President Javier Milei's government goes to the polls tomorrow seeking the backing of voters at its worst moment. The lacklustre midweek campaign closing ceremony is symptomatic of the disorder reigning within the ruling La Libertad Avanza party.
What might the consequences be? The results of the election this Sunday, September 7, will be watched not only by the people of Buenos Aires Province, nor Argentines across the country – it will also be closely watched by the markets and all the country's political actors.
If Libertad Avanza loses by a wide margin, it could trigger a deepening of the political crisis facing the government and prompt the emergence of a new presidential candidate: Buenos Aires Province Governor Axel Kicillof.
If, on the other hand, the government springs a surprise, it will have significant breathing space to recover from its current crises and chances to try to emerge from the total weakness it has been mired in since the leak of audio recordings featuring Diego Spagnuolo, the former head of the ANDIS national disability agency who exposed a corruption scandal.
Paradoxically, a good result for the libertarians would seem to give Kirchnerism and its La Cámpora youth wing a better chance of settling their own internal differences with the governor of Buenos Aires Province. Both former president Cristina Fernández de Kirchner and President Milei are pitted against each other, but they also have common cause against Kicillof, who has everything to gain and everything to lose at the same time.
In politics or in life, not all moments are equal. There are moments that concentrate variables and tensions and where the future is at stake in a single move. If you let it slip away, it will not return. It is a concept that reminds us that time is not only quantity, but also quality – it is what distinguishes the strategist from the improviser.
There is a lot at stake on Sunday, probably much more than has ever been at stake in a provincial legislative election. Why? There are multiple factors that combine to make this election the perfect storm that could lead to a new political situation.
First, the economic dimension. The government's economic plan has many shortcomings – basically, it involves keeping the dollar cheap in order to control inflation based on debt and high interest rates. This maintains stability as long as the country's creditors have confidence that the government will be able to pay them and continue lending, added to the fact that Argentine capital continues to be invested in the local market without going abroad, into safety deposit boxes or under mattresses. When we talk about "the markets," we are specifically talking about all economic actors.
The cheap dollar and high interest rates kill productive activity. The loans that companies need and the consumption of durable goods have increasingly high interest rates, and because of this, the economy comes to a standstill. In addition, the cheap dollar and the opening up of imports mean that many local companies cannot compete and are forced to close.
This unrest has caused the government's popularity to begin to suffer. As a result, the political front opened up and the opposition began to vote for anti-chainsaw laws in Congress to protect the most vulnerable sectors.
The markets have begun to lose faith in the ruling party, given they see it being defeated in Congress time and time again. The Milei government is now unable to renew its public debt in full, only two-thirds in each round of debt renewal. This has led to an increase in statutory reserve requirements – i.e., the money that banks are required to keep in reserve, generating losses across the board.
The state pays higher interest rates and increases its deficit, banks run out of money to lend, while companies and individuals take on debt at higher interest rates and are unable to pay their debts, which grow day-by-day. A system where everyone loses is unsustainable. It is only a desperate bridge to get to the elections, shuffle the deck and deal again, depending on the outcome.
The latest development on this front is a further loss of credibility for the economic team led by Luis ‘Toto’ Caputo, who ordered the Treasury to intervene by selling dollars to contain the price of the dollar before it reaches the upper limit of the band. The Milei government had made a commitment to the International Monetary Fund (IMF) that the Central Bank would not sell dollars before the dollar reached 1,400 pesos.
It is also a political and theoretical capitulation. Broadly speaking, Milei argues that the market should regulate itself without state interference, but there is increasing state intervention to ensure that market figures favour an artificial state of the economy and thus enable them to aspire to win elections. This is precisely what Milei criticised as the cause of the problem, which shows that rather than pragmatism, there is desperation.
In this context, the corruption case involving disability benefits that directly implicates the head of state’s sister, Presidential Chief-of-Staff Karina Milei, raises a very serious question. Could Milei govern without his sister if she were to fall? According to biographers and former friends who know him well, this would not be possible – the President is totally dependent on his sister. This leaves the government nervous about this election and makes it appear disoriented.
Events in recent days have highlighted this. First, a statement to a French media outlet in which Milei said that Kirchnerism was going to try to kill him. "Their strategy [Kirchnerism's] involves trying to destroy the economic programme from within Congress, staging violent demonstrations in the streets or trying to kill me or, if necessary, inventing all kinds of aberrations, inventing lies to try to discredit me," he said in an interview with the son of former French president Nicolas Sarkozy.
Milei then left for the United States in the midst of the campaign and crisis over the leaked audio recordings. Initially, he was going to travel to Las Vegas to attend a show by his ex-partner Fatima Florez, something that caused a stir on social media. Finally, he announced that he would only travel to Los Angeles, where he will hold meetings with business leaders. It is hard to believe that he would travel at a time when an election that is very important for his future is taking place. These are constant missteps that damage the presidential image.
On the opposition side, the election could bring order to a fierce internal struggle that is unfolding within Peronism. Kicillof is challenging Cristina Fernández de Kirchner for leadership who – despite being under house arrest in Constitución – remains a powerful figure within the party.
One of their most visible disputes was Kicillof's questioning of the decision to split the Buenos Aires elections from the national elections, with the provincial elections to be held next Sunday. If Peronism achieves a significant result and defeats La Libertad Avanza by more than five points, to give a figure mentioned by some analysts, the governor would prove that he was right to split the elections and that he managed to lead Peronism to its first significant victory after the defeat in 2023.
If the governor defeats Cristina in this primary, he will become a presidential contender in Argentina. This requires Kicillof to demonstrate autonomy from his former political boss and show that he is broad-minded enough to form a broad coalition to unite the opposition – and that he is not a Kirchnerite.
Could this be the reason why La Cámpora is not campaigning in the province? Do they understand that a resounding victory for Peronism is also a defeat for Cristina? These are questions that must raise suspicions in the governor's mind.
Returning to the government, if a presidential candidate does indeed emerge, the government's crisis will deepen further because Milei's support is largely based on the fact that there is no viable alternative to power at the moment. He has no-one to lose to. If this changes, he is likely to face social protest, a judicial front and, as a by-product of this, economic turmoil.
A technical tie, as Milei announced at the libertarian campaign closing event in Moreno, would mean defeat for Kicillof and a bit of breathing room for the government, which has already predicted that September is its lowest point and that October, with the national elections, could see growth.
For now, there may also be a surprise in abstention, null votes or blank votes. These forms of political disaffection, or even protest against the entire system, could continue to hit the government, but they would probably hit Peronism harder. It would understand that even at the worst moment for the ruling party, Peronism cannot generate enough confidence for people to vote for it.
Political strategist Jaime Durán Barba, known as "the president maker," said that the elections in Buenos Aires Province could be a "supernova" for the political system.
A supernova, in astrophysical terms, is the final explosion of a massive star when it exhausts its nuclear fuel. Until that moment, the star maintains a balance between the gravity that tends to collapse it and the pressure of the nuclear reactions that inflate it. When it can no longer sustain that struggle, the core collapses and a brutal energy is released that expels the outer layers into space.
This explosion marks the end of the star's life as such and, at the same time, the beginning of something else: the heavy materials that are formed (iron, gold, uranium) are dispersed and become part of new stars, planets, even life like ours. It is destruction and creation at the same time.
In other words, on Sunday, the government, the opposition, or perhaps both, may enter into a crisis. This will give rise to the birth of a new moment in Argentine politics.
There is a lot at stake next Sunday, which is why we are committed to showing you all the variables. Power, however, lies with the citizens, the ones who ultimately decide.
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