Javier Miliei's victory in congressional elections means his free-market reform agenda can continue, says guest poster Marcos Falcone, and even accelerate ...
A Resounding Win for Milei’s Reform Agenda in Argentina
by Marcos Falcone
Argentine President Javier Milei won a clear victory on Sunday (October 26) over the opposition in the midterm elections, ensuring that his ambitious reform agenda will continue. With almost 99 percent of votes counted, Milei’s coalition, La Libertad Avanza (LLA), obtained 40.7 percent of the national vote, whereas the Peronists, who competed under the name of Fuerza Patria, received 31.7 percent. LLA carried 15 of 24 provinces.
Milei’s victory is significant for two reasons. First, he won by a large margin. Though most polls favored LLA, some still favored the Peronists. Additionally, virtually all polls indicated that Milei would lose the province of Buenos Aires, Peronism’s stronghold, which he ultimately won by a margin of half a percentage point. In fact, the province of Buenos Aires had been a source of trouble for Milei in September, when his coalition lost a state election 47 percent to 34 percent against the Peronists. This triggered a wave of pessimism in the markets, as well as a run against the peso, which should subside for now.
Second, Milei’s victory will enable him to withstand opposition pressure in Congress and, particularly, to uphold his vetoes of bills that threaten budget stability or of any bills that go against his reform agenda. The LLA coalition (which includes his ally PRO, the party of former President Mauricio Macri) is set to obtain107 seats in the House, or about 42 percent of all seats. This is a much higher figure than the 86 seats (or 34 percent) that the government had set as a goal. Under Argentine law, vetoes can be overridden by Congress only with a majority of over two-thirds. At least until the next election in two years, the opposition will not be able to reach such a figure. In practice, the Peronists’ power has been significantly reduced.
Last night’s results, while not giving Milei a majority in Congress, will put his party and allies much closer to one. Besides being only 20 votes short of a majority in the House, Milei and his allies will now have 24 senators and thus control one-third of the Senate—exactly the same proportion as the Peronists. For Milei, this is unexpectedly good news. But for the Peronists, who held an absolute majority in the Senate from 1985 to 2021 and a near-majority until last night, this is catastrophic news.
Because of yesterday’s results, Milei will be in a stronger position to negotiate with Congress in implementing tax and labour reform, which he announced two weeks before the election. Although the opposition has recently tried to overturn some of his vetoes, there are still a few precedents of collaboration between the Milei government and non-Milei factions. Ley Bases, an omnibus bill named after classical liberal Juan Bautista Alberdi’s most famous book and passed in 2024, is one of them. The government has recently signaled it wants to further deregulate the economy through a second version of Ley Bases. Political compromise by some segments of the opposition is more probable today than before yesterday’s election, given the strong mandate Milei received. This is the case, for example, of the centrist Provincias Unidas, a party that obtained 7 percent of the vote on Sunday.
Finally, Sunday’s results also give Milei a chance to advance a broader reform agenda that includes dollarisation, trade liberalisation, the end of remaining capital controls, and the privatisation of state-owned enterprises, among other measures. Those pro-growth reforms will only strengthen Milei’s now improved position to be reelected in 2027 and further solidify his market revolution.
Argentine President Javier Milei won a clear victory on Sunday (October 26) over the opposition in the midterm elections, ensuring that his ambitious reform agenda will continue. With almost 99 percent of votes counted, Milei’s coalition, La Libertad Avanza (LLA), obtained 40.7 percent of the national vote, whereas the Peronists, who competed under the name of Fuerza Patria, received 31.7 percent. LLA carried 15 of 24 provinces.
Milei’s victory is significant for two reasons. First, he won by a large margin. Though most polls favored LLA, some still favored the Peronists. Additionally, virtually all polls indicated that Milei would lose the province of Buenos Aires, Peronism’s stronghold, which he ultimately won by a margin of half a percentage point. In fact, the province of Buenos Aires had been a source of trouble for Milei in September, when his coalition lost a state election 47 percent to 34 percent against the Peronists. This triggered a wave of pessimism in the markets, as well as a run against the peso, which should subside for now.
Second, Milei’s victory will enable him to withstand opposition pressure in Congress and, particularly, to uphold his vetoes of bills that threaten budget stability or of any bills that go against his reform agenda. The LLA coalition (which includes his ally PRO, the party of former President Mauricio Macri) is set to obtain107 seats in the House, or about 42 percent of all seats. This is a much higher figure than the 86 seats (or 34 percent) that the government had set as a goal. Under Argentine law, vetoes can be overridden by Congress only with a majority of over two-thirds. At least until the next election in two years, the opposition will not be able to reach such a figure. In practice, the Peronists’ power has been significantly reduced.
Last night’s results, while not giving Milei a majority in Congress, will put his party and allies much closer to one. Besides being only 20 votes short of a majority in the House, Milei and his allies will now have 24 senators and thus control one-third of the Senate—exactly the same proportion as the Peronists. For Milei, this is unexpectedly good news. But for the Peronists, who held an absolute majority in the Senate from 1985 to 2021 and a near-majority until last night, this is catastrophic news.
Because of yesterday’s results, Milei will be in a stronger position to negotiate with Congress in implementing tax and labour reform, which he announced two weeks before the election. Although the opposition has recently tried to overturn some of his vetoes, there are still a few precedents of collaboration between the Milei government and non-Milei factions. Ley Bases, an omnibus bill named after classical liberal Juan Bautista Alberdi’s most famous book and passed in 2024, is one of them. The government has recently signaled it wants to further deregulate the economy through a second version of Ley Bases. Political compromise by some segments of the opposition is more probable today than before yesterday’s election, given the strong mandate Milei received. This is the case, for example, of the centrist Provincias Unidas, a party that obtained 7 percent of the vote on Sunday.
Finally, Sunday’s results also give Milei a chance to advance a broader reform agenda that includes dollarisation, trade liberalisation, the end of remaining capital controls, and the privatisation of state-owned enterprises, among other measures. Those pro-growth reforms will only strengthen Milei’s now improved position to be reelected in 2027 and further solidify his market revolution.
* * * *
Marcos Falcone is a policy analyst focusing on Latin America at the Cato Institute’s Center for Global Liberty and Prosperity. His post first appeared at the Cato Institute blog.
4 comments:
Milei as sham
I was very surprised when I read this on Lew Rockwell's Political Theatre blog. I do not know enough about Economics to know if the charges against Milei are valid.
I also read Dan Mitchell's International Liberty blog, and nothing like the above appears. I certainly hope Mr Mitchell is the more correct status
@Peter Stevens: Thanks for the links.
Yes, it's right to be cautious. But Lew Rockwell's commentator, a Mr Ammous (a Bitcoin braggart unhappy that Bitcoin hasn't replaced the peso) demands an immediate fix, apparently ignorant of the many decades of economic and institutional destruction that have got Argentina to this place. As Mitchell says, "Fixing 70-plus years of bad policy doesn’t happen overnight!"
Wow! He's hanging in there. It was raining so turnout was slightly lower than usual, but Milei's people did well.
There may be trouble on the horizon. Two problems. The first is that the voter turnout of young people continues its collapse. It was lower than before (16 - 17 yr olds was down from 65% in 2023 to under 30% this time while 18 - 24 yrs fell from 68% to 51%). Civic engagement amongst the young is free falling. This was likely to have been affected by weather, long waits at some polling stations (2 hours in some places), transport strikes, growing poverty and Milei's own campaign ("Don't waste time, stay home and grille"- President Millei on X) and his public comments ("Midterms are irrelevant" and "Congress obstructs change").
He's an unusual politician for sure. I like to think that his commentary was strategic and he was trying to discourage his opponents' voters from being motivated enough to get out to vote. If so, then it worked out very well for him. Turnout was the lowest since 1983. All the same this ended up in his favour. His team won really well this time.
An issue to watch is that everywhere in the West civic engagement is in decline. The general sentiment appears to be loss of faith in the governments and in the institutions. The trouble is that even if it remains possible to keep sufficient support motivated to win elections the young are increasingly disinterested. The young are the future. If they do not see the value in engaging because they do not believe in the system, then what is the alternative they'll turn to? You just have to expect find something they will. I hope it isn't something bad or awful.
The second problem is the movement of Argentina's gold bullion out of the country. Argentina is supposed to own 62 tonnes in total, some of which is still in Argentina and some is held internationally. In 2024 there was 3 tonnes of gold sent to London as collateral for loans and to "produce a return" implying that it will no longer be free and clear but pledged to some instrument or other (turned into paper). By now it will sure to have been rehypothecated. They say that if you don't hold your gold physical, then you don't own it. Gold has no counterparty risk when the owner has it physically in his possession. If he does not have it, then there is a counterparty risk. In these times of international financial and political instability and volatility this has to be troubling for Argentina.
Did you notice how silver went into backwardation a little while back? Did you notice how some really big market movers throughout Europe and the UK did their best to collapse the prices of precious metals before end of month? It's worked for them. But why did they dump so many shorts on the market at a time of low liquidity (when the big exchanges were closed) and all at once (guaranteeing they'd not get the best prices for them- law of supply and demand)? The analysts are saying too many people were standing for delivery and that this move was to wipe them out since the LBMA was running lean on the physical. If that's right, then Argentina's gold is not in a safe location. Moving it was a problem.
Argentina is in trouble anyway. There is pain ahead for them. Can President Milei turn his ship? Ought he to do it? Will that make things get worse? How long will it take for things to improve? Does anyone really know? One thing is certain, in the not too distant future the answers will be obvious.
I so wish the very best for the people of Argentina. I hope President Milei can taste success making a better future for them.
Henry J
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