Perhaps time to let readers into a secret – these midterms are overrated. Simulations of the future distribution of Congress seats give various outcomes but they can be broadly simplified as follows – the best-case scenarios for President Javier Milei’s La Libertad Avanza (LLA) would give the LLA plus the PRO centre-right and other allies around 110 seats as against about 90 for Kirchnerism and the left with 50-plus in the middle whereas the worst-case scenarios would give the 110 seats to Kirchnerism and the left with some 90 for LLA/PRO etc. with again over 50 for the rest. We are told that the choice is “libertad or kirchnerismo” but neither libertarians nor Kirchnerism will be able to do very much with the 110 of the 257 seats accruing to whoever wins – Argentina’s middle ground has far less seats than Brazil’s "centrão" but could carry equivalent clout.
October 27 will thus not be seeing any end of the world or new dawn so from that perspective these midterms do not really matter, except that they do matter for Milei – after delivering on a continued fiscal surplus and bringing monthly inflation down to a couple of points in the first half of his term, he cannot be a one-trick pony but must advance with the labour, pension, tax and other structural reforms in the remaining half or else the one-trick pony becomes a lame duck.
Neither the markets nor the media seem to perceive this picture of more of the same emerging from electoral number-crunching with constant panic attacks. The implosion of the Milei administration is not incompatible with dozens of LLA deputies entering the new Congress even with presidential approval ratings down to 36 percent. Nor does the cacophony of campaign advertising offer much alternative – while LLA candidates all repeat the same message like robots, it is sometimes impossible to pick up the unknown names and meaningless labels of the others with even the best will.
The panoply of lists offers the worst of all worlds thanks to the new Boleta Única Papel (BUP) single paper ballot, along with suspension of the PASO primaries with their filter of the 1.5 percent threshold. Suspending PASO has much to recommend it and the single ballot is a welcome innovation but if two wrongs never make a right, two rights can make a wrong – doing both in the same year has been a recipe for disaster.
Yet no denying that the libertarian administration is on the ropes with the meltdown of José Luis Espert, its top candidate in the country’s most populous province, the epicentre of the crisis. This has undoubtedly cost the government many votes (not least in Buenos Aires Province where LLA-PRO stand to undershoot last month’s dismal performance, incredibly enough), not to mention the costly mess of reprinting 14 million ballots to replace Espert with Diego Santilli yet this too could be overrated. A cynic might even say that if the best the opposition can find is a shady campaign contribution of US$200,000 from half a decade ago, this would seem a pretty clean administration by Argentine standards.
Yet corruption scandals are arbitrary in their impact. The ‘$LIBRA’ cryptocurrency fraud on Saint Valentine’s Day was a scandal in real time extending to Milei himself yet fell short of gutting the administration in the same way as Espert’s drug-money contributions – made to sound like a red-hot exposé by many media but its essential details were already published by this newspaper in May 2021, when reporting why deputy Ricardo López Murphy ditched his alliance with Espert. The difference between the two scandals in all probability lies in the economic cycle – the $LIBRA scam occurred in a first quarter of sturdy growth while in this second half of the year each month has been less than the one before it since July while almost two-thirds of Argentines cannot stretch their earnings to the end of the month.
Rather than the Espert scandal, the real root of political malaise and market mayhem alike lies in monetary rather than fiscal policy. Austerity was already a hard sell but monetarism was too much. An overvalued peso was an overvalued policy, sacrificing Central Bank reserves, the trade balance, credit and thus growth for an unsustainable control of the dollar with creditor scepticism and country risk turning into a vicious circle. Even promises of a US$20-billion currency swap and guaranteed bond purchases from the Donald Trump administration (contingent on an electoral result increasingly in doubt) only turned the corner for a couple of days last month, while this month’s federal shutdown in Washington makes any largesse for the other end of the hemisphere seem surrealistic.
Beyond these economic roots the political errors should not be underestimated and even without these Milei has been the outsider on the inside for too long, losing his novelty value and also his aura of infallibility following last month’s catastrophic defeat in Buenos Aires Province. That nemesis of the “purple or nothing” strategy is only being confirmed by the negotiations with both the Trump administration and the International Monetary Fund (IMF) in Washington, which are prodding Milei to construct a broader political base for ambitious economic reforms.
Life imitates art – the final run-up to the midterms is starting to look like the ‘Panic Show’ with which Milei commenced his grotesque book launch in the Movistar Arena last Monday, oblivious to any irony. Talk about dancing on the deck of the Titanic. Perhaps Milei is so insensitive to the autistic because he is autistic himself.
If Harold Wilson said half a century ago in the Britain of the stiff upper lip that a week is a long time in politics, how much more the fortnight still lying between us and the midterms in today’s volatile Argentina? Next Saturday’s column will be the last chance to attempt some final conclusions before the veda curfew on the eve of voting.
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