Why support for Argentina's Milei is waning | DW News

Key Concepts

• Anarco-capitalism: A political philosophy that advocates for the elimination of the state and the establishment of a society based on voluntary exchange and private property.
• Midterm Elections: Elections held in the middle of a president's term, often seen as a referendum on the current administration.
• Austerity: Policies aimed at reducing government budget deficits through spending cuts and/or tax increases.
• Fiscal Deficit: The difference between government spending and government revenue.
• Currency Swap: An agreement between two central banks to exchange currencies.
• Legislative Gridlock: A situation where it is difficult for the government to pass laws due to political disagreement.
• Peronism: A political movement in Argentina that emerged in the mid-20th century, characterized by a blend of nationalism, populism, and social justice.

Argentina's Midterm Elections: A Test for Javier Milei's Free Market Experiment

Argentina is on the cusp of a midterm election that will serve as a crucial test for President Javier Milei's radical free-market policies. Since assuming office in 2023, Milei, a self-proclaimed anarcho-capitalist, has implemented significant spending cuts and managed to reduce inflation. However, these measures, coupled with a series of scandals, have led to growing discontent among segments of the population, particularly young people who initially supported him. The election's outcome is further complicated by the involvement of former US President Donald Trump, who has reportedly linked US aid to Milei's electoral success.

Disillusionment Among Young Supporters

Many young Argentines, including students like Patricio Martin, who were drawn to Milei's promise of dismantling the establishment, are now expressing disillusionment. Martin highlights the drastic reduction in government spending, particularly the 30% cut to university budgets, which has impacted professor salaries and infrastructure. He laments that the austerity measures have disproportionately affected students, teachers, and retirees, while the "elite" remains largely untouched. This sentiment is leading some, like Martin, to consider voting for left-wing parties in the upcoming midterm elections.

Impact of Austerity and Scandals

Milei's administration has also faced criticism for cutting aid to people with disabilities. These cuts coincided with a scandal alleging that his administration accepted bribes from pharmaceutical companies that supply medicine to disabled individuals. Protests have erupted in cities like Buenos Aires, with participants expressing fear over the extent of Milei's actions and the disruption caused by the cessation of benefit payments. The registry for electrodependence, which grants free electricity, has reportedly been cut by over 35%. Protesters argue that initial claims of "fake pensions" have now escalated to the withdrawal of all support, leaving professionals unpaid.

Shifting Public Opinion and Political Landscape

Political consultant Herlan Reyes observes that while some young people are disillusioned, a significant portion of the electorate still supports Milei, albeit with diminished enthusiasm. Milei's initial mandates were to curb inflation and combat the existing political system. However, recent corruption cases have cast doubt on the latter. While inflation has been reduced from 160% to 32%, unemployment has risen, and real wages have declined.

Despite budget cuts, some students at the University of Lanos still support Milei, acknowledging the need for change after two decades of what they perceive as ineffective left-wing governance. For 18 of the 22 years preceding Milei's presidency, left-wing parties held power. Now, the same ideology is poised to challenge Milei in the midterm elections. The success of Milei's extreme pro-market, anti-state model, which has been presented as a global example, is now at stake.

What's at Stake in the Midterm Elections

Political analyst Marcelo Garcia explains that while these are midterm elections and Milei will remain president regardless of the outcome, they represent a critical test for his government. Milei's presidency has been built on two assumptions: public support for his economic reforms, symbolized by his ubiquitous chainsaw, and the success of his economic program. Both assumptions are now being questioned. Milei faces his lowest approval ratings to date, and his economic program has relied on two significant bailouts: one from the International Monetary Fund (IMF) and another from Donald Trump.

Economic Performance and Public Demands

While Milei can point to a dramatic reduction in inflation, Argentines are still experiencing the pain of austerity and a weakened peso. Garcia notes that once inflation is brought down, public attention shifts to other demands, such as employment and the purchasing power of salaries, which have been eroded by inflation under Milei. Milei's ideological belief is that stabilizing macroeconomic indicators like the fiscal deficit will naturally resolve other economic issues. However, reality is proving more complex, and the public is now judging him on his ability to address these emerging demands.

Corruption Scandals and Political Damage

Milei, like other populist presidents, has campaigned on an anti-corruption platform. However, scandals involving his sister, candidates, and even a cryptocurrency promotion have emerged. These cases, while potentially damaging to his image as an outsider fighting corruption, are less critical than his economic performance. Garcia emphasizes that Milei will primarily be judged on his ability to solve the country's economic problems. The key question moving forward is whether Milei can be pragmatic enough to address the issues his government faces and position himself for re-election in 2027.

The Role of US Aid and Donald Trump

The relationship with the United States, particularly with Donald Trump, is a significant factor. Trump has provided a substantial $20 billion economic bailout, with the US reportedly indicating that aid could be contingent on Milei's electoral performance. Garcia states that Trump's endorsement and financial support are so significant that he will effectively be "on the ballot." Beyond the Treasury Secretary's currency swap, the US Treasury has directly purchased Argentine pesos to prevent a pre-election devaluation.

While this support is beneficial in the short term by averting a currency crisis, it raises concerns in the medium term. There is a perception that Milei has ceded economic control to Trump and Treasury Secretary Scott Besson.

Legislative Challenges and Alliance Building

Even in the best-case scenario, Milei's party is unlikely to secure a majority in Congress. This necessitates a shift from his current defensive strategy of blocking opposition moves and ruling by decree. To pass crucial reforms, such as fiscal, pension, and tax reforms requested by the IMF, Milei needs to build broader alliances. He will need to move beyond his confrontational approach and forge more lasting partnerships with like-minded parties.

Furthermore, Milei needs to symbolically defeat the Peronists in Sunday's elections, even by a narrow margin. This victory is crucial as it will set the stage for the 2027 presidential race, which is anticipated to be a direct contest between Milei and the Peronist movement.

Conclusion

Argentina's midterm elections represent a critical juncture for President Javier Milei's administration. While he has achieved some success in reducing inflation, the economic pain of austerity, coupled with corruption scandals and rising unemployment, has eroded his initial support. The election will test the resilience of his free-market experiment and his ability to navigate complex economic and political challenges, including the significant influence of US aid and the looming presidential race of 2027. Milei's capacity for pragmatic alliance-building and effective governance in the face of legislative hurdles will be paramount to his long-term success.