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ould redefining friendly fire form part of the government’s urgent need to reinvent itself in its political winter? Those explosive voice note recordings pointing to corruption in the highest presidential circles have been widely attributed to friendly fire within the La Libertad Avanza administration but might not those stones hurled at President Javier Milei in Lomas de Zamora during a midweek campaign rally also be qualified as friendly fire, permitting the lion of the chainsaw and hate speech to victimise himself (a strategy deployed so frequently by his arch-rival, ex-president Cristina Fernández de Kirchner)?
Yet the crisis arising from the audio recordings of ex-official Diego Spagnuolo does not look like being so easily surmounted. Optimists within the presidential entourage might point to the ‘$LIBRA’ cryptocurrency scam half a year ago, from which President Milei did not emerge unscathed but still walking upright the tightrope leading to midterm triumph, but there are huge qualitative and quantitative differences between the two scandals.
Those hit by the cryptocurrency rug-pull, buying into the meme coin at inflated prices on the President’s recommendation only to suffer a crash when support was withdrawn, were around 70,000 people with the money to dabble – essentially gamblers and thus with no right to a guaranteed return, as Milei was quick to point out. Nevertheless, there was no way the rash endorsement could leave Milei looking good but he opted for having been a fool rather than a crook as the lesser evil – with some success although the investigation continues. But no room for innocence where squeezing kickbacks out of the medicine for around a million disabled people is concerned – arguably the most vulnerable sector of society. Nor has Milei allowed himself much possibility of the benefit of the doubt from his aggression against the autistic kid Ian Moche in recent weeks.
The stunned silence prevailing in government ranks in the 10 days since the scandal burst seems almost an admission of guilt. The libertarian administration should have a readymade line of defence from the fact that the Suizo Argentina pharmaceutical chain nailed 85 percent of the medicine purchases for the disabled last year from the fact that their offer undercut the other bidders by 20 percent – a simple case of the laws of market and the government’s austerity drive in action as part of returning Argentina to the rest of the world. But who is going to believe that it is anything but ‘good’ old-fashioned corruption with Spagnuolo’s voice messages pointing to kickbacks for Presidential Chief-of-Staff Karina Milei and the Menems (her right-hand man Eduardo ‘Lule’ and Congress Speaker Martín) with the latter surname evoking memories of innumerable scams during the Carlos Menem Presidency three decades ago plus Suizo Argentina’s key executive Jonathan Kovalivker on the run?
Those Menem scams failed to derail his 1995 re-election against the phrase also coined in those years elsewhere: “It’s the economy, stupid” and the impact of corruption scandals since then has been largely relative for similar reasons (with Fernández de Kirchner also re-elected in 2011) but this time it could be different. Changing the subject to the economy does not necessarily work out in Milei’s favour – despite interest rates roaming into three-digit territory (and hence closer to last year’s inflation than this) and applying a new variation of the ‘cepo’ clamp in the form of imposing statutory reserve requirements on over half of bank deposits and thus forcing them into government bonds (with the public sector crowding out the private as in Kirchnerite times), his control over the dollar and hence inflation remains uncertain.
For the first time in this administration, the presidential economist and his economic team are not on the same page because of the various problems arising from this strategy – even if the Economy Ministry does not express its misgivings in public about this single-issue economics driven by purely electoral considerations, its defence of current monetary policy lacks all conviction with no good arguments. A prime factor behind the world’s fastest growth among major economies after India earlier this year was the credit suddenly available to companies and private individuals purchasing consumer durables (although also tourists abroad, it should be said) – this credit has been cut short by the accelerating debt from soaring interest rates and growth is stuttering to a halt with jobs at risk in precarious companies.
In order to win the October midterms, the government thus faces the challenge of surmounting a massive corruption scandal beforehand and finding an exit strategy from unsustainable monetary policies afterwards.
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