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Loading the Elevenlabs Text to Speech AudioNative Player... Javier Milei, Argentina’s eccentric anarcho-capitalist president, has once again defied the odds to claim a surprise victory in Sunday’s midterm elections. The president’s party, La Libertad Avanza (LLA), secured a convincing plurality of 41 percent, handily beating the opposing Peronist coalition Frente de Todos, which claimed only 32 percent of the vote. The victory will more than triple LLA’s presence in the Argentine Congress. Milei picked up 64 seats in the House of Deputies, where LLA currently holds 28 seats, and 13 seats in the Argentine Senate, where LLA holds six. Those additional seats, alongside the congressmen of LLA’s coalition partner Propuesta Republicana (PRO)—the party of former president Mauricio Macri—will be enough to prevent Congress from annulling Milei’s presidential decrees or overriding his vetos. This is a massive step toward securing the president’s economic program, and means that there is no longer any possibility of Milei’s policies being rolled back through legislation, a process the opposition threatened in September. Milei still lacks a majority in either house and will need cooperation from other parties’ representatives to pass legislation, but the president’s unexpected triumph has cemented his political dominance and breathed new life into a political movement that just a few weeks ago appeared to be teetering on the brink, as a passel of scandals and a devastating loss in the important Buenos Aires provincial elections galvanized the opposition and dented Milei’s image as an unstoppable political force. That image has been significantly rehabilitated, as LLA dramatically outperformed polling to have one of the best midterm performances in the past 20 years of Argentine politics. The electorate appears more than willing to overlook Milei’s foibles, given his success in tamping down inflation and putting the country on a more sustainable fiscal footing—a welcome change from decades of Peronist mismanagement. The victory is also a vindication of the Trump administration’s controversial decision to make a major play in support of Milei’s reelection. The U.S. granted Argentina a $20 billion currency swap line to shore up the precarious market for the peso, Secretary of the Treasury Scott Bessent canvassed for private investment for Argentine markets, and Donald Trump personally endorsed Milei and LLA. Trump even went so far as to implicitly threaten the country with a loss of U.S. support if Milei was not reelected: “If he loses, we are not going to be generous with Argentina,” Trump said. The tactics worked, and now Milei owes his “favorite president” no small amount of credit for his successful election—something of which both parties are well aware. “He had a lot of help from us,” Trump told reporters after hearing the election results. “He had a lot of help. I gave him an endorsement, a very strong endorsement.” Overt interference in foreign elections is unusual for the United States, but the Trump administration is pushing forward with new strategies to exert American power in the Western Hemisphere. The administration has used the threat of economic penalties to extract concessions from Mexico, Panama, and Colombia, and is currently conducting a massive military pressure campaign against the Maduro government in Venezuela. Argentina exemplifies the other end of the diplomatic spectrum, empowering friendly governments and rewarding them for cooperating with American interests. (That empowerment always comes at a price, though, and Milei can be sure that he will need to pay the piper sooner or later.) Milei’s strengthened political position bodes well for Argentina’s future, but he and his American backers still have a long way to go to break the country out of its long economic spiral. The biggest challenge confronting him is the infinitely intractable problem of the peso. Milei entered office promising to abolish the country’s central bank and dollarize the Argentine economy, an approach that could potentially damage the competitiveness of Argentina’s export market but would end the chronic high inflation and monetary instability that has plagued the country for decades. But he quickly discovered that Argentina lacks sufficient dollar reserves to service the country’s economy. His compromise solution has been to remove most of the currency controls, which were strangling Argentina’s domestic investment and fostered a massive black market for currency exchange, and move to a “managed float” regime. Under this system, the central bank sets a slowly expanding band of prices between which the peso can be bought and sold freely, and only intervenes when the peso reaches the top or bottom limit of the band. The peso, however, has been sitting at the top of the band since the beginning of September, and the Argentine Central Bank has been forced to spend its precious reserves propping it up. This has reduced inflation by artificially strengthening the currency, but the country’s foreign reserves—which it needs to service its debts—are precariously low, and it will be unable to prop up the currency for much longer. There are no easy solutions to this dilemma for Milei. Devaluing the peso and allowing a true free-floating currency market would remove the necessity of spending down the central bank’s remaining reserves, but could kick-start the inflation he has worked so hard to bring down. Dollarizing the economy is not possible without a significant infusion of cash, and Argentina is already deeply in debt to the IMF. American aid could make it possible, but is the U.S. willing to put billions more into the country? The only other option is a return to currency controls—a prospect which would be tantamount to admitting defeat, and which would likely end any prospect of further libertarian governance, as it did when the former President Mauricio Macri was forced to reimpose currency controls after a failed attempt to rationalize Argentine monetary policy. Milei has plenty of other economic levers to pull. His administration has big plans to rationalize Argentina’s byzantine tax code to promote new business and attract foreign investment, and he’s also expressed a desire to reform the country’s cumbersome labor laws—vast swathes of Argentine economic activity takes place off the books to avoid dealing with the tangle of regulations and entitlements successive Peronist governments have imposed over the years. His program of fiscal reform will continue to whittle away at the wasteful subsidies and excessive government spending that characterize the Argentine welfare system. These programs hold great promise for increasing the dynamism and efficiency of Argentina’s economy, and between the prospects for attracting foreign investment and reforming domestic industry the prospects for growth look bright. But until Milei can create a permanent solution to the country’s currency woes, it will be too early to declare that he has Made Argentina Great Again.
