Smelling a drop of blood in the water

‘In the land of uncertainty, the man with convictions is King,’ could be a paraphrase of the famous idiom, adapted to fit the reality of Argentina under President Javier Milei. Indeed, even in what is arguably the world’s most prepared country for volatility, the situation is increasingly unstable. 

For the first time since making his bombastic entry into the first division of Argentine politics, Milei could actually be losing his grip on things, as evidenced by growing disillusionment and even extreme levels of negativity in the digital ecosystem, where the President and his band of libertarian followers have demonstrated expertise. Make no mistake, he still commands the field, which is deeply fragmented, but Milei is failing on the economic front, and especially with the skill that was supposed to be his forte: fighting inflation. This situation is also making this administration’s lack of political experience more explicit, as it exposes itself through petty corruption scandals which erode its image in the face of a tired electorate that really has nowhere else to go, at least for the time being. Milei and Sister Karina, his powerful presidential chief-of-staff, are doubling down and going on the offensive, but it feels that this time they won’t be able to pull the proverbial rabbit out of the hat without solving the underlying loss in purchasing power and growing job insecurity.

During an unusually active week in public speaking for the President, Milei diverted from his usual script and admitted certain potential weaknesses. “We’re going to write the greatest page in Argentine history, whether you’re with us or not,” the self-proclaimed anarcho-capitalist told a crowd of businessmen gathered at the AmCham Summit earlier this week. “And if you’re not with us, we’ll just go home, no problem – we can all go back to work in the private sector.” It isn’t clear whether Milei was joking and being facetious, trying to play on the idea that he’s the only one standing between the status quo and a return to Kirchnerism, which appears to be the main risk scenario for investors who have kept Argentina’s country-risk premium painfully high. Yet, the President acknowledged the possibility that his dream of political hegemony isn’t guaranteed. Just a few days before, he gave an interview to Antonio Aracre and Ramiro Castiñeiras in which he admitted: “People are suffering, we have to understand why people are struggling.” Revealing a previously hidden level of empathy, Milei continued: "What people are feeling is the [negative] impact on the level of economic output; as economists, we know that numbers represent averages, and there are people that are not just below average, but at the far end” of the statistical measurement. Milei was showing a softer side after the cruelty that had characterised his “chainsaw austerity,” particularly with sectors such as retirees and the handicapped.

How should this new and apparently fallible Milei be interpreted? For the first two years of his Presidency, he assumed a posture of absolute conviction in himself, rejecting criticism as personal attacks based on idiocy or corruption, or both. And while he still holds that his proposed economic plan is the best possible, for the first time the man who suggests that selling organs and children is acceptable if it’s a transaction between free individuals is acknowledging that things might not work out and that he understands that much of society is suffering.

Part of the explanation may reside in the stubbornness of inflation, which refuses to be tamed by Milei and Economy Minister Luis ‘Toto’ Caputo’s monetary tourniquet and budget surplus. Indeed, the INDEC national statistics bureau’s consumer price index (CPI) has been on the uptick for 10 consecutive months and clocked in at 3.4 percent in March. This, coupled with the fact that a majority of the economy’s non-extractivist sectors are in deep recessions, has created a troubling situation in which formal wages are now below levels seen in December 2023, before Milei took office. The stagnation that is particularly strong in labour-intensive sectors has also led to increasing concern about the lack of jobs, particularly with informal labour on the rise.

A highly regarded survey put together by the Universidad de San Andrés (UdeSA) highlights the marked uptick in dissatisfaction with the current situation. Two-thirds of the population are not happy with the current state of affairs, a seven percentage point drop from last November. While Milei’s approval rate remains relatively strong at 38 percent, it’s been sliding for months with negative opinions on the rise. Low salaries and joblessness are people’s main concerns, at 37 and 36 percent respectively, and growing, says the UdeSA survey. Pessimism is on the rise too: 46 percent of those polled expect the country to be worse off a year from now, with 56 percent indicating they are doing worse than a year ago. Both of these negative indicators are sharply higher than in recent months.

Digital analyst Diego Corbalan’s Digital Monitor report shows that the social media conversation around Milei is extremely negative, even for such a toxic environment. A whopping 92 percent of messages and posts about the government expressed negative sentiment, while those specifically about the President stood at 87 percent negative. The digital ecosystem is Milei and his libertarians’ secret weapon; the troll farm controlled by controversial political advisor Santiago Caputo, together with Milei’s organic appeal, ran a tight ship in terms of their digital communications strategy, ultimately allowing them to win the Presidency despite counting with a minimal budget compared to the historic coalitions he defeated, Mauricio Macri’s Juntos por el Cambio and Cristina Fernández de Kirchner’s Unión por la Patria. At the time we used the term “synthetic power” to express how Milei converted his social media magnetism into votes and political capital. Losing control of the digital discourse for Milei is akin to losing the streets for a traditional Peronist politician of the 21st-century.

At this particular moment of political weakness, Milei’s adversaries want to capitalise on his misfortune. Multiple potential presidential candidates have already thrown their hat in the ring for next year, or have allowed others to do that for them. Former President Macri and certain Peronist sectors are each looking for their own outsiders, seeking to replicate Milei’s unexpected success. Buenos Aires Province Governor Axel Kicillof is trying to suit up. Juan Grabois also has his eye on the prize. Others will emerge too. It’s a risky endeavour, as former Buenos Aires City mayor Horacio Rodríguez Larreta can attest to. The same goes for Sergio Massa.

Furthermore, the Judiciary appears to be smelling blood. In Argentina, the level of judicial scrutiny on a sitting government is inversely proportional to the perception of power it exudes. It acts as a forward indicator, much like in 2014 when the seemingly untouchable Fernández de Kirchner began to feel the heat of judicial investigations and accusations. There is a heightened level of scrutiny in several cases that affect Milei and his sister directly, including the corruption scandals involving their beloved Cabinet Chief Manuel Adorni. The ANDIS national disability agency that has Diego Spagnuolo in checkmate is also exhibiting signs of high activity. These cases contrast sharply, however, with the ‘$LIBRA’ crypto-scandal and the investigations tied to lobbyist Leonardo Scatturice and his personal assistant Laura Belen Arrieta who arrived in Argentina via private jet with multiple suitcases and promptly received no baggage checks from Customs. These, and other cases, could begin to move more quickly if Milei’s perceived weakness is sustained.

The wild-haired economist has proven time and again that he is no ordinary politician. Milei’s meteoric ascent was matched by the capacity to remain popular in the face of a tough austerity plan and continued exhibitions of cruelty. He’s lied – like any other politician – constantly and picks fights with all of his circumstantial allies. He’s been on the edge of the precipice multiple times, but always managed to claw back while retaining political centrality. He may be able to do it again, but the obstacles look bigger than in previous attempts. 

Politics alone probably won’t cover it. If his theoretical playbook doesn’t generate the results he expects, he’ll only face further declines. Until then, expect Milei to turn up the heat.