No one anticipated last Sunday midterm election result in Argentina. Not even the executive, that faced a dire situation on the way to the election. Unexpectedly, Donald Trump himself came to President Milei’s rescue and the election´s results surprised everyone in the Argentine political spectrum.
The political campaign couldn´t be worse for the incumbent. First, in early September it lost a provincial election in key Buenos Aires province (home to 40% of Argentines). Second, Milei’s sister and top political advisor was accused of bribery. Third, his top candidate for national lawmaker at, again, the crucial Buenos Aires province had to step down amid accusations of being funded by a suspected narcotrafficker. Fourth, even though Milei has been very successful in slashing inflation, from over 200% annually to around 20%, this came with a hefty price. He cut subsidies to poor families and utilities, increase interest rates and open the economy to imports. According to the World Bank, economic activity plummeted a 1.7% in Milei’s first year in office while projections for 2025 economic growth hover around 3% to 4%. Finally, the Argentine peso faced strong devaluation pressures for several weeks prior the election that dried good part of Central Bank´s reserves.
It was at this point that Trump stepped in. He gave a 20bn US$ bailout that kept the peso´s devaluation under control during the crucial days previous to the election. He even offered to increase the economic assistance to 40bn depending on the elections’ result. Trump defied internal criticism, both from Democrats and Republicans for giving money to record high foreign debt defaulter Argentina.
Astonishingly, the election’s result couldn´t be better for the government. It won at the national level with over 40% of the votes while the Peronist got 35%. It won in all but 8 of the 24 provinces, including Peronist stronghold, Buenos Aires province. It has greatly increased the president´s party congressional power, giving him the chance to defend his presidential decrees and vetoes and even advancing crucial legislation with the help of allies. Key among Milei´s projects is the reform of the 1974 labour law. This law repeatedly resisted reform attempts by pro market administrations in the past and has been blamed for Argentina´s far from successful private sector performance.
At the same time, the election has weakened the Peronists presidential aspirations since this voting could not produce a clear leader in their political arc. The same goes for other opposition candidates with presidential ambitions. In sum, this election has infused new life to the Milei administration and gave him the chance to pursue his agenda with renewed strength.
The other big winner is Donald Trump. He has successfully influenced an election in one of Latin America’s largest country. From here on, Argentina’s alliance with the US will only deepened. In the mind of those who voted Milei for president and were now doubting whether to cast their ballots for him again, the US support acted as a huge catalyst in making up their minds. The group of those seeking a profound alliance with the US in Argentina (traditionally an anti-American country, as Latino Barometer polls has shown across the years) has only grew.
Nevertheless, one important pitfall lies ahead: Argentina’s relations with China. China is currently Argentina’s major trading partner while the US ranks fourth after Brazil and the EU. Former Brazilian president and Trump ally Jair Bolsonaro faced the same situation: he tried at first to sever its economic ties with Beijing, only to find massive opposition from exporters at home. Will political affinity trump (no pun intended!) trade interests? The Argentine case will act as a litmus test of the future of the relationship between the US, Latin America and China.
