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The Chainsaw's Mandate

Javier Milei's Midterm Triumph Secures His Radical Economic Experiment

Monday, 27 October 2025 11:10

Abstract

Argentina’s libertarian President, Javier Milei, secured a decisive victory in the October 2025 legislative midterm elections, a result widely interpreted as a crucial vote of confidence in his aggressive austerity programme. The win significantly bolsters the legislative power of his La Libertad Avanza party, providing the necessary political shield to continue his free-market reforms and prevent opposition from overturning presidential vetoes. The outcome was immediately celebrated by international allies, particularly the United States, which had recently conditioned a substantial financial aid package on a favourable result for the incumbent government.

A Referendum on Radical Austerity

The legislative elections held on Sunday, 26 October 2025, became a de facto national referendum on the first two years of President Javier Milei’s self-described anarcho-capitalist administration6,7,9. His party, La Libertad Avanza (LLA), secured a sweeping victory, winning nearly 41 per cent of the nationwide vote for the Chamber of Deputies, significantly exceeding analysts’ projections6,7,13. The main opposition, the left-leaning Peronist coalition Fuerza Patria, trailed with approximately 32 per cent of the vote, marking one of the alliance’s poorest performances in years6,7. The election renewed 127 of the 257 seats in the Chamber of Deputies and 24 of the 72 seats in the Senate6,9. The result was a remarkable turnaround for the government, which had suffered a heavy defeat in the Buenos Aires provincial elections just a month prior, an outcome that had sparked a market sell-off and raised doubts about the president’s popular support4,7,9. Milei’s campaign had centred on his signature policy of “chainsaw” austerity, a programme of deep public spending cuts, deregulation, and a reduction in the number of government ministries from 20 to nine3,7,14. These measures were credited with achieving Argentina’s first fiscal surplus in 14 years and dramatically reducing the annual inflation rate from nearly 300 per cent at the start of his term to around 32 per cent3,7. However, the economic overhaul has also led to a sharp decline in purchasing power, the loss of over 250,000 jobs, and the closure of an estimated 18,000 businesses, creating a polarised electorate divided by the immediate pain of the cuts and the promise of long-term stability3,7.

The Legislative Shield

The primary objective of the LLA in the midterm contest was to secure a legislative shield against the opposition’s attempts to block the reform agenda9. The Argentine Congress is bicameral, and overturning a presidential veto requires a two-thirds majority in both the 257-seat Chamber of Deputies and the 72-seat Senate15,16. Before the election, LLA held a small minority, with only 37 deputies and six senators, forcing the president to rely heavily on executive decrees and facing multiple successful veto overrides by the opposition in the preceding months9,15,16. The election results significantly strengthened the government’s position, with LLA gaining 64 new seats in the lower house, bringing its total representation to approximately 101 deputies6,13. In the Senate, the party picked up 14 seats, increasing its total to 20 members6,13. Crucially, the gains in the Chamber of Deputies are sufficient to secure the one-third threshold needed to sustain presidential vetoes, effectively preventing the opposition from unilaterally nullifying the executive’s legislative decisions6,9. This new parliamentary strength is expected to clear the way for the second phase of Milei’s structural adjustment reforms, including ambitious changes to labour and tax laws1. Speaking to supporters in Buenos Aires, a triumphant Milei hailed the result as a “turning point” and a confirmation of the mandate his party received in 2023, pledging to continue on the “reformist path”6,13. He also adopted a more conciliatory tone towards non-Peronist opposition parties, inviting them to negotiate on a basic set of agreements, while pointedly excluding the Peronist movement, which he referred to as “misfits”11.

The Washington Connection

The election was watched with unusual intensity in Washington and on Wall Street, largely due to the explicit financial intervention and political support from the United States government6,8. US President Donald Trump, a close ideological ally of Milei, had publicly conditioned a substantial financial aid package on a favourable outcome for the LLA7,8,12. In the weeks leading up to the vote, the US Treasury had finalised a $20 billion currency swap framework with Argentina and directly purchased Argentine pesos to stabilise the currency, which had been under pressure following the September provincial election loss1,3,9. This was part of an unprecedented financial rescue package that included a promise of an additional $20 billion in private-sector financing3,8. Following the LLA’s victory, President Trump offered immediate congratulations, calling the result a “landslide victory” and stating that the confidence placed in Milei had been “justified by the People of Argentina”5,7. US Treasury Secretary Scott Bessent described the financial assistance as part of a new “economic Monroe Doctrine,” arguing that it was better to use American economic power to stabilise a friendly government8. The opposition, however, seized on the US intervention as a rallying point, with Peronist Governor Axel Kicillof criticising the aid as a self-serving move by non-charitable entities like the US government and JP Morgan, who were only interested in profit10. The controversy surrounding the US involvement led to the hashtag #PatriaOColonia, meaning “motherland or colony,” circulating online in the lead-up to the vote8.

Market Euphoria and Future Challenges

Financial markets reacted with immediate and pronounced enthusiasm to the election results, reversing the volatility and sell-off that had characterised the preceding weeks1,4. Argentine stocks and US-listed exchange-traded funds (ETFs) related to the country rose sharply, with some Argentine stocks jumping by over 30 per cent in US premarket trading1. The peso also extended its gains in the crypto market, strengthening to around 1,390 pesos per US dollar4. The market rally reflected investor relief that the political risk to Milei’s reform agenda had been significantly reduced, ensuring the continuation of his deregulatory and budget-cutting policies4. The victory also cemented the government’s plans to keep Argentina firmly within the orbit of the US, which had conditioned its financial support on the outcome1. Despite the market euphoria, the government still faces immense economic and political challenges3. While the legislative gains provide a crucial defensive position against opposition bills and veto overrides, LLA still does not command an outright majority in either chamber, meaning the president must still negotiate with provincial governors and other political blocs to pass major legislation7,11. Furthermore, the social cost of the austerity programme remains a significant domestic pressure point, with many Argentines continuing to struggle with plummeting purchasing power and job losses3,7. The success of the next phase of reforms, which includes ambitious tax and labour law changes, will depend on the government’s ability to translate its electoral mandate into effective legislative consensus and tangible economic relief for the population1,6.

Conclusion

The midterm election victory for Javier Milei’s La Libertad Avanza party represents a profound political endorsement of his radical economic vision, providing him with the necessary legislative leverage to push forward his agenda6,9. By securing the one-third threshold in the Chamber of Deputies, the government has gained a critical shield against the opposition’s attempts to derail his austerity programme through veto overrides6,9. The result was a clear rejection of the Peronist opposition and a signal from a significant portion of the electorate that they are willing to endure the current economic hardship for the promise of long-term stability7,12. The victory also solidifies the close political and financial alliance with the United States, which had made its substantial aid package contingent on the election’s outcome7,8. As the government prepares to introduce its next wave of reforms, the challenge shifts from winning a mandate to successfully navigating a still-divided Congress and delivering on the economic recovery that the markets and his supporters now expect1,11.

References

  1. Argentina stocks and U.S.-listed ETFs rise sharply as Milei's party wins big in midterm elections

    Supports the election results, the market reaction (stock and ETF increases), the US financial bailout condition, and the goal of pushing through the second phase of reforms.

  2. Argentina votes in midterm elections set to test Milei's mandate, US support

    Provides context on the election as a test of Milei's mandate, the 'chainsaw' austerity measures (job cuts, subsidy cuts), the drop in inflation, the plummeting purchasing power, and the US financial rescue plan.

  3. Milei's party wins Argentina midterm vote in major comeback

    Confirms the market rally, the strengthening of the peso in the crypto market, and the context of the previous defeat in Buenos Aires province.

  4. Trump hails 'big win' for ally Milei in Argentina's midterm elections

    Cites Donald Trump's reaction, calling the win a 'big win' and mentioning US help.

  5. Milei triumphs in Argentine midterm elections closely watched by Washington

    Confirms the election date, LLA's vote share (over 40%), Peronism's share (31%), the legislative gains (64 seats in lower house, 14 in Senate), the goal of upholding vetoes, Milei's 'turning point' quote, and Trump's conditional aid.

  6. Javier Milei hails ‘tipping point’ as his far-right party wins Argentina’s midterm elections

    Provides LLA's exact vote share (40.84%), Peronism's share (31.67%), the context of the election as a referendum, the social cost (job losses, business closures), and Trump's 'landslide victory' quote.

  7. Argentina's Milei wins friendlier Congress in midterms after U.S. bailout

    Details the US financial package ($40 billion total, $20 billion swap, $20 billion private), Trump's conditional aid quote, and US Treasury Secretary Scott Bessent's 'economic Monroe Doctrine' comment, as well as the opposition's 'motherland or colony' hashtag.

  8. Polling stations close in key midterm elections that will define Milei's future

    Confirms the election date (October 26, 2025), the seats up for renewal, the one-third threshold for vetoes, the previous market rout after the Buenos Aires loss, and opposition comments on the need for a less polarised Congress.

  9. Milei triumphs in Argentine midterm elections closely watched by Washington

    Cites the reaction of Peronist Governor Axel Kicillof, who criticised the US financial aid as a self-serving move by non-charitable entities.

  10. Argentina's Milei celebrates electoral win by signaling openness to deal with opposition

    Details Milei's post-election speech, his willingness to work with non-Peronist opposition, and his exclusion of Peronism, whom he called 'misfits'.

  11. Voters hand Milei belated birthday present, post-mortem for Peronism overdue

    Supports the idea that the result was a rejection of a return to Peronism and the context of the election as a test of his 'chainsaw' austerity.

  12. Milei claims decisive midterm win in Argentina

    Provides the estimated seat gains (from 37 to around 101 deputies, six to 20 senators) and confirms the vote share and the 'turning point' quote.

  13. Europe must learn from Argentina's chainsaw cure

    Supports the context of Milei's 'chainsaw cure' and the reduction of ministries.

  14. Argentina's senate delivers blow to Milei's agenda, overturning veto on disability benefits

    Confirms the two-thirds majority requirement to override a presidential veto and the total number of Senate seats (72).

  15. Argentina's Senate votes to overturn Milei's veto on provincial funding

    Confirms the two-thirds majority requirement to overturn a veto and the total number of Senate seats (72).