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Argentina's libertarian President Javier Milei has won decisive victories in the midterm elections, clinching a crucial vote of confidence that strengthens his ability to carry out his radical free-market experiment with billions of dollars in backing from the US administration. In the Sunday election widely seen as a referendum on Mr Milei's past two years in office, his upstart La Libertad Avanza party scored more than 40 per cent of votes compared with 31 per cent for the left-leaning populist opposition movement, known as Peronism, exceeding analysts' projections. Mr Milei, a key ideological ally of US President Donald Trump, said his party and allied blocs picked up 14 seats in the Senate and 64 in the lower house of Congress, bolstering the government's support in the legislature enough to uphold presidential vetoes and block impeachment efforts. At La Libertad Avanza headquarters late Sunday in downtown Buenos Aires, a beaming Mr Milei hailed the election sweep as a mandate to press forward with his spending cuts and introduce ambitious tax and labour reforms. The results also automatically position him as a candidate for re-election in 2027. "The Argentine people have decided to leave behind 100 years of decadence," Mr Milei said as his supporters cheered, referring to a succession of Peronist governments that brought Argentina infamy for its inflationary spirals. High stakes include $40 billion from the US Perhaps never has an Argentine legislative election generated so much interest in Washington and Wall Street. Mr Trump appeared to condition a $US20 billion currency swap deal with Argentina's central bank and an additional $20 billion loan from private banks on a good showing for Mr Milei in national midterms, threatening to rescind the assistance for the cash-strapped country in the event of a Peronist victory. "If he wins, we're staying with him, and if he doesn't win, we're gone," Mr Trump said after welcoming Mr Milei to the White House earlier this month. To stem the run on the peso, Mr Milei burned through billions of dollars in foreign exchange reserves to shore up the peso. In an extraordinary move, the US Treasury then came to the rescue, selling dollars to help meet soaring demand for greenbacks and finalising the credit line. In the end, the Peronist alliance performed poorly, underscoring how weak the once-dominant movement has become in the Milei era, largely as a result of internal divisions. Markets were widely expected to rally on Monday, local time. "For foreign investors, this outcome is a relief because it shows that the Milei program can be sustainable," Marcelo J García said, the Americas director for the geopolitical risk consultancy Horizon Engage. "It leaves the opposition weakened and fragmented, just as it was when Milei won the presidency in December 2023," Mr García said. A changed electoral map The results showed Milei's young libertarian party gaining support across the country, including in some surprising corners that have long been under the sway of Peronism. In the closely watched Buenos Aires province, a Peronist stronghold home to nearly 40 per cent of the electorate, La Libertad Avanza eked out a razor-thin victory Sunday. Just last month, the Peronists beat Milei's party there by a whopping 14 percentage points. Axel Kicillof, governor of Buenos Aires province and the most influential elected official in the Peronist opposition, criticised Mr Trump for putting his thumb on the scale. He warned that the billions of dollars in financial aid from the US Treasury and investment banks would do nothing to help ordinary Argentines squeezed by Mr Milei's cuts to subsidies or forced out of business by a contracting economy. "If they come to Argentina, it is for nothing other than to take a profit." Despite Mr Milei's new momentum, experts caution that the irascible president still needs to court political allies to see through his agenda. Given the limited number of seats up for grabs in this election, it was mathematically impossible for Mr Milei to secure a majority in either house. "This victory is necessary, but not sufficient to maintain control of Congress," political consultant Sergio Berensztein said. "The government must build a broad and effective coalition with like-minded forces." Seeking to capitalise quickly on Sunday's results, Mr Milei said he called the country's powerful provincial governors to accelerate agreements on long-term economic reform. Sunday's outcome will also test public patience for Mr Milei's cost-cutting measures in the coming months. Although his budget cuts have significantly driven down inflation, from an annual high of 289 per cent in April 2024 to 32 per cent last month, the price increases still outpace salaries and pensions. The electorate appears increasingly polarised between beneficiaries of Mr Milei's reforms and those who say they are struggling to make ends meet like never before.
