Chaco and Milei’s electoral strategy for October

A province in northeastern Argentina that is home to only 2.5 percent of the country’s total population is giving us the first clear indication of where politics might go this year, an electoral one in which Argentines will renew half of the lower house of Congress and a third of the Senate in the upcoming October midterm elections.

Chaco Province Governor Leandro Zdero has announced that his front for its elections in May will include La Libertad Avanza, President Javier Milei’s party. Chaco is one of the seven provinces that have decided to detach their provincial elections, which renews half of its local Assembly, from the national vote in October. Interestingly, Zdero is a member of the Unión Cívica Radical (UCR), a centennial centrist party that has, in recent years, formed part of governing centre-right coalitions.

For most of last year, Milei’s sister, Presidential Chief-of-Staff Karina Milei, has worked on establishing the ruling party at the national level. La Libertad Avanza is now entitled to field its own candidates and brand in all districts, but it still needs a set of established figureheads and an electoral machine to back them up.

The Chaco example shows that the Mileis is willing to seal alliances with the local political establishment — a.k.a. “the caste,” in libertarian jargon — as it best suits them. And the Casa Rosada has leverage in this negotiation with the governors: cash.

Besides the federal revenue-sharing funds that are distributed automatically among the provinces according to a percentage established by law (coparticipación), the Milei administration last year sat on a mountain of money that it is entitled to hand out discretionararily to regional governments. In 2024, the federal government distributed only seven percent of the 680 billion pesos (US$637 million at the official exchange rate) it had available in Aportes del Tesoro Nacional, or ATNs in their Spanish acronym. These cuts to provinces accounted for around 20 percent of Milei’s fiscal deficit chainsaw in his first year in office.

These funds are crucial for many provinces to make ends meet, especially smaller ones like Chaco where the state is the dominant economic force. For governors like Zdero, joining forces with Milei may be both a political and an economic calculation — the mix varying depending on each district. Governors also know that, thanks to the reduction of inflation of the last year, that Milei continues to be popular in their own constituencies, even though most of the people who represent La Libertad Avanza in their regions are not well known.

For the government, the calculation also makes sense. The October midterm elections will be judged by at least three variables. First, the overall vote count, which means putting together the results of 24 different elections that will happen on October 26, when each province elects its representatives to the national Congress. Second, the number of seats each party will have when the new Congress takes charge on December 10. Third, the outcome in key races like Buenos Aires City and Buenos Aires Province, where Milei’s party will challenge the two main opposition parties: the more moderate PRO, led by the Macri family, in the former, and the leftist Peronists – led by Cristina Fernández de Kirchner and Axel Kicillof, who are engaged in their own internal tussle – in the latter.

The outcome Milei cares about most is the congressional count. Since taking office in December 2023, the President has been on the defensive, managing to pass only one signature piece of legislation — his sweeping ‘Ley de Bases’ mega-reform — after granting several concessions, and then holding on to a tie by garnering just enough votes to block opposition defiance of his ability to rule by decree. Milei knows that with the current line-up in Congress, where his party holds less than 10 percent of the seats, a potential impeachment is also on the table, as this week’s attempt by the Peronists over the ‘$LIBRA’ crypto-scam scandal showed.

If things go as planned, Milei and his party would emerge in a more comfortable position in both houses, with around 35 percent of the seats in the Chamber of Deputies and 25 percent in the Senate. A willingness to strike more alliances at the district level — like the one in Chaco — might also land them more like-minded lawmakers who are not diehard followers but are willing to support Milei’s party in crucial votes. This is important for a government that, as part of the agreement expected to be signed with the International Monetary Fund in the coming weeks, will need to meet reform targets in sensitive areas, likely including labour, tax, and pensions.

Milei will increasingly need more support if he wants to turn his disruptive political force into something that leaves a lasting mark. Violent confrontation like the one we saw outside – and even inside – Congress this week is not the correct road. Chaco may be showing a different route to success.