Key topics
- Milei’s endorsement of Libra crypto left thousands of investors in ruin.
- Political fallout intensifies with attacks from both the left and opposition.
- Despite setbacks, Milei’s economic policies still show positive results for Argentina.
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By Juan Pablo Spinetto ___STEADY_PAYWALL___
Argentina’s president Javier Milei definitely did something very dumb: His reckless support for a dubious crypto coin called Libra on Friday night led to thousands of retail investors going bust once the unregulated token unsurprisingly collapsed within hours. Duh, what was he thinking?!
At best, this shows him unprepared and distracted from more important priorities, including trying to seal a much-needed agreement with the International Monetary Fund. As someone constantly boasting about his economic mastery and who embraced the singularities of the crypto world, he now faces the humiliation of admitting he didn’t totally understand what he was doing. At worst, the case brings up legitimate questions about what kind of deals are done in the name of the world’s most famous Liberal Libertarian leader.
Never mind the potential legal ramifications: The case carries some intriguing political consequences and several important lessons. All modern governments eventually face high-stakes situations that tend to define their presidency. That’s even more so for someone playing beyond the limits of traditional politics like Milei, with little executive experience and an explosive personality: How he reacts to the uproar in the coming days and weeks and keeps his anti-system narrative alive and voters engaged will be crucial for his fate.
History suggests different outcomes: Milei’s predecessor Alberto Fernández saw his presidency effectively end with the publication of photos of him at his partner’s birthday party during the strictest phase of the Covid-19 lockdown while he was forcing Argentines to avoid any socialization. In Mexico, Enrique Peña Nieto never recovered from a $7 million mansion scandal and the horrific disappearance of 43 students, both occurring in 2014. A much more skillful politician, Andrés Manuel López Obrador managed instead to navigate unscathed his own series of damaging accusations — including videos of his brothers secretly taking cash and allegations of campaign links with narcotraffickers.
Despite his not-fully convincing explanations and amateurish communication, I suspect Milei will be able to emerge from the most difficult hurdle of his first 14 months in office without a significant impact to his popularity. Argentines picked him in a desperate attempt to avoid hyperinflation and reverse the collapse of the economy — and that’s just what he’s doing. Inflation in January slowed to the lowest level since 2020, growth is expected to reach 5% this year and poverty indicators are declining dramatically. The market reaction, with the local stock exchange recovering Monday’s losses and the peso unmuted, points in the same direction.
But nothing will be the same for Milei now because his aura of invincibility, at times combined with insufferable arrogance, has burst. The president should take on board a few valuable lessons from the episode: For a start, it’s a timely reminder that he’s still in a minority government with little formal support and far away from having won the tough game he’s playing. He’s likely to suffer delays to his legislative agenda in the short term. Building up alliances take time, but the government needs to speed up the process of achieving a more solid institutional framework, probably through an agreement with the center-right group of former President Mauricio Macri, who is now in a stronger position to set conditions.
Make no mistake: The virulent media attacks Milei has received since Friday are partly driven by the looming October midterm election, where half the lower house of congress and a third of the Senate will be renewed. Up to now, the government was expected to win the vote comfortably, possibly even putting Milei on course for reelection. But the episode introduces uncertainty: Milei’s unforced error reinvigorated the Peronist and leftwing opposition and gave it the opportunity to wear down a president who enjoyed a 55% positive rating before the scandal.
The political reaction has gifted us some memorable images worthy of including in any international contest for political cynicism: Honors go to former president Cristina Fernández de Kirchner — convicted of defrauding the state and given a six-year prison sentence in December 2022 — who called Milei “truly incompetent” (her “from Hayek you turned Ponzi” dig at him was funny, though). Her Peronist ally-turned-nemesis Férnandez, charged on Monday with beating his First Lady while in office, said the judge ruled against him to cover Milei’s mess. And of course Venezuelan dictator Nicolás Maduro didn’t want to miss the chance to chime in. Magical realism stuff.
These are enemies Milei should rejoice in having even if they push for an unlikely impeachment. More worrying is the impact on presidential credibility and the day-to-day operation of the government. It’s not enough for Argentina to lower inflation and spark growth after more than a decade of stagnation. It’s also crucial to prove that this change is sustainable and shielded from the country’s traditional vicissitudes — including the tendency of opposition politicians to sink the boat in hopes of a shot at regaining power. The widespread rejoicing over Milei’s faux pas exposes the merciless nature of Argentine politics.
Milei was already reeling from a vulgar speech in Davos last month that triggered domestic pushback. Hs constant personnel changes and the fear he imposes on officials have left him surrounded by loyalists who don’t give him honest advice. Add a busy agenda of international trips (he travels to Washington again tonight) and the risk of repeating these blunders is real.
Asking Milei to change his style would be futile because — as with other populists — that’s what made him what he is. He may also feel emboldened by the chaos strategy that his friend Donald Trump is leading. But the sooner Milei realizes that his presidency can combine a transformational, shrink-the-state agenda with grown-up policies that avoid improvisation, the better. Otherwise, the electoral test in October promises to be an uphill battle.
Read also:
- đź”’ Lessons from Argentina: Javier Milei at Davos
- 🔒 FT: Javier Milei’s next economic mission: affordable air fryers
- 🔒 The Economist – Argentia’s Milei: “My contempt for the state is infinite.”
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