Milei Wins Argentine Midterm Elections 10/27 06:07

   

   BUENOS AIRES, Argentina (AP) -- Argentina's libertarian President Javier 
Milei won decisive victories in key districts in midterm elections Sunday, 
clinching a crucial vote of confidence that strengthens his ability to carry 
out his radical free-market experiment with billions of dollars in backing from 
the Trump administration.

   In the election widely seen as a referendum on Milei's past two years in 
office, his upstart La Libertad Avanza party scored over 40% of votes 
compared with 31% for the left-leaning populist opposition movement, known as 
Peronism, exceeding analysts' projections.

   Milei, a key ideological ally of U.S. President Donald Trump, said his party 
and allied blocs picked up 14 seats in the Senate and 64 in the lower house of 
Congress on Sunday, bolstering the government's support in the legislature 
enough to uphold presidential vetoes and block impeachment efforts.

   At La Libertad Avanza headquarters late Sunday in downtown Buenos Aires, a 
beaming Milei hailed the election sweep as a mandate to press forward with his 
spending cuts and introduce ambitious tax and labor reforms. The results also 
automatically position him as a candidate for reelection in 2027.

   "The Argentine people have decided to leave behind 100 years of decadence," 
Milei exulted as his supporters cheered, referring to a succession of Peronist 
governments that brought Argentina infamy for its inflationary spirals and 
sovereign debt defaults.

   "Today we have passed the turning point. Today we begin the construction of 
a great Argentina."

   High stakes include $40 billion from the U.S.

   Perhaps never has an Argentine legislative election generated so much 
interest in Washington and Wall Street.

   Trump appeared to condition a $20 billion currency swap deal with 
Argentina's central bank and an additional $20 billion loan from private banks 
on a good showing for Milei in national midterms, threatening to rescind the 
assistance for the cash-strapped country in the event of a Peronist victory.

   "If he wins we're staying with him, and if he doesn't win, we're gone," 
Trump said after welcoming Milei to the White House earlier this month.

   Those contentious comments added to mounting pressure on Milei, who has 
scrambled to avert a currency crisis since the Peronist opposition won a 
landslide victory in Buenos Aires provincial polls last month. Argentina's 
bonds and currency nosedived as markets sensed that the public was losing 
patience with Milei's reforms and that the midterm race would be tight.

   To stem the run on the peso, Milei burned through billions of dollars in 
foreign exchange reserves to shore up the peso. In an extraordinary move, the 
U.S. Treasury then came to the rescue, selling dollars to help meet soaring 
demand for greenbacks and finalizing the credit line.

   In the end, the Peronist alliance performed poorly, underscoring how weak 
the once-dominant movement has become in the Milei era, largely as a result of 
internal divisions. Markets were widely expected to rally on Monday.

   "For foreign investors, this outcome is a relief because it shows that the 
Milei program can be sustainable," said Marcelo J. Garca, the America's 
director for the geopolitical risk consultancy Horizon Engage.

   "It leaves the opposition weakened and fragmented, just as it was when Milei 
won the presidency in December 2023," Garcia added.

   The Peronist coalition has struggled to channel rising public anger with 
Milei's painful austerity measures into a new political strategy after 
delivering the economic shambles that the chain saw-wielding outsider inherited 
in late 2023.

   Trump, while on his way to Japan on Monday, posted on Truth Social that 
Milei was "doing a wonderful job" after his party beat expectations in midterm 
elections.

   "Our confidence in him was justified by the People of Argentina," Trump 
wrote.

   Milei responded to Trump's post, calling him "a great friend" of Argentina 
and thanking him for "trusting the Argentine people."

   A changed electoral map

   The results showed Milei's young libertarian party gaining support across 
the country -- including in some surprising corners that have long been under 
the sway of Peronism.

   In the closely watched Buenos Aires province, a Peronist stronghold home to 
nearly 40% of the electorate, La Libertad Avanza eked out a razor-thin victory 
Sunday. Just last month, the Peronists beat Milei's party there by a whopping 
14 percentage points.

   Axel Kicillof, governor of Buenos Aires province and the most influential 
elected official in the Peronist opposition, criticized Trump for putting his 
thumb on the scale.

   He warned that the billions of dollars in financial aid from the U.S. 
Treasury and investment banks would do nothing to help ordinary Argentines 
squeezed by Milei's cuts to subsidies or forced out of business by a 
contracting economy.

   "I want to make it clear that neither the U.S. government nor JP Morgan are 
charitable societies," he said. "If they come to Argentina, it is for nothing 
other than to take a profit."

   With Milei's efforts to deregulate the economy and scrap tariffs winning 
over Argentina's powerful agriculture sector, La Libertad Avanza also swept 
Santa Fe, which dominates soybean production and processing, and Crdoba, 
another powerhouse farming province.

   Risks remain for Milei as austerity hits hard

   Despite Milei's new momentum, experts caution that the irascible president 
still needs to court political allies to see through his agenda. Given the 
limited number of seats up for grabs in this election, it was mathematically 
impossible for Milei to secure a majority in either house.

   "This victory is necessary, but not sufficient to maintain control of 
Congress," said political consultant Sergio Berensztein. "The government must 
build a broad and effective coalition with like-minded forces."

   Seeking to capitalize quickly on Sunday's results, Milei said he called the 
country's powerful provincial governors to accelerate agreements on long-term 
economic reform.

   Sunday's outcome will also test public patience for Milei's cost-cutting 
measures in the coming months. Although Milei's budget cuts have significantly 
driven down inflation -- from an annual high of 289% in April 2024 to 32% last 
month -- the price increases still outpace salaries and pensions.

   The electorate appears increasingly polarized between beneficiaries of 
Milei's reforms and those who say they're struggling to make ends meet like 
never before.

   In the financial district of Puerto Madero, luxury car dealerships report 
sales surging since Milei scrapped import restrictions. Streets bustle with 
bankers who praise the president for ending a yearslong ban on selling dollars 
online. Fine restaurants serve Argentine oil executives who gush about his 
efforts to draw foreign investment.

   But at a soup kitchen on the other side of Argentina's Riachuelo River, 
Epifana Contreras, 64, said she feels like she's bearing the brunt of the 
cutbacks.

   "You can't live on 290,000 pesos a month with today's inflation," she said, 
describing how her $200 monthly pension has shriveled in value since Milei cut 
cost-of-living increases. "The situation is getting worse and worse."

   Reflecting widespread public resignation, electoral authorities reported a 
turnout rate of just under 68% Sunday, among the lowest recorded since the 
nation's 1983 return to democracy. Voting is compulsory in Argentina.

   "I vote out of obligation, nothing more," said Matas Paredes, 50, a real 
estate broker whose foreign clientele vanished with Milei's strong exchange 
rate. "None of these figures inspire optimism. We're just choosing the lesser 
evil."