Argentina remains embroiled in a deep political crisis a year into Javier Milei’s Presidency.
The self-professed “anarcho-capitalist” libertarian has turned the political system on its head, breaking down several prejudices and myths of Argentine politics. Incredibly, he retains substantial popular support and is managing to change society’s expectations about their personal future. This is occurring in an incredibly difficult economic context, where the severity of a recession engineered to successfully help lower inflation has increased poverty while further eroding purchasing power (it has been recovering as of late, but remains deeply depressed when compared to the recent past). In the meantime, Milei and Sister Karina, his presidential chief-of-staff have pumped up his international image, allowing the head of state to become one of the global rockstars of the “new right” movements, giving him a platform to showcase his ideology worldwide that serves to “validate” his plan domestically.
Political rocket
Politically, Milei and his ragtag group of libertarians have been extremely successful. After his emergence a talking head on late-night political TV shows, Milei managed to snatch a seat in the lower house Chamber of Deputies in 2021, going on to overtake the Cambiemos/Juntos por el Cambio coalition built by Mauricio Macri in the first round of the presidential election in 2023, and finally dismantling Cristina Fernández de Kirchner’s Frente de Todos coalition in the run-off. While the fractures in both coalitions were extremely evident — in Juntos por el Cambio it was between hawks and doves, while in Unión por la Patria it centered on whether to support or oppose Cristina’s harder line — Milei helped hammer the last nail into the coffin of the bi-coalitionism that reigned supreme in Argentina for over a decade by properly interpreting society’s disillusionment with the political class. Not to forget his solid social media strategy. This condition of outsiderness led analysts to prognosticate an early failure for Milei and his La Libertad Avanza coalition for multiple reasons: the lack of political structure to man the state, the lack of political experience to run the government, the lack of legislative muscle to pass bills, the lack of “real world” muscle on the ground to “control the streets” and even lack of mental sanity to cope with the intensity of the first magistracy.
Developing their own style, the ruling party has managed to generally outsmart a fragmented opposition to get what they want with minimal concessions. Milei managed to absorb Macri’s main political asset, Security Minister Patricia Bullrich, and a large part of their electorate. He used the PRO party’s legislators to secure support for key legislation such as the ‘Ley de Bases’ law, only to turn their back on them in an implicit pact with the Kirchnerites to block the ‘Ficha Limpia’ bill that was a marquee project for Macri’s anti-kirchnerista electorate. They’ve strategically kept Fernández de Kirchner in the boxing ring, reducing opportunities for potential contenders — for example, Buenos Aires Province Governor Axel Kicillof — and assuring that the pan-Peronist bloc remains united but internally fragmented.
It’s impossible to determine how much of it is skill and how much is luck, but star political advisor Santiago Caputo, a Jaime Durán Barba alum, has been keen to collect the credit. While Cristina guarantees that the Peronists have no choice but her, Juntos por el Cambio has effectively shattered into fragments, with the PRO party in disarray and the Unión Cívica Radical (UCR) divided among those who “wear wigs” (i.e. support Milei) and those who are opposed, who themselves disagree about how to become the resistance. Whether this strategy remains successful is yet to be seen, but it does have a major weak spot: among the libertarians, only Milei can be said to have built real political capital (on the back of “synthetic power” in great part, as defined previously in these columns). Vice-President Victoria Villaruel has positioned herself well, but she is locked in a bitter civil war with the Casa Rosada, while Bullrich is an outsider to the space, even if she shows herself as the staunchest “Mileist” politician. Next year’s midterm elections will be the first hurdle for the ambitious right-wingers.
Austerity and popularity
The pillar behind this political construction is the level of popular support that Milei, more than his government, has attained and maintained. Which shatters another popular myth: that it’s impossible to impose draconian austerity and remain electorally popular. The president’s macroeconomic plan, which is really Economy Minister Luis ‘Toto’ Caputo’s plan, has put the mantra of budget surpluses at the center of their belief system. From there, they’ve maintained currency controls and fed a peso rally that has substantially appreciated the local currency. This occurs against the backdrop of a formidable devaluation in the early days of the Milei administration, a “crawling peg” that was lower than inflation, and major slashing of government spending. The ensuing recession has been brutal, while extractivist sectors have made a killing. A very successful tax moratorium has allowed the economy to absorb dollars, despite a lack of any real flows of foreign direct investment. The plan has been very successful in lowering inflation, allowing the President to deliver on one of his key campaign promises. Balanced budgets and lower inflation have also allowed for a timid recovery in real wages. This level of macroeconomic stability, albeit in Argentine terms, has helped large portions of the population to recover hope for the future, even if the present is in tatters. The middle classes are travelling abroad once again, as the dream of a neo-convertibility that mirrors the decade of one-to-one convertibility with the US dollar in the 1990s stimulates popular support.
But there are serious reasons to believe that the Milei-Caputo plan is unsustainable in the medium term. The International Monetary Fund is concerned with the potentially over-valued peso, in a global context where Donald Trump’s victory in the US presidential elections over Kamala Harris has made the dollar even stronger. They are also worried about the lack of foreign reserve accumulation at the Central Bank, one of the direct consequences of the strong peso policy and capital controls (commonly referred to as ‘cepo’). The destruction of private-sector jobs, together with the plummeting of consumption, create a troubling vicious cycle. Argentina’s large and restructured stock of foreign debt, together with its obligations with the IMF, present another major challenge in the near future. Politically, the opposition could finally find a leader, whether it is in Macri or Cristina’s space, that could eat into Milei’s support base. They could also finally coalesce around certain legislative ideas and deliver painful blows to the Casa Rosada and its strategy. At some point, lowering inflation may not be enough to maintain popular support. Or the novelty of being Milei may grow old.
Both from an economic and a political standpoint, there are challenges and opportunities for Milei, and for the multiple oppositions he faces. A year in, Milei is surfing the wave of popularity, feeling invincible as he receives the constant attention of the international media, which in turn feeds his ego even further. His lack of regard for democratic and institutional norms is overlooked by a large part of the population, and certain friendly and fearful media players. For now, the cracks that are beginning to become visible are brushed off, both by the Milei administration and a majority of the public, and the president can continue to sing ‘YMCA’ with Trump and his family members without looking like a fool. The future remains uncertain, but rest assured, a year from now, nothing will feel the same.
This piece was originally published in the Buenos Aires Times, Argentina’s only English-language newspaper.