congress could be enough to increase confidence in his government.
Pendulum-swinging politics and economic uncertainty have made Argentina a no-go zone for international investors for far too long. Milei is hoping that his drastic reforms will convince them that the country is a safe place for their money. But the hoped-for influx is yet to materialise, as decision-makers warily wait to see whether the Milei experiment will stick for the long term. This latest electoral setback will do nothing to persuade them. A rebound next month? That might do the trick.
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