Espert for President!

José Luis Espert’s fall from grace was dramatic, portentous. In just a few weeks he went from one of the pillars of Javier Milei’s government, presiding over the Budget Committee in the Chamber of Deputies and leading the candidate list in Buenos Aires Province (“the mother of all battles”) to a political outcast who seems absolutely finished. His ties to Federico Andrés ‘Fred’ Machado, accused of drug-trafficking by the United States government, were well-known and documented ever since Noticias investigative reporter Rodis Recalt began chronicling the odds and ends of the first national libertarian campaign for president in 2019. At the time, Milei was a second-tier player among the far-right anti-Kirchnerites who sought to shock the political system by capitalising on discontent and disillusionment. Indeed, it is just a matter of timing that Espert and his ragtag crew didn’t make it to the Casa Rosada, while Milei and his squad did. In many ways, Espert paved the way, first as a loudmouth economist with an aggressive rhetoric on cable news television that was replicable on social media, before making the jump to politics with his presidential bid in 2019. They were political partners until Milei broke with Espert, accusing him of colluding with former Buenos Aires City mayor Horacio Rodríguez Larreta and PRO in 2021, and of trying to bribe him to the tune of US$300,000 in order to drop his candidacy.

It is interesting to muse on a counterfactual, a potential Espert presidency in 2023 if the roles had been reversed. Would he have been as magnanimous as Milei, pardoning his former antagonist to bring him on board in a key role? Would Espert have appointed Luis ‘Toto’ Caputo to the Economy Ministry and Federico Sturzenegger to become Deregulation & State Transformation minister, bringing back the duo that ran the circus during Macri’s botched tenure? Would he have had the charisma to implement tough austerity measures while basking in positive polling figures? How would society have reacted to a series of corruption scandals involving him and his family which not only revealed the contradictory nature of his “anti-caste” platform, but also the amateurism of supposed geniuses in economics?

The whole Machado narco-scandal hit Espert and the Milei administration at just the right time, and where it hurts the most. It was a politically timed neutron bomb that resulted in Espert resigning from his candidacy and taking a leave of absence from the lower house Chamber of Deputies, forced into political exile, probably on a one-way ticket to the proverbial Siberia. Machado ended up burying the hatchet once he knew his luck was sealed in a series of bizarre and troubling radio interviews that included thinly-veiled physical threats against journalists. In one of the radio interviews he claimed he wasn’t a real drug-trafficker, noting that in countries like Guatemala (where he operates a suspicious precious metals mine), journalists that publish stories about “real narcos” end up hung by the neck. In another, he suggested he delved into the mining project – which happens to be located in a remote tropical mountain region that is essentially inaccessible and where the local aborigine population expelled even the military – almost as a social project because he fell in love with the people and the place. He excluded details about the myriad of downed and intercepted airplanes in the region filled with some 6.4 tons of cocaine property of the Sinaloa Cartel allegedly associated with him, according to data the US government provided to Argentina. While he couldn’t remember exact numbers at the time, he hinted at a US$1-million consulting contract with Espert paid in installments, of which a famous tranche of US$200,000 was transferred before the campaign. The coup de grace came when Machado remembered the situation where he told Espert about the serious accusations against him: the former candidate told him he believed in his innocence, then asked for the consulting contract to be reinstated. Machado had managed to avoid extradition until the scandal erupted, but this furore pushed the Supreme Court to finally approve the request. President Milei, who shares the patronage of attorney Francisco Oneto with Machado, quickly signed the extradition documents.

The underlying question is what level of impact will this, and other scandals, have on upcoming midterm elections. Indeed, not only were Espert’s shady dealings well documented, but the Milei siblings have been pointed out time and time again for utilising the President’s skyrocketing political career for personal enrichment. Karina Milei, presidential chief-of-staff and Javier’s sister and closest confidant, manages her brother’s personal finances and has been monetising his image ever since he became a household name on television and social media. From selling spots on candidate lists to charging for face-to-face encounters, Karina and Javier escalated to the ‘$LIBRA’ crypto-scandal and the alleged three-percent surcharge on medication purchases at the ANDIS national disability agency, together with Diego Spagnuolo and the Menem cousins. These corruption accusations didn’t appear to impact Milei’s standing in opinion polls initially, much in the same way as he could remain Argentina’s most popular politician while slashing the budget.

At some point, though, something broke, and Milei fell down to Earth. A prestigious index on trust in politics and the government put together by Universidad Torcuato Di Tella shows a marked and consistent decline since March, after the $LIBRA crypto-scandal broke, but also in line with a stagnation in the rate of decline in monthly inflation. It also correlates with the moment the INDEC national statistics bureau’s monthly economic activity index found its peak and began to slide sideways with a slight negative tendency. March was also the month in which Caputo announced the agreement with the International Monetary Fund that included a managed flotation of the peso-dollar exchange rate within set “bands.” In practice, the official exchange rate suffered an initial devaluation of around 10 percent and found some sort of stability in early months, as the economic team used the firepower at their disposal to tame currency markets. By July, the rate of devaluation accelerated as the market began to test the upper bounds of the bands, a situation exacerbated by the negative electoral result for the government in September’s regional election in Buenos Aires Province. It forced Milei to seek emergency relief with Donald Trump, who gave US Treasury Secretary Scott Bessent the mandate to bail out Argentina. In an unprecedented move, the US Treasury is buying pesos in the open market.

While the election is only two weeks out, it couldn’t come quicker for the government. In what feels like an eternity, there are still 10 trading sessions where the market will have its say as to whether the bailout is sufficient and whether it has faith in the future of the Milei administration. The President is personally leading the campaign and hopes for some sort of decent result in the face of a fragmented opposition to claim victory, which today would mean sufficient legislative muscle to protect Milei’s veto power in Congress. Moderate aspirations for a President who fancied himself emperor and dreamt of constructing a libertarian hegemony for decades. He called for the support of Mauricio Macri, a much more rational political player, and suggested he would tone down his verbal belligerence while seeking constructive relationships with his allies. He’s also empowered controversial political strategist Santiago Caputo, who is appealing to his base of core followers. The scandalous rock concert this week – in which Milei appeared to be quite insane and was criticised by his opponents and even the international media – was classic Caputo. Appealing to the extended anti-Kirchnerite sentiment among a substantial portion of the population, together with the “fear” of a return of Cristina Fernández de Kirchner through Axel Kicillof, Caputo and Milei hope to make it through the elections in one piece, while ‘Toto’ guarantees the stock of dollars will continue flowing until then.

It will be a brave new world on October 27. Until then, hold on to your hats.