The Irish Times view on Argentina: Javier Milei’s chainsaw breaks down

Elected president of Argentina 21 months ago in a landslide vote, the self-styled anarcho-capitalist Javier Milei has since then implemented his “chainsaw” attack on the state and its ruling “caste” with swingeing austerity cuts and an external policy of dollarising its trade and finances. He is now becoming unstuck politically, having lost provincial elections in Buenos Aires amid a corruption scandal. Market fears about his diminishing political support then created a financial crisis which has brought the Trump administration to the rescue of its ideological ally. But that will come at a price.

Milei’s initial success in tackling hyper-inflation by radical budget cuts was followed by a systematic attack on the state’s role in Argentinian society through emergency decrees and brutal confrontations with its administrative and legal elites. He enjoyed initial legitimacy by targeting entrenched corruption among his Peronist predecessors. But lacking majorities in the congress and senate, he has failed to find the political allies he now needs. His perpetual libertarian theatrics have worn thinner the more poverty and unemployment deepen. A bribery scandal involving his sister, who is also his chief of staff, proved electorally lethal, setting the scene for more defeats in mid-term federal elections next month.

An external financial crisis now compounds Milei’s difficulties. He has insisted on keeping the peso pegged to the US dollar to keep inflation down. But that has inhibited economic recovery. A run on the currency after the provincial elections raises the spectre of yet another intervention by the International Monetary Fund, which is already exposed to Argentinian debt.

The Trump administration has now promised financial and political support. Trump sees Milei as a key ally in the region, exemplifying the methods driving his own programme of regime change. That would make Argentina a pawn in a wider regional and ideological battle but is unlikely to solve Milei’s domestic problems. They would become even more difficult if the US insists the peso be floated as the price of its support.