Argentina’s Rightward Shift Deepens as Milei’s Party Wins Midterm Elections with Trump Endorsement

Argentina is witnessing a notable political tide as President Javier Milei’s libertarian party, La Libertad Avanza, secured a significant victory in the midterm elections held on October 26, 2024. This triumph not only strengthens Milei’s position but also signifies a broader rightward move in the country’s politics, amplified by an endorsement from former U.S. President Donald Trump.

Former President Trump’s words resonate on social media. With a post on Truth Social, he declared, “He is doing a wonderful job! Our confidence in him was justified by the People of Argentina.” This endorsement of Milei comes at a critical juncture, as his party edged past the historically dominant Peronist coalition in Buenos Aires province, showcasing a shift in what many once viewed as a stronghold for the Peronists.

La Libertad Avanza’s electoral success led to a gain of 64 seats in the lower Chamber of Deputies, bringing their total to 94 of 257. Although this number does not constitute a majority, it provides an essential cushion against potential impeachment attempts and positions Milei to influence significant changes.

In his victory speech, Milei spoke plainly, asserting, “Argentines showed that they don’t want to return to the model of failure.” This comment reflects deep-seated frustrations with previous Peronist administrations, known for their economic mismanagement characterized by chronic inflation and stalled growth.

Voter engagement was at 68%, the lowest since the military dictatorship ended in 1983. This decline hints at growing apathy among the electorate, yet many analysts interpret Milei’s electoral performance as a testament to his base’s persistence. “Many people were willing to give the government another chance,” remarked Gustavo Cordoba, director of polling firm Zuban Cordoba. The underlying sentiment appears to be that voters prefer enduring economic hardship under Milei to returning to what they perceive as chaotic governance from the past.

Milei’s economic policies, which have been controversial due to their austerity measures—like slashing public sector jobs and cutting financial supports—show some early signs of success. Inflation dropped dramatically, from 12.8% before he took office to a low 2.1% recently. Remarkably, Argentina posted a budget surplus for the first time in over a decade shortly after Milei’s inauguration. Observers now anticipate legislative actions that could further solidify these fiscal reforms.

The financial world responded positively to Milei’s gains. Analysts predict that the Argentine peso may rally, benefiting from a more favorable market perspective. One financial strategist stated, “This evening’s unexpectedly strong performance for Milei’s La Libertad Avanza should see the peso rally,” indicating a shift in investor confidence.

The future remains uncertain, however. Milei hinted at strategic negotiations with deputies and senators from other parties to strengthen his legislative efforts. Uniting with the centrist PRO party, affiliated with former President Mauricio Macri, could yield important support for Milei’s initiatives, particularly concerning labor and pension reforms.

The backdrop of the campaign was influenced by public discontent with the Peronist legacy and apprehensions about potential economic collapse. Despite ongoing critiques of Milei’s aggressive tactics and reliance on executive orders, his administration has made substantial moves toward a libertarian agenda, including significant deregulations.

However, Milei’s administration has not been without controversy. Early this year, he faced backlash over his involvement with the Solana-based LIBRA cryptocurrency, which saw its value plummet. Although Milei distanced himself from the investment blunder, it nonetheless raised questions about his commitment to free-market principles among disenchanted supporters.

Still, it is vital to emphasize that the broader narrative hinges on Milei’s commitment to revive Argentina’s faltering economy. Political scientist Maria Laura Tagina described the election results as a “cautious endorsement” of Milei’s economic trajectory, citing improvements in inflation and the fear of reverting to a troubled past.

International dynamics also play a critical role in this scenario. Under Milei’s governance, the U.S. Treasury Department initiated nearly $20 billion in support for Argentina, aimed at stabilizing the economy and encouraging foreign investment. Despite some U.S. lawmakers questioning the wisdom of such financial commitments amid domestic fiscal tightening, officials argue that these moves are strategic for maintaining regional stability.

As Marcelo Garcia of Horizon Engage pointed out, the election results exceeded expectations for even the most optimistic supporters of Milei, emphasizing that political stability is paramount to market interests. However, challenges persist, particularly in the Senate, which remains under opposition control. Many proposed reforms face hostility from public sector unions and other groups, leading to ongoing legal disputes over executive authority.

Yet, for the moment, the electoral message is clear: President Javier Milei has gained more leverage in Congress, echoing his campaign promises to embrace harsh economic realities for the sake of long-term progress. With support from Trump and favorable projections from market analysts, he is set to enter a new legislative phase he believes is the “most reformist Congress in Argentine history.”