Milei triumphs in Argentine midterm elections closely watched by Washington

Milei, a key ideological ally of U.S. President Donald Trump, said his party picked up 14 seats in the Senate and 64 in the lower house of Congress on Sunday, bolstering its count in the legislature enough to uphold presidential vetoes and block impeachment efforts.

At La Libertad Avanza headquarters late Sunday, a beaming Milei hailed the election sweep as a mandate to press forward with his spending cuts and introduce ambitious tax and labor reforms. The results also automatically position him as a candidate for reelection in 2027.

“The Argentine people have decided to leave behind 100 years of decadence,” Milei exulted as his supporters cheered. “Today we have passed the turning point. Today we begin the construction of a great Argentina.”

High stakes include $40 billion from the U.S.

Perhaps never has an Argentine legislative election generated so much interest in Washington and Wall Street.

Trump appeared to condition a $20 billion currency swap deal with Argentina's central bank and an additional $20 billion loan from private banks on a good showing for Milei in national midterms, threatening to rescind the assistance for the cash-strapped country in the event of a Peronist victory.

“If he wins we’re staying with him, and if he doesn’t win, we’re gone,” Trump said after welcoming Milei to the White House earlier this month.

Those contentious comments added to mounting pressure on Milei, who has scrambled to avert a currency crisis since the Peronist opposition won a landslide victory in Buenos Aires provincial polls last month.

Argentina’s bonds and currency nosedived as markets sensed that the public was losing patience with Milei’s reforms and that the midterm race would be tight.

To stem the run on the peso, Milei burned through billions of dollars in foreign exchange reserves to shore up the peso. In an extraordinary move, the U.S. Treasury then came to the rescue, selling dollars to help meet soaring demand for greenbacks and finalizing the credit line.

In the end, the Peronist alliance did very poorly, underscoring how weak the once-dominant movement has become in the Milei era, largely as a result of internal divisions. Markets were widely expected to rally on Monday.

“For foreign investors, this outcome is a relief because it shows that the Milei program can be sustainable,” said Marcelo J. García, the America’s director for the geopolitical risk consultancy Horizon Engage.

“It leaves the opposition weakened and fragmented, just as it was when Milei won the presidency in December 2023,” Garcia added.

The Peronist coalition has struggled to channel rising public anger with Milei's painful austerity measures into a new vision after delivering the economic shambles that the chain saw-wielding political outsider inherited in late 2023.

A changed electoral map

The results showed Milei’s young libertarian party gaining support across the country — including in some surprising corners that have long been under the sway of Peronism.

In the closely watched Buenos Aires province, a Peronist stronghold home to nearly 40% of the electorate, La Libertad Avanza eked out a razor-thin victory Sunday. Just last month, the Peronists beat Milei’s party there by a whopping 14 percentage points.

Axel Kicillof, governor of Buenos Aires province and the most influential elected official in the Peronist opposition, criticized Trump for putting his thumb on the scale.

He warned that the billions of dollars in financial aid from the U.S. Treasury and investment banks would do nothing to help ordinary Argentines squeezed by Milei's cuts to subsidies or forced out of business by a contracting economy.

“I want to make it clear that neither the U.S. government nor JP Morgan are charitable societies,” he said. "If they come to Argentina, it is for nothing other than to take a profit, to jeopardize our resources.”

With Milei's efforts to deregulate the economy and scrap tariffs winning him support from Argentina’s powerful agriculture sector, La Libertad Avanza also swept Santa Fe province, which dominates soybean production and processing, and the powerhouse farming province of Cordoba.

Despite his party's gains, experts caution that the irascible president still needs to court political allies to see through his agenda. Given the limited number of seats up for grabs in this election, it was mathematically impossible for Milei to secure a majority in either house.

“This victory is necessary, but not sufficient to maintain control of Congress,” said political consultant Sergio Berensztein. “The government must build a broad and effective coalition with like-minded forces."

Associated Press writers Almudena Calatrava and Débora Rey contributed to this report.