In the past couple of weeks, Argentina’s government delivered two of the best pieces of economic data from President Javier Milei’s tenure to date: January’s inflation, at 2.2 percent, was the lowest monthly rate in almost five years; economic growth in December, at 5.5 percent, was well above market expectations and the strongest in almost three years.
This is what most Argentines voted for Milei to do: lower inflation and make the economy grow. It is as simple as that. But instead of focusing its messaging on that primary goal, now that it has good results to show, the Milei administration is making news from other, less pleasing aspects of the public agenda — aloof to the fact that most of its voters either don’t care or detest them, or even worse, didn’t care until they found out.
Alt-right strategists talk about “flooding the zone.” They repurposed the expression from American football, where it means sending multiple receivers to one side of the field to force the defence to tilt that way. In political communications, spin doctors claim that if one floods the field with outrageous information, the public is dumbstruck, unable to react to any of it. This, of course, is if the public are tuned 24/7 to whatever the government says or Milei posts on social media.
This theory is not different from the time-old mantra that “no publicity is bad publicity.” It might serve a purpose for a while when you are unknown, but once people know who you are and what your track record is, it might be better to pace public appearances — or, in the new jargon, to instead “starve the zone” a bit.
The information the Milei administration put out this week does not necessarily play in the President’s favour. In a desperate effort to steer away from the crypto-scam scandal that involves him personally and has tarnished his reputation worldwide, the government voted against Ukraine at the United Nations (this after Milei had promised full support to Volodymyr Zelenskyy), complained about a potential monopoly the President had previously praised and appointed two Supreme Court justices by decree, triggering immediate opposition outrage.
The risk with “flooding the zone” is that you might drown yourself. Argentines voted for Milei in 2023 despite — not because of — his aggressiveness, vulgarity, and pretentiousness, trusting that his outsider status would separate him from a useless and disconnected political establishment and that his economic knowledge would fix endemic inflation.
The daily management of Milei’s economy is in the hands of a group of people led by Economy Minister Luis Caputo, who, by contrast, seem down-to-earth and unassuming. They are leading a negotiation with the International Monetary Fund that will make or break the Milei government.
Caputo and his team should be credited for having convinced Milei that his campaign promise of dollarising the economy did not make sense, especially without having the dollars to do it. They also achieved an unexpected fiscal surplus, one higher than even the IMF would have hoped for.
But Argentina’s economic team is aware that certain inconsistencies are building in the economy and that there isn’t much room for unforced errors. Milei’s rock-star global personality has so far played in favour of the economic programme, but Caputo knows from experience from his time with the Mauricio Macri administration that not all publicity is good publicity when it comes to dealing with moody financial markets.
The one thing the IMF wants from Caputo and his team is for the country’s economic programme to flood the Central Bank with foreign reserves, which is the cash that would later be used to repay debt. This has not been happening in the last eight months and net reserves currently stand at around US$4 billion in the negative. Caputo's team wants the IMF to take a (new) leap of faith in the country and disburse more cash to fill that gap. The IMF is thinking about it.
Flooding is also the opposite of what happened in the Argentine pampa this season, meaning crop forecasts have been trimmed — if only slightly — and the inflow of farming sector dollars this year will be weaker than in 2024. The appreciation of the peso and low international prices dissuade farmers from selling their produce, something the government has tried to offset by temporarily lowering export duties.
Despite the recent good news, the fragility of Argentina’s economy demands sobriety and steadiness — something that zone-flooders may lack as they attempt to sow confusion. What worked until now will not necessarily work from now on.
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