Laughing and crying at the same time

A person that knows Santiago Caputo well recently told me that he is a very jovial guy who generally takes things humorously. 

The attitude of President Javier Milei’s star political advisor is a key part of what has enabled him to craft a political communications strategy efficiently, allowing him not to take things seriously while at the same time being pragmatic. A joker of sorts, he seems to always be looking for ways to “troll” his audience. One example could be his boss’ recent speech at the United Nations General Assembly, in which multiple paragraphs were “copy-pasted” direct out of an episode of The West Wing. The political sitcom – of which Caputo is a fan according to journalist Carlos Pagni, who uncovered the rip-off – stars Martin Sheen as Josiah Bartlet, a Nobel Prize-winning economist who becomes President of the United States. La Nación’s Investigative reporter Hugo Alconada Mon noted that Caputo watched the series created by Aaron Sorkin multiple times, recommending it to his colleagues at the political consultancy he founded, Move Group.

The political strategist, who holds no official post, works hand-in-hand with Rodrigo Lugones in crafting the libertarian agenda, making sure their client is always in the spotlight. Both of them are alumni of the Jaime Durán Barba school – literally – with past experience as part of the Ecuadorean strategist’s team during the Mauricio Macri era. 

Lugones reportedly lives abroad in Madrid, while Caputo lets himself be seen at the Casa Rosada, from where he’s constructed a character that he himself has called the “Kremlin Magician.” From anonymous social media accounts on X (formerly Twitter), he appears to be a dogmatic extremist pushing for Milei to become Emperor of Argentina, while news reports speak of his passion for firearms and wide network of influence and power. If indeed the tough guy image is a farce, a costume that he’s put on to distract the media and the political “caste,” it confirms his skill in directing the public’s attention to the wrong place, like a magician. It may also be a way to consolidate his power, and potentially other interests. Being the “architect” behind Milei’s unexpected rise from eccentric TV personality to president is a daunting task, similar to Durán Barba’s genius construction of Macri, who evolved from dreaded rich boy to Buenos Aires City Mayor, and then president.

Milei is beginning to feel the brunt of government, particularly in the aftermath of his battles with Congress, which has “forced” him to veto increases in the formula that updates retirees’ pension payments, and inflation-corrected increases for public university budgets. The government faced popular outrage, including a massive, nationwide protest that gave the opposition some breathing room. No-one can say that it caught the Casa Rosada flat-footed, but their response appears rigid, unbecoming of Santiago. At least of the way in which he has portrayed himself. Trying to downplay it as a political march from a group looking to destabilise the government makes them look foolish and out of touch with reality, much like when the President tells friendly journalists that retirement pension payments are “skyrocketing” and purchasing power is outstripping inflation.

It isn’t entirely clear whether Milei is being dogmatic in his crusades against retirees and public education, or if it’s part of a risky strategy. The President claims the veto is tied to the mantra of eliminating budget deficits, which has become his “fiscal anchor” and with which he will try and dismantle inflation, much like Domingo Cavallo did with the “convertibility” scheme in the 1990s. His detractors reject that claim, particularly as related to the public education system, with Unión Cívica Radical (UCR) national deputy Martín Tetaz indicating that the funding hikes were part of the national budget that the President decided to utilise for 2024, which was plainly an update from 2023. Furthermore, the share of the increases as a percentage of GDP is minimal.

This strategy is leading some observers to suggest that the President is heading down a politically unsustainable path that inevitably leads to crashing into a wall. While Milei has managed to retain a substantially elevated public image, he’s suffered sustained erosion in recent months, particularly as his economic plan has been successful in taming high inflation but fails to produce economic improvements for a majority of the population. Bringing retirees and the public education system into the political battleground is a loser’s fight historically, particularly as the cost of public services and transportation has gone up more than fivefold in some cases. The question of how long the population would maintain its support for Milei in the context of a brutal recession had been circulating since Day One, and in this context it becomes more explicit.

The President’s political pragmatism shouldn’t be underestimated, as he’s proved previously that he is much more willing to negotiate than he lets out. At the same time, the anti-establishment appeal that brought him to the Casa Rosada remains intact, particularly with his core voters. It helps to see the likes of Sergio Massa and Horacio Rodríguez Larreta — former adversaries in last year’s presidential race for the leading coalitions, Unión por la Patria and Juntos por el Cambio, respectively — stick their necks out. Some would put Cristina Fernández de Kirchner in the same boat, but the former president shouldn’t be underestimated either – Kirchnerism has been written off as dead several times before. Milei has managed to change directions in previous “ideological battles” including the ‘Ley de Bases’ mega-reform package, ultimately securing a substantial victory while at the same time giving concessions to circumstantial allies. His administration has also been intelligent in directing the public’s opinion toward the culture war, and away from unpopular policies.

With a war in the Middle East involving Israel, one of Milei’s geopolitical (and spiritual) infatuations, going on, it’s odd to see the administration so quiet on a hot global issue. Not that what Argentina has to say matters, with it putting a greater risk of being targeted by Jihadist terrorism than making a difference in Israel’s favour in the current war, especially with Iran  on the other side. The war could have direct effects for Argentina, on the one hand pushing up the international price of energy, while on the other sparking fear and uncertainty and a flight to quality. Economy Minister Luis ‘Toto’ Caputo has maintained ‘cepo’ currency controls in place despite continued criticisms from orthodox economists, ideologically closer to this administration than the Peronists. Yet, an exogenous shock similar to what Macri suffered in 2018, having lifted currency controls without having secured macroeconomic stability, could be disastrous for the Mileis’ political dreams of consolidation in next year’s midterms, and then re-election in 2027. Many are already imagining Sister Karina replacing Vice-President Victoria Villaruel on the ticket.

The flipside of currency controls is the impact on the economy, which is the main obstacle for the Milei administration at the moment. Purchasing power is greatly diminished, while unemployment is rising and poverty has increased dramatically. The President needs to engineer a recovery – fast – but there don’t seem to be many ideas coming from the Milei-Caputo tandem with the exception of complaining to the private sector about its lack of investment, while looking to the international community for help. They are banking on a victory by Donald Trump in the US presidential election, yet the polls suggest he’s locked in a technical tie with Kamala Harris. It will come down to the wire.

Continued campaigning is effective politically, particularly when trying to construct a narrative to position the anarcho-capitalists for next year’s elections. But, as Durán Barba has said before, as a political strategist he wasn’t involved in policy. The President may be stuck in a game of chicken with the opposition, or he may be playing his cards. In the meantime, the people are suffering.