However much of a paradox the markets being so relentless with perhaps the market-friendliest government here of this century, the lethal cocktail of financial turbulence and political scandal afflicting the Javier Milei administration in this electoral month has its reasons. The financial relief from the massive Donald Trump package spearheaded by a US$20-billion currency swap ended up lasting about as long as the elimination of grain export duties. The latter amounted to a tax break of US$1.5 billion for a dozen major export companies to coax US$7 billion into depleted reserves with almost minimal benefit for irate farmers in an electoral month – a tax break also injecting a huge mass of pesos to inflate the frantic demand for dollars, forcing the Central Bank to improvise yet another change in the exchange rate rules. These almost daily changes in the rules make nonsense of the government’s main campaign slogan “Libertad o Kirchnerismo” because the Central Bank is intervening with an intensity to rival Kirchnerism.
The markets thus have reasons to mistrust an error-strewn administration whose “anarcho-capitalism” seems more the former than the latter but this is not the main problem – even before coming under domestic pressure to backtrack given the anomaly of his “America First” presidency bailing out a country at the other end of the hemisphere, Donald Trump had already timed delivery of assistance for after the midterms with the implicit premise that it be won, something falling into serious doubt. The last few days have shown Trump’s support to be insufficient to overcome the loss of confidence in the libertarian administration, a problem which the midmonth snapshot with the Republican in Washington planned by Milei is hardly likely to change.
The dwindling chances of Milei delivering on the midterm triumph implicitly demanded by Washington have many causes, also extending to the economic sphere, but this week they have name and surname: José Luis Espert, now accused of receiving at least US$200,000 from Federico Andrés “Fred” Machado, a Patagonian businessman accused of drug-trafficking in Texas who backed his 2019 presidential candidacy. Timing a case dating back half a decade for the prelude of the midterms may legitimately be attributed to Kirchnerite electioneering malice and if Espert was indeed unaware of drug money entering his campaign funding, he would be far from being the first – if it were that simple, the lower house Budget Committee chairman could perhaps shrug off the charges but it is not.
Espert’s problem is that he not only faces the charges of Juan Grabois, a Fuerza Patria rival of the top name of the La Libertad Avanza list running for Congress in Buenos Aires Province, but also friendly fire. The media coverage of his Machado connection does not only come from journalists expressing sympathies with Kirchnerism or hostility to the Milei government but also from Marcelo Longobardi, an icon of mainstream centre-right journalism, who testifies to a much more recent contact. National Security Minister Patricia Bullrich, the government’s City senatorial candidate who prides herself on the vigour of her battle against drug-trafficking, has felt obliged to pull Espert up on the inadequacy of his tersely laconic explanations – an obligation almost impossible to avoid despite Milei’s displeasure after last month’s horrendous murder of three young girls in Greater Buenos Aires. Bullrich is not alone in her pressures – María Eugenia Talerico, who worked on the UIF money-laundering watchdog during the Mauricio Macri Presidency, has been joined by the liberal republican deputy Ricardo López Murphy. The latter is the most significant voice here because, unlike opposition politicians only now jumping onto this bandwagon, López Murphy has expressed aversion to Espert’s shady connections from the word go, pulling out of an electoral alliance with him for the 2021 midterms for that reason.
Espert is a massive government headache for the elections in the last weekend of this month but there are even more immediate problems. The budget committee chairman is under intense pressure to resign just a fortnight after submission of the 2026 Budget, an issue delaying discussion of that issue. He is also under heavy pressure to relinquish the top spot in the La Libertad Avanza list of candidates for Buenos Aires Province, in which event he would be replaced by Karen Reichardt, a former starlet and Playboy model now hosting a television programme for dog-lovers – an at least debatable improvement on Espert who is a prestigious economist at the end of the day. Perhaps Milei can only find consolation in the Mark Twain phrase: Cheer up, the worst is yet to come.
Comments