Argentina’s libertarian President Javier Milei has secured a decisive victory in the nation’s midterm elections, strengthening his mandate to pursue radical free-market reforms. This electoral success is backed by significant financial support from the United States, marking a pivotal moment in Argentina’s political landscape.
In what was widely perceived as a referendum on his first two years in office, Milei’s La Libertad Avanza party garnered over 40% of the vote. This outpaced the left-leaning Peronist opposition, which received 31%, surpassing analysts’ expectations. The results bolster Milei’s legislative power, with his party and allies gaining 14 Senate seats and 64 in the lower house, enabling him to uphold presidential vetoes and block impeachment efforts.
At the party headquarters in Buenos Aires, Milei celebrated the outcome as a mandate to advance his economic reforms, which include significant spending cuts and ambitious tax and labor changes. The victory also positions him as a strong candidate for re-election in 2027.
High Stakes and U.S. Involvement
The midterm elections attracted unprecedented attention from Washington and Wall Street. U.S. President Donald Trump, a key ally of Milei, linked a $20 billion currency swap deal with Argentina’s central bank and an additional $20 billion loan from private banks to Milei’s electoral success, warning that a Peronist victory could jeopardize the financial aid.
“If he wins, we’re staying with him, and if he doesn’t win, we’re gone,” Trump stated after meeting Milei at the White House earlier this month.
To stabilize the peso, Milei utilized billions in foreign reserves, with the U.S. Treasury stepping in to sell dollars and finalize a credit line. Speaking from Asia, Trump praised Milei’s “big win,” highlighting the U.S. support for his administration.
Market Reactions and Political Implications
The Peronist alliance’s poor performance underscores its weakened state in the Milei era, largely due to internal divisions. Markets are expected to rally following the election results, with foreign investors viewing the outcome as a sign of Milei’s program’s sustainability.
“For foreign investors, this outcome is a relief because it shows that the Milei program can be sustainable,” said Marcelo J García, Americas director for Horizon Engage.
The electoral map has shifted, with Milei’s party gaining ground even in traditional Peronist strongholds. In Buenos Aires province, home to nearly 40% of the electorate, La Libertad Avanza narrowly defeated the Peronists, reversing a significant deficit from the previous month.
Challenges Ahead for Milei
Despite the victory, Milei faces challenges in implementing his agenda. The limited number of seats up for grabs meant he could not secure a majority in either house, necessitating alliances with other political forces.
“This victory is necessary, but not sufficient to maintain control of Congress,” noted political consultant Sergio Berensztein. “The government must build a broad and effective coalition with like-minded forces.”
Milei has initiated discussions with provincial governors to accelerate economic reform agreements. However, his cost-cutting measures, while reducing inflation from 289% in April 2024 to 32% last month, have polarized the electorate. Many Argentines continue to struggle with rising prices outpacing wages and pensions.
The coming months will test public patience with Milei’s reforms as he navigates the complex political landscape to maintain momentum and deliver on his promises.
