Buenos Aires, Argentina — Argentina’s President Javier Milei suffered his biggest defeat to date in Congress on July 10, as opposition senators passed a series of bills that threaten the cost-cutting policies championed by his libertarian government. The crisis worsened after 10 governors, who usually support Milei, instructed senators from their provinces to vote in favor of the spending measures.
The Senate approved a series of bills that require the national government to share part of its revenue, including a fuel tax, with the provinces. Fifty-six of 72 senators voted in favor of the measures, which will now head to Argentina’s lower house of Congress.
Another bill to increase spending on retiree benefits —previously vetoed by the president— passed with 52 votes. A declaration of emergency for people with disabilities received 56 votes, after already passing in the lower house. The Senate also overturned a presidential veto on a bill declaring a state of emergency in Bahía Blanca, a city in the Buenos Aires Province that was hit by a deadly storm in early March.
Milei remained defiant in the aftermath of the defeat. “We will veto it. If the veto fails, we will take it to court. If the judiciary delays, the damage they could cause would still be minimal. We will reverse it — the fiscal surplus policy is permanent,” he said during a speech marking the anniversary of the Buenos Aires Chamber of Commerce.
The president previously vetoed a hike in retiree benefits passed by Congress in August 2024. He even hosted a massive “asado” (barbecue) at the Olivos Presidential Residence to celebrate the “87 heroes” who supported his veto in the House of Representatives at the time.
This current scenario doesn’t look as favorable for Milei. Those “87 heroes” relied on support from the governors, who are now challenging the Casa Rosada and demanding a larger share of tax revenue for the provinces. The petition was rejected by the national government, which insists on preserving fiscal stability, having committed to a 1.6% surplus with the International Monetary Fund (IMF).
Tensions between the governors and the presidency are rising as October midterm elections approach. Although many provinces have previously collaborated with President Milei, his coalition, La Libertad Avanza, is now pushing to run its own candidates in most districts. A so-called “purist” initiative, led by the president’s sister, General Secretary Karina Milei, has further weakened support from the so-called “collaborationist” governors.
Markets fall after Milei’s defeat in the Senate
In the run-up to the July 10 session, the government tried to pressure provincial leaders not to support the opposition’s bills, arguing that doing so would harm the economy.
The message was delivered by Economy Minister Luis Caputo, who held an off-the-record conversation with journalist Alejandro Fantino. Fantino later disclosed the contents of the supposedly private exchange.
“The dollar will go up,” Fantino warned on his streaming channel Neura on Wednesday, during the July 9 holiday, Argentina’s Independence Day. Attempting to sway provincial leaders, he said that if the bills passed, the economy would face a very difficult scenario over the next three months.
Fantino’s remarks circulated widely on social media and were treated by some media outlets as an official message from the government. Public officials quickly moved to correct the journalist, with Caputo claiming the most widely shared version of the video had been edited using artificial intelligence.
“What I told Fantino is the opposite of what that clip suggests. The economy is stable, and despite politicians trying to create chaos, it won’t be a problem. That is what we discussed, and what the president and the economic team believe. I have no doubt the video is fake — I’m clarifying just in case,” Caputo posted on X.
This message was followed by Fantino himself denouncing an “edited” version of the video circulating, and posting the “original” version, which itself was not different in content to the alleged doctored recording.
The President also chimed in on the issue, calling the episode an “operation” and urging supporters to “fight hard” against “this trash that call themselves ‘journalists.’”
Read more: Javier Milei sues Argentine journalists for libel and slander
Caputo’s warning appeared to come true on July 11, when Argentine markets opened in the red following news of the Senate defeat. The S&P MERVAL index fell 2.2%, with losses concentrated in financial stocks.
Argentine stocks trading on Wall Street also declined, while sovereign bonds dropped by roughly 1%. The peso weakened as the exchange rate continued a downward trend that has persisted for several weeks.
Featured image credit:
Image: Vicepresident Victoria Villarruel presiding over a Senate session.
Author: Victoria Villarruel on Facebook.
Source: Victoria Villarruel on Facebook.
The post Argentina senators deliver blow to Javier Milei ahead of October mid-terms appeared first on Argentina Reports.
The post Argentina senators deliver blow to Javier Milei ahead of October mid-terms appeared first on Latin America Reports.
