# Milei’s Libertarian Experiment : Shock Therapy and the Economic Crossroads Ahead of Midterm Elections **Date de l'événement :** 23/10/2025 * Publié le 23/10/2025 ### Date 23/10/2025 ## Chapô **As Argentina approaches the legislative elections of October 26, 2025, Javier Milei’s government faces the most serious test of his “libertarian revolution.” In this analysis, economist Vera Chiodi examines how, after the electoral setback in Buenos Aires Province and amid a deep economic recession, the promises of prosperity born from Milei’s “freedom shock” are fading. Between extreme fiscal austerity, growing social tensions, and decisive support from the United States and the IMF, Argentina stands at a historic crossroads –** **one that will determine not only the country’s future but also the fate of the libertarian project itself.** ## Corps du texte As Argentina approaches the October 26, 2025, midterm legislative elections, the Milei government is still dealing with the setback of the last September 7th provincial elections in Buenos Aires Province (which represent about 40% of Argentina’s population). In a historic move, the province held its elections separately from the national ones. National legislative elections will be held on October 26, and current polls are not favorable to the government. It remains unclear whether the government’s poor performance in Buenos Aires will translate into national losses, as the government “nationalized” what was essentially a provincial defeat which further exacerbated its vulnerability. Bringing inflation down from 200% to 20% annually is no longer seen as its primary strength: economic activity has plummeted (even though the monthly economic activity estimator has shown some improvement, small and medium-sized enterprises are closing), unemployment (particularly in construction and public administration) and poverty (rising slowly again fastest among the young) have resurged, and the promised benefits of libertarian shock therapy remain elusive for most citizens.  The administration’s vigorous deregulation and austerity measures—including on public universities (a cornerstone of Argentina’s social contract), [the dismantling of state institutions](https://www.lemonde.fr/idees/article/2025/03/01/si-javier-milei-a-maintenu-sa-ligne-dure-sur-l-austerite-budgetaire-il-a-aussi-fait-preuve-d-un-certain-pragmatisme_6571257_3232.html?lmd_medium=al&lmd_campaign=envoye-par-appli&lmd_creation=ios&lmd_source=whatsapp) (particularly focused on gender equality, indigenous rights, and environmental protection),  the promotion of crypto-currencies implicated in fraud and other allegations of corruption related to the financing of the Disability Agency  have profoundly undermined public trust. What the government once declared as “The most difficult phase is behind us” now has lost all credibility. Recently, Donald Trump starkly contrasted this optimism, asserting that “Argentina is fighting for its life, fighting to survive—they are dying!”—a statement that underscores the severity of the current crisis, often associated with a “Financial Vietnam”.  The Rise of the New Right ------------------------- The global political landscape has witnessed the ascent of a “new right,” characterized by disruptive rhetoric and a radical departure from traditional conservative or liberal paradigms. In Argentina, this phenomenon culminated in [the election of “the outsider” Javier Milei](http://www.iheal.univ-paris3.fr/fr/edito_archive/202311), whose libertarian platform promised a wholesale dismantling of the state, deregulation, and a cultural battle against, among other concepts, what he terms the “caste” of political elites: taken together, this had a direct appeal to disaffected middle and lower classes.  Furthermore, Milei’s rise reflects broader dissatisfaction with macroeconomic instability, inflation, and perceived corruption. His economic program is defined by its ambition: a radical revision of Argentina’s monetary, fiscal, and labor institutions. His government has pursued aggressive fiscal consolidation—cutting public works, subsidies (apart from the lowest-income groups, whose financial support was multiplied by three via two specific initiatives), and state employment—while implementing a sharp devaluation of the peso and negative real interest rates. Sustainability and the Pendulum of Argentine Politics ----------------------------------------------------- The central question is whether such a radical program can endure. Argentina’s history suggests a pendulum swing between interventionism and liberalization. Now, recession is justified as a path to prosperity: framing this downturn as a necessary “income policy” to break inflationary inertia. Argentina has both recently received exceptional financial support from the International Monetary Fund in April 2025, and from the United States’ treasury almost on the eve of the upcoming elections when the economic situation had been deteriorating severely, with “black days” —marked by extreme market volatility— from a financial perspective regarding two aspects.  First, The Central Bank’s dollar reserves, as it was forced to sell dollars to sustain the exchange rate and prevent, at all costs, a devaluation—given that Milei’s policy relies on maintaining an artificially appreciated exchange rate. This occurred even just after the recent elimination of export taxes on grains—a measure to attract foreign exchange liquidities— that was exploited by a handful of dominant firms (3 out of them control over 70% of Argentina’s agro-exports). These corporations obtained extraordinary profits, while small and medium producers were marginalized, and the state lost critical fiscal revenue. This episode is not an anomaly but was a historical constant: since the 1930s, the agro-export sector has secured state support during downturns (through price stabilization boards) and resisted redistribution during booms (through protests against export taxes). While the agro-export model has long been associated with a rentier culture, this link has significantly weakened since the early 21st century, as technological investments have surged to unprecedented levels compared to previous decades.  Second, the deterioration in sovereign bond markets, as investors holding argentine assets anticipated that if international reserves were depleted to sustain electoral objectives and the Central Bank’s dollar position weakened, sovereign risk would rise sharply, undermining the government’s ability to meet its external obligations in early 2025. The response from the U.S. Treasury Secretary was unprecedented: a commitment to “do whatever it takes” to intervene in the currency and debt markets.  From U.S. policymakers’ perspective, support Milei’s administration is key. Among other aspects, Argentina and the region are strategically relevant: Mexico, Brazil, and Chile are currently led by governments perceived as less aligned with U.S. interests, and electoral campaigns are underway in several countries. A victory for Milei would signal a pro-U.S. orientation, whereas his defeat could open the door to a closer alignment with China.  As suspected, political sustainability is crucial. Milei’s economic strategy requires profound labor (including the extension of probationary periods and the simplification of dismissal procedures, aiming to reduce the power of unions and increase flexibility) and tax reforms. To achieve this, the government must secure congressional approval and build a governing coalition, whether through alliances with non-Peronist or anti-Kirchnerist forces. These actors could either become relatively stable partners or, alternatively, abstain or cast blank votes, indirectly strengthening the stable opposition. **Licence :** `#CC-BY-ND (Attribution, Pas de modification)` ### Thématique `#Démocratie` **Langue :** `#Anglais` --- ### Navigation pour IA - [Index de tous les contenus](https://conference.sciencespo.fr/llms.txt) - [Plan du site (Sitemap)](https://conference.sciencespo.fr/sitemap.xml) - [Retour à l'accueil](https://conference.sciencespo.fr/)