BUENOS AIRES, Argentina —The party of Argentina’s libertarian President Javier Milei suffered a sweeping setback Sunday in Buenos Aires provincial elections that are viewed as a barometer for how the party will perform in congressional midterms and a key test for the embattled president. Milei’s recently formed libertarian party lagged with nearly 34% of the vote, with the majority of votes counted. Meanwhile, Peronism, the ideologically flexible populist movement that has held sway in Argentina for decades, lead polls with nearly 47% of the vote. The results were a significant blow to Milei, who has made radical changes in Argentina perpetually crisis-stricken economy. While the peso has stabilized from previously soaring inflation, harsh scarcity measures have been felt by much of the South American nation’s working class. Eyes were on the local election because the province is polarized between the political currents and seen as an indication of how the balance is tipping before congressional elections next month. “This result is a key data point to understand the social mood -- where the opposition stands, the state of Peronism and the level of support for the government in Argentina’s most important electoral district,” said Juan Cruz Diaz, the head of Cefeidas Group, a consultancy in Buenos Aires. “While not the main national election in October, it is nonetheless a wake-up call for the government, and how it reacts will be crucial to understanding the evolving political map.” The leader of the Peronism movement, former President Cristina Fernandez de Kirchner, was quick to gloat on social media and take digs at the loose-lipped leader, who has long been compared with President Donald Trump. “Did you see that Milei?” she wrote on the social media platform X, railing on his economic cuts and controversial statements the president has made. “Get out of your bubble, brother things are getting heavy.” The test comes came at a tough time for Milei. A bribery scandal has rocked the nation, entangling Milei’s politically powerful sister and undercutting the president’s image as a political outsider pitted against the corrupt Peronist elite. Milei denies the allegations that his sister took kickbacks from pharmaceutical contracts. The opposition-dominated Congress has started to turn against Milei’s harsh cuts to social programs, overriding his veto on raising disability benefits and approving bills that boost scant funding for health care and universities. Adding to the pressure, Argentina’s economy is shrinking, consumer confidence is falling, unemployment is rising and interest rates are soaring to record highs as the government repeatedly intervenes in the currency market to prop up the peso and hold down inflation in hopes of placating cash-strapped voters. As a result, Milei hasn’t built up enough foreign currency reserves to assure global markets that he can make good on his promise to transform this nine-time serial defaulter into a normal country capable of servicing its debts. “Milei has a very strong ideology, and his vision is that the state has to have a minimal impact and investments have to come from the private sector. But that hasn’t materialized yet,” said Ana Iparraguirre, an Argentine political analyst and partner at Washington-based strategy firm GBAO. Sunday’s vote to elect 69 provincial lawmakers and councilors in dozens of municipalities will not change national policy, nor will it affect the national Congress that holds its midterm elections to renew half of the lower house and a third of the Senate in late October. But the election has offered foreign investors important clues about whether Milei’s party can gain enough seats in Congress to push through the president’s radical economic overhaul. Despite the headwinds, it was unclear how things were going to swing until results rolled in Sunday night. The president has maintained an important level of support by fulfilling his flagship campaign pledge to bring down Argentina’s sky-high inflation rate. And his rivals -- whose reckless spending helped deliver the crisis that he inherited -- are in disarray. Former President Fernandez, who pulled Peronism to the left during her 2007-2015 tenure and remains its most powerful leader, has been banned from politics for life and placed under house arrest over a corruption conviction. The party’s future leadership remains uncertain. The movement has struggled to articulate a clear political vision beyond opposition to Milei or economic policy beyond the same patchwork of price controls and cash handouts. Nonetheless, a sputtering economy and ballooning government corruption scandal has given a jolt of optimism to Peronists in the very place the movement was born in the 1940s. Isabel Debre, The Associated Press
