Milei: failure or shock therapy? Argentina's dilemma

Milei: failure or shock therapy? The figures dividing Argentina

The governor of Buenos Aires, Axel Kicillof, has passed his verdict: Javier Milei's model is failing. Argentina, mired in a recession that some compare to 2001, is watching draconian spending cuts and the chainsaw send poverty soaring while the president insists that austerity is the only way forward. But the data, as always, has two sides.

Inflation falls while the recession bites

It is true that inflation, which was running above 200% year-on-year when Milei took office, has eased. Some analysts point out that it has fallen significantly in recent months, and that the economy has begun to grow from a very low base. The social cost, however, has been brutal: millions of Argentines have fallen below the poverty line and consumption has collapsed. The idea that "kicking the freeloaders out of the state" would bring prosperity clashes with the reality that the state, however inefficient, supported part of a population now left to fend for itself.

Debt, dependence and the ghost of Menem

Argentina is not self-sufficient. It has natural resources, but lacks a competitive industrial base and must import everything from technology to basic inputs. The history of its recurring defaults —from the 2001 "megacanje"-era debt repudiation to the seizure of the frigate Libertad— shows that the country cannot live without external credit. Milei has chosen to align himself with the United States and the IMF, repeating the recipe of the 1990s under Carlos Menem: privatisation, deregulation and fiscal austerity. The difference is that the global context is no longer so benign and social patience is wearing thin.

The Trump factor and external pressure

Former president Donald Trump made it clear that if Milei lost the election, the United States would not be generous with Argentina. That threat, more than ideological allegiance, explains why part of the electorate opted for the outsider. The campaign painted an apocalyptic scenario: Milei or chaos. But chaos arrived with the chainsaw. The opposition, led by Kicillof, denounces the fact that the country is being sold off to the "Anglos" —this time in exchange for financing— while working-class neighbourhoods sink.

As far as the analysis goes, Argentina is torn between the need for austerity and the impossibility of bearing it. Milei insists his shock therapy is the only way out; his critics say history has already shown it does not work. Time —and the ballot box— will tell who was right.