President Javier Milei has managed to reignite his romance with Argentine society. Despite being elected with minimal legislative and territorial representation, the anarcho-capitalist has generally managed to impose his will on the political class he disdainfully calls “caste.” He’s enjoying a breath of fresh air after Donald Trump won the presidential elections in the United States, strengthening his international alliance of right-wing populist leaders, even as the region appears to be turning against him. And, most importantly, inflation remains under control and on a downward trajectory, allowing a timid recuperation of purchasing power that, in relative terms, feels like a cup of water in the desert to Argentine society.
After beginning to slide in opinion polls, Milei and his libertarians have seen a recovery in their image and popularity, together with a generalised feeling of hope for a potential economic improvement, fuelling a sense of invincibility that marks the moment of greatest power of this administration in its nearly 12 months in power. Milei, the international rockstar of the “new right” — he was recently dubbed “the libertarian John Lennon” by the CEO of the Conservative Political Action Conference (CPAC), which will hold an important rally in Buenos Aires next week — is at the peak of his power.
Milei is winning. At least according to a recent poll put together by political consultancy firm Tendencias. A growing share of the population approves of the Milei administration, feels that their personal economic situation is better than a year ago, and will improve over the course of the next six months.
Let’s go to the survey: “Hope” has gone from 39.8 percent in December to 47.4 percent in November as the leading “feeling” regarding the current moment in time, while “worrying” has fallen from a peak of 28.9 percent in February to 16.7 percent. Among those who voted for Milei in the run-off vote last November, 89.6 percent are happy with their choice, while 54.5 percent of those who voted for Sergio Massa are discontented with the role of the Peronist opposition. The number of people that couldn’t make ends meet or barely reached the end of the month decreased from 44.8 percent in May to 26.9 percent in November, while those who cover their expenses and have a margin for savings doubled from 10.2 percent to 20.1 percent. Inflation, which was the leading concern in most polls ahead of last year’s election, fell to sixth place (8.2 percent), behind insecurity (11.6 percent), corruption (12.2 percent), health and education (13 percent), low wages (22.5 percent), and poverty (29 percent). President Milei holds the second-highest approval ratings, at 52.3 percent, only trailing Vice-President Victoria Villaruel (53 percent), who also holds a higher positive to negative differential (eight percentage points compared to 5.3 percentage points).
This slew of good news for the Milei administration is just what the Casa Rosada wanted to see at this point. Throughout the campaign and before he took office, Milei’s Presidency was seen as potentially catastrophic, given the combination of a lack of political representation and party support, together with a psychologically weak and inexperienced leader who looked like he would crack under pressure. His draconian austerity plan could have led to popular revolt and some even speculated that he would be forced to resign by April or May. But, much to the surprise of analysts, society has stoically tolerated an acute recession, a substantial jump in poverty, and a weakening labour market. And thrown itself at Milei’s feet.
In a society scared by high and rising inflation, Milei and Economy Minister Luis ‘Toto’ Caputo’s plan has borne its political fruit. Society is much more willing to tolerate the nefarious consequences of the recession if it is the price to pay for price stability, as the aforementioned statistics indicate. Real wages, as measured by the INDEC national statistics bureau, have been growing faster than inflation since April on a month-over-month basis. Even though they remain well below the rate of annual inflation, the relative effect of price stability and greater purchasing power extending over several months is helping to change the population’s expectations.
There are many factors helping to keep a lid on inflation, including the persistence of budget surpluses and the persistence of currency controls. Yet several economists, many of them ideologically close to Milei and Caputo, are beginning to warn that Argentina is “becoming expensive in dollars,” meaning that the peso is artificially strong. This is a situation that the International Monetary Fund has pointed out in the past, sparking aggressive reactions from Milei. Recent experience, including Mauricio Macri’s 2015-2019 Presidency, when Caputo and Federico Sturzenegger were also in charge of the nation’s economic levers, ended up with jarring devaluations that initiated a new and deeper descent into economic decrepitude.
A very successful tax moratorium/whitewash together with booming financial markets have allowed Caputo to keep the value of the multiple peso-dollar exchange rates under control, together with the ‘cepo’ currency controls. Fresh funds from the International Monetary Fund (IMF) and other multilateral organisations, along with real economy investments, are a necessary next step, together with regaining market access, if Caputo and Milei are looking to avoid a sequel of Macri’s 2018 debacle. And some sort of economic recovery, which isn’t occurring with the notable exception of extractivist sectors.
Yet things look rosy for the libertarians at this juncture, encouraging them to become even more ambitious. The president and his political musketeers are slowly dismantling the opposition. Star political advisor Santiago Caputo – who calls himself “the Kremlin Magician” on supposedly anonymous social media accounts – and Cabinet Chief Guillermo Francos, continue to weave a network of circumstantial alliances that have been hugely successful for the government. At different moments they’ve gained the support of Macri’s PRO party and even the Unión Cívica Radical (UCR), which has been openly attacked by Milei.
What’s even more surprising is what appears to be an explicit strategic alliance with Cristina Fernández de Kirchner’s Peronist caucuses. They’ve effectively managed to block the lower house Chamber of Deputies from debating a bill on “clean backgrounds” aimed at barring politicians found guilty of corruption from running in elections. A pillar of Macri’s PRO party and a direct attack aimed at Fernández de Kirchner (who is expected to run in next year’s midterms in Buenos Aires Province but has a conviction – yet to be finally confirmed – against her in the courts), its failure is a libertarian show of force, indicating that not only can they govern via emergency decree and veto, they have also have stripped Macri of his quorum-forming capacity.
Francos recently confirmed that the Casa Rosada is locked in negotiations with the Peronists over the future of their Supreme Court picks, Manuel García-Mansilla and the controversial Ariel Lijo. There’s even talk about dropping García-Mansila’s candidacy in favour of a woman and potentially granting Fernández de Kirchner a friendly pick for attorney-general. Pragmatist libertarians engaging in ever caste-like behaviour.
Milei and sister Karina Milei, his presidential chief-of-staff, are probably beginning to become ever more convinced of the prophecy. For them, they were handpicked by “The One” to lead Argentina out of its economic malaise by finally slaying the socialist pigs. She’s the incarnation of Moses, and he is brother Aaron, the communicator. Conan, the eternal English mastiff who is ever present, is their nexus between this world and the realm of ideas, helping them to interpret the messages of genius economists who are long gone.
The world is beginning to see too, with even Donald Trump copying his model. Yet everything that goes up must come down, and hubris is one of the major symptoms of delusions of grandeur.
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