It is a bit bizarre that the Javier Milei administration now finds itself licking its wounds when it hoped to be taking a victory lap. Not only that – just as the scandal involving former president Alberto Fernández and accusations of harassment, assault and threats against his former partner, Fabiola Yáñez promised to engulf the opposition and propel the Milei administration, the very opposite began to happen.
A circumstantial majority in the lower house Chamber of Deputies involving myriad political actors with a deep distrust of each other joined forces to reject a DNU emergency decree giving the freshly minted SIDE intelligence agency some US$100 million in opaque financing, while in the Senate the committee responsible for supervising the espionage agency was handed over to the chair of the Unión Cívica Radical, Martín Lousteau, one of president Milei’s sworn enemies. Thus, the Milei administration suffered dual defeats at the hands of Argentina’s supposedly retired political leaders, ex-presidents Mauricio Macri and Cristina Fernández de Kirchner, who gave their blessings and lent their congressional muscle to oppose Javier Milei’s wishes. Incredibly, controversial federal judge Ariel Lijo – who was grilled in a Senate hearing for some eight hours – overcame in good form the gauntlet of a high-profile public appearance, despite serious questioning about his capacity to impart justice impartially.
At the centre of this all is none other than Santiago Caputo, Milei’s star political advisor and the only non-family member to have a place in the president’s inner circle of trust. Caputo’s incredible ascent to the Olympus of power has helped him win many enemies, among them Macri, a worthy opponent who appears to have signalled him out as everything that’s wrong with the Milei administration, along with sister Karina who, given her bloodline, is probably an inseparable part of the Milei package. Meanwhile, the Cold War between the President and Victoria Villaruel, his vice-president, continues to escalate, opening a new internal rift within the ruling La Libertad Avanza party.
Congress is clearly the battleground where a new political ecosystem is emerging and evolving in the aftermath of the Big Bang – the irruption of an absolute outsider onto the scene, effectively fragmenting the bi-coalitionist system that constituted a political hegemony over the past several decades. Milei’s anarcho-libertarians had apparently managed to domesticate that wild beast that is Argentina’s political ecosystem, even in a context of absolute fragility, with just a handful of legislators and no provincial representation at the Executive level. At least it seemed like that in the aftermath of the passage of his controversial and wide-ranging ‘Ley de Bases’ law, which even in its diluted form represents one of the largest plans to overhaul the state ever implemented in this country. In practice, though, Milei’s gang are moving at a snail’s pace, speaking to the difficulties of putting into action the plan crafted by Federico Sturzenegger, the President’s new Deregulation & State Transformation minister. Simultaneously, Economy Minister Luis ‘Toto’ Caputo’s plan is working, at least under the lens of lowering inflation and sustaining budget and trade surpluses.
The depth of the recession facing Argentina at present is only comparable to some of the worse moments in recent history, including the global Covid-19 pandemic and the 2001-2002 implosion and it is pushing large numbers of Argentines into poverty and destitution. Toto’s reluctance to lift capital controls, commonly referred to as the “cepo,” has eroded support for the Milei-Caputo economic plan even among most orthodox economists, while also making it increasingly difficult to hit the reserve accumulation targets stipulated in the agreement with the International Monetary Fund. While public support for Milei personally remains high, several opinion polls are beginning to show evidence of the population’s exhaustion. Once again, when it seemed that the government had things under control, chaos erupts onto the scene.
It isn’t clear whether it was cause or consequence, but Milei’s exponential surge from eccentric TV panellist to president is intimately tied to a paradigm shift in Argentine politics. After decades of antagonism between Kirchnerism (represented by Fernández de Kirchner) and their opponents (for the most part, banded together behind Macri), those coalitions began to see their identity, and therefore social representation, diluted. Ultimately, both became electoral coalitions that were incapable of effectively governing the country, as evidenced by the administrations led by Macri on the one hand, and Alberto Fernández and Cristina on the other.
It was evident that, by the time the 2023 presidential campaign came around, both coalitions were internally fragmented between hawks and doves. While pan-Peronism banded behind Sergio Massa, Macri’s Juntos por el Cambio embraced the idea of PASO primaries, but raised the level of aggression to the point where the fracture of the coalition was accelerated and exposed. Enter Milei, who absorbed a large chunk of their electorate, while also eating Peronism’s lunch by winning in multiple lower class districts. With Milei in the Casa Rosada and his four English Mastiffs at the Olivos presidential residence (and Conan in his heart), the lack of a clear opposition leader, coupled with a successful communications strategy leveraged on social media and apparently conducted by the younger Caputo), seemed to consolidate La Libertad Av(anza’s grip on power. Milei, and Caputo, emerged as invincible. Macri and Cristina were told, both publicly and in private, it was time to retire.
When push came to shove though, both have managed to inflict damage on Milei & Co. The circumstantial majorities that targeted the power structure controlled by Caputo through the espionage agencies are more a show of force than anything else. They are a demonstration that, despite a lack of clear leadership in the opposition camps, certain bills and attitudes will elicit a response. It occurred during the debate about public university funding and regarding the formula used to calculate retirement and pension payments, and even for certain articles of the ‘Ley de Bases’ reform bill. All of these issues have the capacity to impact the government’s fiscal anchor. And Macri, who feels publicly offended by some of the attitude coming from the Casa Rosada (he is careful not to point the finger at the president), is trying to stomp his foot on the ground and mark a limit. The PRO party leader has a difficult task of having to balance a common agenda, and electorate, with Milei, amid the potential loss of control of his political space. Security Minister Patricia Bullrich, the PRO heavyweight turned Milei minister, sought to dispute that territory, and lost. Now, the calabrese has Caputo in his sights. (He also likes keeping Villaruel close, much to the annoyance of Karina.)
In the pan-Peronist front, Cristina is being forced to act pragmatically. She is no longer the undisputed Queen of Unión por la Patria, even if she remains its single largest stakeholder. Axel Kicillof, governor of the giant Buenos Aires Province and the highest-ranking serving Peronist, has indicated it is time for new leadership but he has always been careful not to confront CFK’s leadership. Fernández de Kirchner’s son, Máximo, has been in charge of that battle, while she prefers to keep her distance. In the Senate, she was instrumental in keeping La Libertad Avanza out of the committee providing intelligence oversight, even if she was handing victory to Lousteau, a former enemy. She did the same with Alberto and ousted Mauricio. While Peronist governors have sought to strike deals with the Executive, for now Cristina retains substantial hold over its lawmakers. If she manages to reach across the aisle, she can block the projects coming from the Casa Rosada. Occasionally, she can also align herself with the libertarians – we’ll see if her senators vote in Lijo’s favour.
It is too early for a new political landscape to solidify, but it is materialising. Milei, who absorbed a large portion of both Mauricio and Cristina’s electorates, will see his territory disputed from both sides. A new hegemony has yet to arise from the ashes of last year’s election.
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