Milei's Government in Argentina: Will Going Against Gravity Work?

A year ago, the paleo-libertarian Javier Milei surprised everyone by coming in first in Argentina's Open, Simultaneous, and Mandatory Primary Elections (Primarias Abiertas, Simultáneas y Obligatorias, or PASO). With 30 percent of the votes, he was able to compete as the candidate for his coalition La Libertad Avanza (LLA, Liberty Advances) in the presidential election last October. In the first round, he came in second to Sergio Massa, who was the candidate of the incumbent Peronist coalition Unión por la Patria (UP, Union for the Motherland) and the Minister of the Economy at the time. However, no candidate won a majority, so Milei and Massa competed in a runoff in late November, in which Milei won the presidency with almost 56 percent of the votes.

Milei won using rhetoric about destroying the state and liberalizing the economy, as well as opposing the rights of minorities and outcasts. During his first nine months in office, he outdid his promises. However, his government, and particularly his strategy to take Argentina out of its long-standing economic crisis, has also suffered significant setbacks. Nonetheless, his government still has a great deal of momentum as popular support remains quite high despite the harsh impact of its policies.

Unsurprisingly, once in power, the newly formed LLA coalition had a few mishaps in Congress during its first months. Underestimating the complexities of state management and parliamentary politics, it took almost six months for the government to pass its omnibus bill after an initial setback in February 2024. A reduced version of the bill was finally approved in June. The bill allows the government to radically transform the structure of the state, promote big investments with tax rebates and normative privileges, privatize several state enterprises, and move forward with substantial labour market flexibilization.

II

In the meantime, the government advanced a new macroeconomic policy in an attempt to short circuit the economic crisis, reduce inflation, and stimulate economic growth. The new policies began with a huge devaluation of the national currency just three days after Milei took office: the peso was devalued by more than 50 percent relative to the US dollar (whose value rose by 120 percent). This was followed by the liberalization of regulated prices in the economy and an accelerated increase in the prices of privatized public utilities. The increase in these prices goes hand in hand with the reduction in subsidies for tap water and sewage, electricity, gas, and public transportation. On the other hand, the government established policies of fiscal surplus at the national level and zero currency emission from the Central Bank. As inflation jumped after devaluation and then began trending downward after that, austerity meant freezing or cutting down public expenditures such as pensions, public wages, public universities, even mandatory fund transfers to provincial states and investments in public infrastructure. Public spending by the federal government fell by about 30 percent in real terms in the first half of 2024 as inflation continued to rise to a record high of 289.4 percent per annum in April and remained above 4 percent per month in July.

In addition to freezing expenditures (known as the efecto licuadora, or blending effect), the government has made progress in effectively closing down whole ministries, institutions, and programs (the motosierra, or chainsaw policy), such as the Ministry of Women, Genders, and Diversity (created in late 2019), the National Institute against Discrimination, Xenophobia, and Racism (INADI), or the National Commission on the Right to Identity (CONADI), which was established to help in the search for children illegally appropriated during the last dictatorship.

Some of these cuts were part of the new far-right government’s “cultural battle” (in Milei’s terms) against the cultural left, “communists”, and defenders of “social justice”, which they believe is just an aberration.

III

While the political system is only now waking up from the shock, there were mobilizations and resistance from the start of the new administration, albeit with worrying difficulties. The government had won with significant support, and mobilizing against it in the first few months was seen by a majority of the population as a senseless response. Various polls have shown that a considerable number of people were (and still are) willing to give the government some leeway and time. Austerity measures appear as the suffering necessary to overcome the accumulation of instability and failure of recent years. While the livelihoods of the common people deteriorated violently in those first few months, many still hope that things will improve soon, and hope outweighs the present hardship.

At the same time, we see a government taking advantage of this free pass to advance its program by hitting social mobilizations hard, especially in the city of Buenos Aires, where the federal forces of repression can usually act. A new protocol against pickets (protocolo anti-piquetes) is being enforced. This new policy prohibits protest actions from extending beyond the sidewalks. When protestors go into the streets, the police respond harshly, often arresting them. Of course, this does not usually work when mobilizations are too massive, but it has succeeded against smaller actions. A huge action in April in favour of a bigger budget for public universities (with more than a million people on the streets of Buenos Aires and many other cities) was allowed to happen with minimal police intervention. However, in mid-June, as Congress was attempting to turn the omnibus bill into law, a massive mobilization was forcefully broken up and 33 people were sent to jail on terrorism charges. Through further mobilizing and campaigning, many of them were released after two weeks, however one man was held in a maximum security prison until early september.

As state repression rages on, popular mobilizations are being contained somewhat. Fear of imprisonment, injury, or even losing one’s job are detrimental to the possibilities of collective action. This is especially true for many of the social movements known as piqueteros. Milei’s government has made them an example of the kind of social action that will not be tolerated. These movements have not only been particularly affected by repressive actions, but are also being legally persecuted. Many organisations and their leaders have been accused of embezzlement and mismanagement of public resources given to them to run soup kitchens and other endeavours in poor neighbourhoods. While these accusations usually turn out to be false, they function in the meantime as a mechanism to stigmatize the activities of racialized and women-led movements. The combination of racial and gender stigma is at the core of the current political climate.

IV

As Milei’s government approaches a year in office, there are a few questions that come to mind for the upcoming year of parliamentary elections. First, while inflation has been reduced to 4 percent a month, there are doubts as to whether the current economic policy can drive it below the official 2 percent monthly target by the end of 2024. This is particularly relevant as these policies are putting the economy on a path of sustained stagnation while apparently failing to solve the core issue of Argentina’s economy: how to grow while paying down the foreign debt. This is the most pressing ongoing challenge. The government is currently in negotiations with the IMF to get further financial support to exit controls on capital movements, encouraging a rapid flow of incoming financial capital to help debt refinancing. However, Milei’s administration will not budge on its request for a new currency devaluation that will jeopardize its only merit so far, namely reduced inflation. This is the economic dilemma in which the government finds itself: without IMF support, it is difficult to see how the government will pay next year's debt maturities, and it will probably be pushed to devalue, but to get that support, it will probably also need to devalue. Resolving this is at the top of the agenda.

At the same time, we are beginning to see an incipient movement within the political opposition in Congress. While some sectors within the traditional right-wing parties (especially former president Macri’s PRO party) previously supported many of the government’s initiatives, in recent weeks they have begun to coalesce around the Peronist coalition in an effort to increase control over the government’s policies and limit austerity. First, a bill to expand the budget for public universities is moving forward. The same is happening with the Congressional rejection of the presidential decree to increase funding for unregulated expenditures by the federal intelligence agency (SIDE). Finally, Congress has just approved a bill that will slightly improve social security benefits for old people. This has provoked the president’s rage, and he has just vetoed it.

These shifts, unforeseen a few months ago, seem to be signaling the end of Milei’s honeymoon. The new LLA coalition is starting to encounter resistance within the political-institutional system as popular support progressively diminishes (although it remains high). As the main trade unions start planning a third general strike and the university unions plan a new mass street action for mid-September, Argentina's political scene could once again show its traditional liveliness.