It’s difficult to acknowledge that elections in Buenos Aires Province occurred less than a month ago and that national midterms are a mere four weeks out. It feels as if reality has been reconfigured multiple times since then, meaning we could still be in the midst of these transformative processes. Unfortunately, Argentines aren’t unaccustomed to these extreme levels of turbulence, though this doesn’t make them any less traumatic. While it is impossible to assess the extent of the damage caused by the hurricane of volatility of the past several weeks, it is evident that it has had an impact on Javier Milei’s dreams of constructing an anarcho-libertarian utopia on the basis of his popularity on social media. While he has the opportunity to recover, society’s expectations have been recalibrated and brought down a notch, affecting both his hardcore supporters and anyone else that had some sort of hope that “this time was different.” Whatever happens over the next few weeks and on the fateful night of October 26 will set us up for the final stretch of the Milei Presidency, both of which remain totally unpredictable.
With Argentina on the verge of a financial meltdown, Milei and Economy Minister Luis Caputo pulled out all the stops. Former president Cristina Fernández de Kirchner cruelly noted it “smells of default” from her home imprisonment, accusing Milei and ‘Toto’ of “burning one billion dollars in two days.” Indeed, Caputo was forced to eat his words, having mocked those who said the peso was overvalued (which means the dollar is cheap), telling investors in July to “buy ’em up, champ.” A mere two months later, he sought to contain market panic by promising this administration would “sell up until the last dollar” to defend the peso’s value. He attempted to channel former European Central Bank president Mario Draghi’s famous “whatever it takes,” moment, when the Italian banker contained markets by noting they had unlimited firepower to defend the euro. It didn’t work out as well for Caputo, who saw the Central Bank sell a whopping US$678 million the following day, surpassing the billion-dollar mark in a few days and forcing ‘Toto’ and Milei to issue a distress signal.
The call was answered by Scott Bessent, US Treasury Secretary and – counter-intuitively – George Soros’ former right-hand man. Acting at the behest of US President Donald Trump, Bessent agreed to structure a bailout to save Milei from short-term capitulation in an incredibly unusual move for US diplomacy. The Treasury decided to backstop Argentina’s sovereign debt, beefing up foreign exchange reserves by negotiating a US$20-billion currency swap, agreeing to step in with direct and indirect bond purchases and potentially offering a bilateral bailout. Bessent went on TV to defend the move by noting Milei needed the funds to win the election, while Trump appears to have mistaken Argentina’s electoral calendar by saying he deserved re-election. In a tragicomic scene, Trump “endorsed” Milei for a second term and handed him a printout of a post of his made on his own social media network. The President, sister and Presidential Chief-of-Staff Karina Milei, Foreign Minister Gerardo Werthein and Caputo then listened to the Republican leader riff on what a wonderful job they were doing. After about two minutes, Trump abruptly joked: “Well, that wasn’t so bad, now we can get out of here.” He tried to get rid of the Argentine delegation and get on with the rest of his agenda. No-one from Milei’s team said a word.
Milei has gone from international political rockstar to beggar in less than two years, following a similar trajectory to Mauricio Macri – only that the latter got bailed out after winning the midterm elections. Argentina’s President delivered a toned-down speech at the United Nations General Assembly to a nearly empty auditorium, taking a page from Trump’s anti-multilateralism book while criticising the inefficiencies of the UN and the tyranny of supranational institutions. This time around, he didn’t forget to mention Argentina’s traditional diplomatic causes, namely the Malvinas Islands and the quest for justice for the victims of the bombings of the AMIA Jewish community centre and Israeli Embassy in Buenos Aires. He was compared with Brazil’s Luiz Inacio Lula Da Silva, who spoke before a full house and took the opportunity to criticise Trump’s intrusion into his country’s domestic affairs over the conviction of ex-president Jair Bolsonaro, who was recently found guilty of plotting a coup after losing elections in 2022. While it is true that Brazil traditionally opens the programme of the UN General Assembly and speaks ahead of the US, Lula is vying to once again become a prominent global leader, in opposition to Trump and the concentration of global governance in the US and Western Europe. As the full auditorium celebrated his speech and welcomed Trump, the US President surprisingly said he had met Lula backstage, that they had good chemistry and that they would meet soon, de-escalating a growing personal conflict between both leaders and their nations. Trump’s attacks on Lula have actually bolstered the leftist leader’s popularity in Brazil at a time when his image had begun to suffer due to a lack of political and economic victories.
Trump’s support for Milei is crucial in order to contain financial distress in Argentina and the move responds to the US President’s transactional view of geopolitics. Milei is his only political ally among the major economies of Latin America and is also an exponent of the same brand of “new right” ideology. The La Libertad Avanza leader has courted the sympathy of the US president and demonstrated total loyalty and diplomatic alignment. It isn’t clear how much it will cost Argentina, nor whether conditions will be even more strenuous than those agreed with the International Monetary Fund, but Washington’s support isn’t free – particularly given the current state of global geopolitics and the showdown between the 21st century’s two superpowers, the US and China.
Regardless, Argentina is stuck in much more mundane affairs. Trump’s support is a necessary but insufficient condition for Milei to secure a victory on October 26. The government has indicated it considers a nationwide electoral result north of 40 percent a victory. It is polling ahead of the “opposition,” which at the national level is a disjointed group of Peronist factions together with dissident governors and little else. While most polls put La Libertad Avanza ahead of Fuerza Patria, it is difficult to imagine a “violet tide” that will give the Casa Rosada enough legislative muscle to defend the President’s vetoes on its own. Yet, in order to secure governability, as the IMF has requested of him, he would need to forge a greater alliance that will allow him to pass structural reforms, which means reconstructing something similar to the former Juntos por el Cambio coalition led by Macri. Milei managed to gain that level of support in the early days of his Presidency, when he passed his ‘Ley de Bases’ mega-reform bill but since then he’s alienated potential allies and provincial governors.
Milei is showing signs of change. He’s reduced foul language in his public appearances and toned down his prepared remarks. The President has spoken of constructing consensus to push forth with his political project. The Casa Rosada has submitted a proposed budget bill and appears to be ready to negotiate with governors and other political leaders to get it passed through Congress. With Trump’s blessing, he hopes to get to the election in one piece. But in this context, four weeks feel like an eternity.
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