“For victory in war does not depend on the size of the army, but on the strength that comes from Heaven.” Thus, citing the first book of Maccabees, Javier Milei reaches the climax of his speeches, just before he turns to his raspy voice to yell: “Viva la libertad carajo!” (“Long live freedom, damn it!”). During the long-awaited signing of his ‘May Pact’ this week, Milei was joined by 18 provincial leaders, including several Peronist governors, who responded to his three repetitions of his trademark phrase with a “viva!” that sounded like a mix of embarrassment and pity.
They had gathered in the historic Tucumán house to sign a document committing to 10 points as part of the president’s strategy to re-found the nation. It wasn’t the first time in recent history a President has called on the nation’s governors to get together and sign a piece of paper supposedly delineating a series of points that everyone agrees on, and that are part of a broader agreement aimed at isolating long-term national priorities from the vicissitudes of day-to-day political warfare. Yet, Milei’s 10 points, while commonsensical, are not part of a consensus that spans the political divide – they were almost entirely developed by the President and his ideological aides, before being handed down to the governors and the rest of the political class much in the same way as Moses delivered the Ten Commandments.
While this administration has relied heavily on its communications strategy in order to build political support, the current situation makes such an approach imperative for Milei & Co. The tensions that have been bubbling away in financial markets have fully revealed themselves in the form of a continued erosion in the value of the currency as measured by the financial exchange rates, namely the ‘blue chip swap’ and the ‘CCL’ (“contado con liqui”), indicating that economic actors are beginning to lose faith in the economic plan.
In Tucumán, the president made no mention of these issues, focusing on a sort of ideological and theoretical framework to explain his motives and intentions. It is curious that his initial point pertains to the “inviolability of private property,” which initially seems to refer to a specific economic circumstance rather than the leading founding principle for the new Argentina of the 21st century. Yet Milei does explain that this concept is, at the same time, axiomatic in determining free will. Every single article refers to an economic situation, with the exception of point four which pertains to education and was included at the insistence of governors from the Unión Cívica Radical (UCR). As Milei was laying down his manifesto, the provincial leaders once again showed their pragmatism, as they had done during legislative negotiations regarding the ‘Ley de Bases’ reform and its accompanying fiscal package, giving the president a much-needed show of support in exchange for some sort of good predisposition going forward when it comes to budget negotiations.
Milei’s moment of triumph (of sorts) was also an opportunity for those who opposed the pact. Leading that group is Axel Kicillof, governor of the Buenos Aires Province and currently stuck in a civil war within the pan-Peronist front that is still reeling from a tough electoral defeat. While Kicillof’s space has been heavily criticised by Máximo Kirchner and political youth organisation La Cámpora, he still counts on the support of Cristina Fernández de Kirchner to begin to build out the party with their sites set on the 2025 midterm elections and 2027 presidential elections.
Kicillof is definitely not the consensus choice for the multiple factions composing the Peronist front, including some of the governors who accompanied Milei to Tucumán this week, yet the former economy minister does stand as a primus inter pares, particularly given his role as the leader of the country’s largest and most populous province. The strategy of opposing anything that remotely smells of Milei was already in evidence in Congress, where the Peronists teamed up with the UCR (including former ally Martín Lousteau) and Miguel Ángel Pichetto’s centrist caucus to back a new pension and retirement payment plan that Milei promised to veto. Yet, they ultimately found themselves overtaken by the administration’s alliance with sections of what used to be Juntos por el Cambio, namely the PRO party and a majority of the UCR, in the voting of the ‘Ley de Bases’ and fiscal package in both chambers.
The May Pact, signed in July, was followed by a massive military parade through the streets of Buenos Aires. This administration has made it clear that it is looking to put the military back at the centre of the public debate through ambitious weapons and defence purchases, the suggestion that the Army could be deployed more in the war against drug-trafficking, and through the active role of Vice-President Victoria Villaruel, a denialist of the last military dictatorship’s human rights abuses. Beyond the defence doctrine they plan to adopt, the parade saw thousands make their way to the streets with Argentine flags as the President and his veep jumped on a tank, staging an amazing photo opportunity that made its way onto the cover of The Wall Street Journal.
As mentioned previously, the Milei administration desperately needs to see economic results that will impact positively on the day-to-day life of the population. Until then, it will rely on the communications machine to try and keep ahead of the agenda. At this point, Milei’s massive austerity plan has helped to tip the economy into a deep recession, while inflation has fallen substantially but remains elevated. It is difficult to imagine green shoots and not only is the economy suffering a marked slowdown, the labour market is getting complicated and salaries are far from keeping up with inflation.
The question remains, how long will society tolerate this level of fiscal adjustment and economic downturn? The President and his team continue to try and explain how things will quickly turn around, as Milei did at the Buenos Aires Stock Exchange where he went into full technical mode to explain his administration’s economic plan, while lauding Economy Minister Luis ‘Toto’ Caputo as the best holder of the post in history. Yet, Milei’s technical explanations, questioned by many economists including those in the same part of the ideological spectrum, do not respond to the immediate concerns of the population.
For now, the President retains his popularity, but it seems as if the model is beginning to run out of steam.
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