Argentina’s libertarian president, Javier Milei, has overcome months of crises that threatened to engulf his administration to score a major victory in congressional midterm elections held on Sunday.
His party’s better-than-expected performance also provides a win for US president Donald Trump whose administration came to Milei’s aid with an unprecedented intervention in Argentina’s currency markets and by agreeing a $20 billion (€17 billion) currency swap deal in a bid to prop up its peso.
Trump had conditioned his support for Argentina’s battered currency on a victory for his libertarian ally in Sunday’s vote.
In the biggest test so far of his presidency, Milei’s Liberty Advances coalition took over 40 per cent of the vote, beating the opposition Peronists by nine points. Half of the lower house of congress and a third of the senate was up for election.
RM Block
The win means the self-styled anarcho-capitalist will see his party’s previously minuscule presence n the legislature increase significantly. This boosts his prospects of passing more of his radical reform agenda and crucially should give him enough votes to prevent congress overturning his vetoes.
His triumph is a remarkable turnaround from a heavy defeat last month in elections for the legislature of Buenos Aires province, home to 38 per cent of the country’s electorate.
That loss spooked markets, which began to fret that with little backing in congress and public opinion appearing to turn against Milei, his radical reform agenda might stall.
As a national contest Sunday’s race was always likely to be more favourable for Milei, but his party performed far better than opinion polls predicted, even surging in Buenos Aires province. There it turned around its 13-point loss last month to pip the Peronists in their electoral heartland.
In a country where voting is mandatory, turnout of 66 per cent was the lowest since the return of democracy in 1983.
Sunday’s victory will provide much-needed breathing space for an administration that was increasingly under siege. But the problems confronting it remain hugely challenging. Though it has dropped significantly since Milei took office, inflation is still running above 30 per cent a year and economic growth has stalled.
Argentina is reliant on the International Monetary Fund and the Trump administration for access to hard currency, and despite Sunday’s win many market analysts expect that the peso will still have to be devalued.
The country also faces a major balance-of-payments crisis that has many wondering if a serial defaulter will be able to meet large debt repayments that fall due next year.
It is also unclear just how deep the Trump administration’s commitment to supporting Milei is, despite the warm personal ties between the two men.
Critics scoffed at US treasury secretary Scott Bessent’s claim the currency intervention was because Argentina is strategically important to the US. Instead many pointed out the bailout would allow well-connected investors on Wall Street with close ties to the administration to exit large bets on Argentina made when Milei was being hailed as a libertarian capitalist miracle worker.
Much of Trump’s Maga base has been highly critical of the bailout as Argentina has benefited from China’s sudden halt to all purchases of US soy beans as part of the ongoing trade war between the two countries. While many US growers have been left facing financial ruin, growers in Argentina and Brazil have been the biggest beneficiaries of the halt as China has moved rapidly to secure alternative supplies.
But a big win for a Latin American ally following the Trump administration’s extraordinary interventions in currency markets means the administration has a regional success to its name just as it ramps up military pressure on the leftist Chavista regime in Venezuela.
In the most intimidating display of US power in the western hemisphere in decades, Trump has ordered thousands of troops along with attack aircraft and warships, including an aircraft carrier, to the Caribbean.
Under the pretext of fighting drug traffickers he is threatening to take military action on Venezuelan soil and publicly acknowledged that he has already authorised the CIA to undertake covert action there.
The US military has already carried out at least ten strikes on boats in the Caribbean and Pacific that it claimed, without providing any evidence, were transporting drugs. More than 40 people have been killed in the strikes that a broad range of US legal scholars say are illegal and amount to summary execution.
Colombia’s president, Gustavo Petro, accused the US of murder saying a man killed in one strike was a Colombian fisherman. Trump responded by calling Petro an “illegal drug leader” and imposed sanctions on him.
