Anybody with any doubts about a resounding election victory not guaranteeing stable governance should talk to British Prime Minister Sir Keir Starmer and to President Javier Milei (it might also be recalled that just over 50 years ago Isabel Perón had been on a presidential ticket winning 62 percent of the vote).
Amid the continuing investigations into the property assets and trips abroad of his Cabinet Chief Manuel Adorni beyond his apparent means, undermining the credibility of “anti-caste” rhetoric, Milei has been hit where it hurts most with his proudest achievement of taming inflation now accelerating in the opposite direction – last Tuesday the INDEC national statistics bureau announced a March inflation rate of 3.4 percent, the highest figure since the 3.7 percent of the previous March with the slippage over the past 10 months crushing any claims to year-on-year progress. The government was quick to point to such seasonal factors as education (up 12.1 percent) apart from the global oil crisis, but the fact remains that core inflation excluding regulated and seasonal prices was barely lower at 3.2 percent. Some analysts have even made the spurious point that the annual inflation rate of 30 or so percent inflation persisting over the past 15 months is higher than the 25 percent in the last year of the Cristina Fernández de Kirchner Presidency but this comparison is totally meaningless, given the fudged figures dating back to Guillermo Moreno’s time in charge of INDEC.
Not only does that March inflation rate contradict Milei’s cherished achievement as an economist but it can also be linked to the core of his international policies – the alignment with the United States and Israel – via surging fuel prices in an economy moving on wheels in the world’s eighth-largest country. US President Donald Trump was a blessing last spring as the co-architect of the October midterm triumph with his financial backing but now seems more of a curse this autumn as the prime cause of fuel prices rising seven percent last month alone with his war on Iran.
Changing circumstances might seem to warrant a change in policy but this is next to impossible for Milei for reasons other than a dogmatic personality. Updating public utility billing was among the top three culprits for the March inflation (up 4.7 percent) yet maintaining fiscal surplus gives him little choice but to continue correcting the disarray in relative prices by charging more than core inflation for public services because further slashing of subsidies is dictated by sliding revenues – the consequence of both economic stagnation and tax cuts. There is also no real alternative to perpetuating the index-linking of pensions and other welfare benefits introduced two years ago because pensioners have still not recovered from the massive damage suffered in the almost hyperinflationary first quarter of 2024 (while the frozen 70,000-peso bonus for those on the mínimum pension shrinks ever faster amid accelerating inflation).
With neither fiscal policy changes possible nor economic pickup likely in any near future and with investors continuing to hold back (despite or perhaps even because of the recent favourable YPF ruling), the government badly needs to change the subject and one way of doing so could be taking the initiative against the corruption which has become the leading concern in many public opinion surveys. Yet there are few or no signs of the government picking up the gauntlet. Not only do the Milei siblings continue clinging to their Cabinet chief but they have even moved into reverse gear in their strident offensive against the suspect opulence of AFA Argentine Football Association bosses Claudio ‘Chiqui’ Tapia and Pablo Toviggino (far more ostentatious than Adorni) – a retreat beginning ever since Juan Bautista Mahiques became Justice Minister with an out-of-court settlement likely to bury the tax evasion charges.
In more general terms, Milei constantly contradicts his state-of-the-nation speech to inaugurate ordinary sessions of Congress at the start of March when he urged making the Western values of ethics and morality a state policy transcending governments. Whether the sale of candidacies during his 2023 presidential campaign or his indifference now to senior government officials abusing their privileged positions to land huge Banco Nación mortgage credits, everything is the market for Milei who fails to see any ethical problem or conflict of interest. Perhaps the current government might seem relatively clean when compared to the previous mega-corruption of money-bags tossed over convent walls, presidential hotel chains and fraudulent public works contracts (Milei has none, which is not necessarily a point in favour) but this is not good enough – they need to start raising the bar now.
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