President Javier Milei’s government is struggling to contain a crisis it has mostly created itself. A combination of bad politics and weak economics is an explosive combo. The Milei administration needs a lifeline, which should come via the October 26 midterm elections. It appears the ruling party will not win a landslide victory, but it needs at least a victory. For now, while it waits, it just needs September to end.
For the first time this week, the foreign exchange rate touched the ceiling of the floating band introduced in April, when Argentina signed another agreement with the International Monetary Fund, this time for US$20 billion. The government had promised the exchange rate would stay at the lower edge of the band but it went in the opposite direction. The Central Bank was meant to accumulate reserves; this week, it started selling them.
Milei’s government planned to cruise to the midterms and beat a divided opposition. But part of the opposition united to defeat the government in a curtain-raiser in the country’s largest electoral district, Buenos Aires Province, at the start of this tragic libertarian September. Now, as we near the end of the month, the political establishment that the President has insulted time and again is smelling blood.
The President has to find the right tone for his reaction. So far, he is a boxer throwing punches at shadows. He first said he would be self-critical – but changed nothing in political orchestration and failed to deliver. Chief-of-Staff Karina Milei, his sister who is both credited and blamed for the set-up of the ruling party machine, gained more rather than less protagonism. Elements of the government are mired in infighting and finger-pointing.
On Monday, September 15, President Milei addressed Argentines at prime time to present the 2026 Budget proposal. The most-used word was “fiscal” and the second “equilibrium.” We wrote here last week that he needed to move away from a “single-issue” presidency – but he barely did, repeating that his fiscal surplus was “non-negotiable” and making bleak promises of more funds for education, health, and disability. Too little, too late.
The speech reveals that Milei understands that he has a problem and needs to do something about it. For the first time, he acknowledged that some people may be suffering from his economic programme. A step forward – one year ago, in an interview with the BBC, the President was asked eight times what he would tell a pensioner suffering from his cuts, and time and again declined to personally address any pain inflicted. In his Budget speech, he ventured into telling Argentines that “the worst is over,” something any professional political adviser would strongly recommend against in moments of uncertainty.
The next weeks will indicate just how much the Milei we have known up until now is a public character or his real self. The change he needs to introduce in his administration is substantial, both in the team and in his own leadership. Both the economy and the politics of the country are telling him he cannot fly solo anymore.
Those at the other side of the spectrum are too quick to declare him politically dead. “The government is finished,” said the Peronist governor of La Rioja Province, Ricardo Quintela, feeding government allegations that some in the opposition were fuelling a “coup.” Having suffered two traumatic ends of weak governments in the recent past (Raúl Alfonsín in 1989 and Fernando de la Rúa in 2001), Argentines seem to be waiting for political accidents to happen. More recent history shows otherwise: mediocre governments get past the finish line, even if their leaders lose or don’t have a chance of re-election.
What Milei has done in domestic politics will go down in history as unprecedented. No such outsider in memory had ever won the Presidency and – more importantly – been able to govern a country that often seems ungovernable. He might have to come to terms with the idea that his is not the best government in history, as he has insisted repeatedly, but just another one that could make the country a little bit better or a little bit worse – nothing grandiose.
The choice is clear for Milei: change or else. His speech this week lukewarmly went in the former direction. But it is not clear he truly believes in being a different Milei than the successful one his mirror has been projecting to him.
Mirrors – and followers – are deceitful. Governments are better off looking out the window before making decisions. One does not have to wait until September is over for that to happen.
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