Dual crises throw wrench in Milei’s election plans

The campaign for Argentina’s legislative election officially launched this week, but it couldn’t have gone worse for President Javier Milei. A corruption scandal – one of the very things that he railed against during his successful campaign two years ago – burst into the news after a leaked recording appeared to implicate his sister.

The tapes suggest that Karina Milei, who is also a member of the administration, was involved in a kickback scheme at the National Disability Agency (ANDIS). Nothing has been proven, but the federal authorities stepped up their investigation in response to the leaked audio.

That’s not all for Milei: alongside the corruption scandal are a host of economic issues that have undermined his policy of fiscal “shock therapy.” Output has been stagnant this year, the peso is massively overvalued – this decreases competitiveness of Argentine exports – and public sector pay is down in real terms. Argentina’s central bank also increased its reserve requirements this week, which could further hit the economy. The concern for Milei is that these issues will overwhelm the success he’s had in bringing down inflation and balancing the budget.

“It won’t be a corruption scandal that does him in, it will probably be the economic problems,” said Eugenia Mitchelstein, a social sciences professor at the University of San Andrés in Buenos Aires. “The corruption scandal doesn’t help.”

The Oct. 26 midterm election, where a third of senators and half of the Chamber of Deputies are up for election, is a vital one for the president. The vote will not only be a bellwether for how Argentina feels about his economic approach, but also gives Milei’s La Libertad Avanza (LLA) party an opportunity to pick up seats in a Congress that has blocked many of the president’s proposed reforms.

What’s the current state of Argentina’s Congress? Milei only co-founded the libertarian LLA in 2021, so its representation in both chambers of the National Congress is paltry: only six of the 72 senators and 38 of the 257 deputies currently belong to LLA. What’s more, Argentina’s politics is heavily fragmented, meaning there are several different parties represented in the Congress – no single party has a majority. The Unión por la Patria (UP), a center-left Peronist grouping that is Milei’s main foe, has a plurality.

What does Milei want? Milei’s first target is to win a third of the seats so that he can gain veto power. Beyond that, the president hopes to enact tax, labor, and pension reforms that will structurally alter Argentina’s economy. So far he has been able to muscle some changes through the National Congress, such as the big omnibus bill passed in June 2024 to deregulate the economy and hand the president more power. But his party’s threadbare representation limited what he was able to achieve, forcing him to negotiate with his opponents from a weak position. That could change after the October election.

“Even if the government does extremely well, they won’t have their own majority in Congress, so they will still need to negotiate with the more moderate sectors of the opposition,” Juan Cruz Díaz, the managing director of Buenos Aires-based advisory firm Cefeidas Group, told GZERO. “But they will do it from a different standpoint, from a different legitimacy. They will have more leverage.”

Who’s leading the charge against Milei? UP may be the biggest opposition party, but they have a leadership crisis. Over 40% of Argentinians said they didn’t know who the leader of the opposition was, or said there was none, per a Pulso poll from earlier this month. Another 25% said it was former President Cristina Fernández de Kirchner, the left-wing Peronist leader who is currently under house arrest for corruption, and is barred from politics for life.

“[The opposition] is not only fragmented, it is leaderless,” said Marcelo J. Garcia, Americas director at Horizon Engage consultancy. “Milei is the only national leader that controls his political space, his political party. So that really plays to his advantage.”

Why should I care about Argentina? The Latin American nation of over 47 million people is better known for its soccer stars, beautiful Patagonian mountain range, and delicious beef steaks. But Milei is creating his own level of fame. His brash brand of chainsaw politics has become something exemplary for right wingers across the globe, with libertarians proclaiming his premiership as a paragon of success.

This election gives Argentinians the chance to say how they feel about Milei’s leadership, and whether he’s done enough to stabilize the country’s turbulent economy. It could have major ramifications for how Milei governs going forward, according to Mitchelstein.

“If he does well, if he gets, say, 40-42% of the vote, it will confirm his intuition, and it will probably make him more Milei than ever,” Mitchelstein told GZERO. “If he doesn't get that many votes, say, 37-38%, it might actually lead him to rethink his government, and also the way he’s been ruling.”