President Javier Milei’s administration seems to be bouncing from crisis to crisis lately. As has become the norm with the La Libertad Avanza government, within just a few weeks it can feel like they’re either in heaven or hell, all the while carrying the country along with them. With the economy seemingly under control and a solid electoral victory in Buenos Aires City that allowed the Milei siblings to subjugate the Macri cousins, it felt as if La Libertad Avanza was marching on its way to political hegemony and re-election in 2027. The confirmation of Cristina Fernández de Kirchner’s guilty sentence in the ‘Vialidad’ public works corruption case was the cherry on top. Milei, sister and presidential chief-of-staff Karina and controversial political advisor Santiago Caputo — together known as the “iron triangle” — somehow navigating the turbulent waters of the ‘$LIBRA’ cryptocurrency scandal and even the incriminating images of Laura Belén Arrieta’s 10 undeclared pieces of luggage coming in from Florida. They had emerged victorious in their epic battle against the “caste,” sorting multiple obstacles that were thrown their way.
That situation seems to have been turned on its head, as a fragile economic situation has put financial markets on edge, while corruption scandals associated with the “iron triangle” keep mounting. The past several weeks have seen financial turbulence in the aftermath of the Central Bank’s botched “disarming” of a short-term instrument known as “Letras Fiscales” or “Lefis” banks used to manage liquidity. In their attempt to “heal” the Central Bank’s balance sheet, BCRA Governor Santiago Bausili and Economy Minister Luis ‘Toto’ Caputo, under the supervision of President Milei, failed to convince the banking sector to transfer their portfolios onto other short-term instruments denominated in pesos, leading to a massive jump in private-sector interest rates that ultimately forced the Central Bank’s hand. As the peso-dollar exchange rate surged 4.4 percent last month, the Caputo-Milei tandem resorted to extremely high real interest rates in order to contain the financial situation, trying to keep excess pesos from going into dollars. All of this put even further pressure on economic output, which has flatlined over the past several months, leading to further duress for the population. As Milei and his economic team struggle to contain the financial stress, his popularity and therefore expected electoral victory is under threat.
As the economy plays the background tune, multiple corruption cases continue to erode the Milei administration’s credibility. An investigation by Natalia Volosin, a lawyer specialised in corruption, published in Noticias magazine sheds further light on the business dealings of Leonardo Scatturice. The businessman has become the gatekeeper to the Donald Trump-MAGA world for the Milei crew, and is the owner of the firm that employs the aforementioned Arrieta. The VIP treatment she received at Jorge Newbery Airport in Buenos Aires, including the lack of controls for her 10 pieces of luggage, suggest some level of collusion with authorities who respond to Santiago Caputo. Scatturice, a former spy who in just a few years became a millionaire, has won at least 17 state contracts since Milei came to office, according to La Nación, in total worth more than US$90 million, through his firm OCP Tech and other subsidiaries. Scatturice is not a pure “libertarian,” rather he’s a pragmatist who’s had dealings with governments of different ideological inclinations.
Volosin’s investigation indicates a close working relationship with Daniel Hadad, the media mogul behind the Infobae news site, which throughout the years has figured out a way to produce positive coverage of the administration in charge, at least for a while. A family member of Hadad is also Arieta’s employer, suggesting the connections are not just mere coincidences. And more revelations are expected to surface.
The Scatturice case will continue to shed light on the promiscuous relationship between certain types of businessmen and the power structures of the government. A sort of “deep state” aimed at getting rich, as has been mentioned in previous columns. In the Milei administration, one of the main nodes of that network appears to be Caputo the advisor, who isn’t officially a public servant — he’s a freelancer — and therefore doesn’t have to disclose his wealth or assets. Interestingly, ‘Caputito,’ as he’s mockingly called for his age, is currently employed by Zefica SA, a shell firm owned by the Costa family. He’s the only employee of a company that is part of a business group founded by a longtime family friend. He was hired just two weeks after Milei took office. That firm is under investigation for a recent suspicious operation in which two family members injected US$800,000, as reporter Camila Dolabjian reported. This caused a witch hunt within the UIF money-laundering watchdog, led by Paul Starc, who was promoted by Caputo. The Costa family’s other firm, Camalu SA, employs Francisco Caputo, Santiago’s brother, among others.
These spurious connections between certain types of characters and the government are reminiscent of the worst of the “caste’s” vices, something society does acknowledge, according to opinion polls. Up until now, though, they haven’t had an impact on La Libertad Avanza’s voting intention. The most challenging accusations, though, are those that go all the way to the apex of the libertarian administration, the Mileis. The ‘$LIBRA’ cryptocurrency scandal has seen the investigation progressing, both in the United States and Argentina. The prosecution has located US$500,000 in funds associated to the scam operation that allegedly belong to Manuel Terrones Godoy and Mauricio Novelli, members of Milei’s inner circle who brought Hayden Mark Davis to the Casa Rosada. According to the prosecution they relied on an influencer named Julián Serrano to attempt to hide the funds. He has denied any involvement, but the graphic nature of the case puts the spotlight on Javier and Karina, who came to office with the promise of triumphing against the “caste” to eradicate this sort of behaviour.
With the election around the corner, it is crunch time for the government and the opposition. The economic turbulence comes at a complex moment for the La Libertad Avanza coalition. The continued presence of corruption accusations put further pressure on the President, who still counts with solid support in opinion polls. Aided by the absorption of Macri’s PRO and the lack of any unifying leader amongst the multiple brands of Peronism, the Milei siblings could perform relatively well in the local elections in Buenos Aires Province, going on to win at the national election in October. If they fail to contain the peso-dollar exchange rate, and inflation begins to rise, the electorate could express its dissatisfaction at the ballot box, pointing also to shady dealings from the Casa Rosada. At the end of the day, nothing guarantees survival in the volatile world of Argentine politics.
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