Milei’s Triumph

National Review Online

Tuesday, October 28, 2025

 

The impressive showing by Javier Milei’s LLA in Argentina’s midterm elections is a refreshing reminder that the country’s eccentric “anarcho-capitalist” president has not lost his ability to surprise. The LLA won just under 41 percent of the vote, some six percentage points above (diminished) expectations and far ahead of Milei’s principal opposition, the Peronist Fuerza Patria, which only scored 23–24 percent. Milei will have a substantial base of support in the legislature. something he has lacked up until now — and in the nick of time.

 

Much of what Milei has achieved has been through the exercise of emergency powers. These have now expired and, depending on whether recent legislation survives, could be difficult to repeat on the same scale. This will now matter less as Milei will have enough support in congress to buttress his veto power, although passing legislation will depend on partnerships with other center-right parties — not Milei’s greatest strength.

 

Milei has promised that his reforms will continue, as they should, and the voters have given him valuable backing to persevere with a task that will take time and will frequently hurt. Repairing the damage inflicted by decades of misgovernment is hard. Nevertheless, in his first two years in office, Milei has headed off hyperinflation (monthly inflation was accelerating past 12 percent as he took office and has now fallen to around 2 percent) and restored fiscal discipline to a country infamous for having none. In 2024, Argentina recorded its first budget surplus in a decade. The price was a surge in the poverty rate, but that has now ebbed to 32 percent, lower than the 42 percent at which it stood when Milei took office, but still a very high number, as is 2 percent monthly inflation. He will need better figures to keep alive hopes that his medicine, which has also included sweeping deregulation, will lead to a cure.

 

Economic growth has picked up, reaching an annualized 6.3 percent in the second quarter (GDP fell by 1.7 percent last year). The pace is still uneven, but a brighter political picture ought to encourage investment and reinforce the foundations for more soundly based development than Argentina, which, with its abundant resources, has the potential to rejoin the ranks of the wealthy nations, has known for a long time. The country’s benchmark stock index was up about 20 percent on Monday.

 

For all that, it needs to be remembered that LLA’s strong result was a surprise, a fact that contains a warning. There had been clear signs this summer that Argentines were wearying of the trudge to recovery. Their mood was not improved by allegations of scandal within the administration, common enough in Argentina, but exactly the sort of malfeasance that Milei the outsider was meant to end. It did not help, to say the least, that among those said to be involved were Milei’s sister, in many respects the second-most-powerful person in the administration.

 

This contributed to a strong showing in September by the Peronists in local elections in Buenos Aires province, a traditional stronghold (although not on Sunday, interestingly) and home to around 40 percent of the electorate. That in turn led to a run on the Argentine peso, given extra impetus by the widespread (and understandable) view that it is overvalued. For all his belief in markets, Milei knew that a dramatic fall in the peso risked reviving inflation, the most important of all the benchmarks of his success. He could not risk that ahead of the midterms. Thus his administration has never allowed the peso’s price to be set in the open marketplace, most recently replacing a (too) gradual depreciation with a “dirty float” under which it was meant to trade within certain, widening bands.

 

The problem was that, despite all the greenbacks stashed away in the country, the Argentinian government itself had little in the way of dollars to use to prop up its currency when it neared the band. The U.S. Treasury stepped in, buying pesos in the market and arranging a $20 billion swap line with Argentina’s central bank. In practice, this means lending Argentina up to 20 billion badly needed greenbacks. It also talked about raising $20 billion in private finance. A pre-election peso rout could have sunk the LLA.

 

This was a bold but — America Firsters, please note — far from altruistic move by Treasury Secretary Bessent. A financial crisis in Argentina might have sparked panic beyond its borders. Moreover, if it had handed victory to the Peronists, China, which has already been taking a keen interest in Argentina, its immense resources, and its location in the Western Hemisphere, would have pounced. Keeping such a crisis at bay means that Milei, a fierce defender of Western values, who has aligned Argentina closely with the U.S., will be able to continue with reforms that, if successful, will mean a major geopolitical win for the U.S.

 

But merely keeping a crisis at bay will not be enough. Sunday’s result will probably revive calls for the “dollarization” of Argentina. That is a debate for another day, but for now, Milei will have to focus on introducing the peso to the free market without a chaperone, no easy task, but one best undertaken with the political wind behind his sails.