PRESIDENTIAL spokesperson Manuel Ordoni has said that his party’s heavy defeat in the recent Buenos Aires provincial election was because the voters did not understand the government’s programme, as if they needed an economics degree to work out that increases in poverty, unemployment and prices, coupled with swingeing cuts in public services, were not to their benefit.

While it is always unwise to write off the Peronists in Argentina, the size of their victory was unexpected. Their Fuerza Patria slate took 47.2 per cent of the vote against 33.7 per cent for President Javier Milei’s La Libertad Avanza (LLA), a difference of over a million votes in a province inhabited by 40 per cent of the country’s population.

The LLA’s cause was not helped by a corruption scandal involving the president’s sister and closest confidante, Karina Milei, that exploded shortly before the election and undermined his oft-repeated boast that his party was morally superior to the established political class.

Significantly, it was not just in the urban districts of the province where the LLA were defeated but also in the rural interior where the Peronists had not won a vote for almost two decades.

Milei had regarded the election as a barometer of his government’s popularity and recognised the result as a significant defeat. Nevertheless, he stated that he would not be swayed by it and pledged to accelerate the pace of economic and social reform.

As if to prove the point, he almost immediately vetoed two Bills approved by congress, granting funds for public universities and children’s hospitals that prompted yet another round of protest marches that have become a regular feature on the streets of the capital.

For the vetoes to be overturned and the Bills to become law, they will now have to be rejected by two-thirds of both the upper and lower houses of the parliament. In the earlier part of his presidential term, Milei would have been reasonably confident of ensuring the necessary votes, but continuing battles with provincial governors over funding have weakened his support.

The markets reacted predictably to the defeat with downturns in Argentine shares on the US stock exchanges and increasing pressure on the peso that is being propped up by loans from the IMF, which is effectively running the economy. In July, the Nobel Prize-winning economist, Joseph Stiglitz, enraged Milei’s government by stating that the economy is simply not viable and that the $56 billion debt will, sooner or later, engender a financial crisis.

In a pale imitation of his hero, Donald Trump, Milei pledges to “make Argentina great again” by harking back to some mythical age of prosperity in the latter part of the 19th century. In fact, the period was marked by the emergence of a rural oligarchy who occupied vast tracts of Argentina’s fertile plains at the expense of the indigenous population who were massacred and driven off their ancestral lands.

The subsequent growth of an economy dependent on the export of primary products has been a significant obstacle in the republic’s uneven development, and Milei is now exacerbating the problem by granting foreign capital unprecedented access to Argentina’s natural resources.

The Transnational Information Centre has just published the first of a series of reports on Milei’s flagship incentive regime for large investors, or RIGI as it is known by its Spanish acronym, that, if allowed to proceed, will have grave consequences for the environment and for people living in areas earmarked for projects in hydrocarbons, mining, energy, tourism and other invasive activities.

The period allowed for applications to the scheme runs out in July 2026, although the executive has the authority to extend it for another year to pursue the principal objectives of attracting foreign investment and increasing exports. RIGI reflects the government’s objective of minimising state intervention in the production of goods and assigns a dominant role to the private sector, a common goal of neoliberal administrations.

However, no mechanisms are in place to incorporate these investments into any integral system of planning, nor are there any specific measures for the protection of the environment, its ecosystems or the communities in the affected areas.

So far, 19 applications have been received, of which seven have been approved and one rejected, probably on the grounds that it involved Chinese capital, given that the US has been pressuring Milei to minimise Chinese involvement in the Argentine economy.

Those accepted are concentrated in the extraction of copper, gold, and lithium, as well as a particularly controversial project to greatly expand oil and gas exports from Vaca Muerta, one of the world’s largest fracking operations.

This would envisage the construction of a pipeline and a deep-water port in the Gulf of San Matias adjacent to the Valdes peninsula, recognised for its biodiversity and the habitat of whales, dolphins, penguins and sea lions, all of which would be under threat.

In anticipation of opposition to the expansion of the extractive economy, the Security Ministry has created the Productive Security Unit, which will deploy federal forces to provide protection to sectors of the economy that require, as they put it, “special care” in their operations of production and transport.

This is nothing more than a euphemism to describe the repression that will be meted out to any persons or groups who decide to oppose the expansion of mining, agribusiness, oil extraction or any other invasive activity.

And if that were not enough, RIGI grants foreign companies rights enshrined in Investor State Dispute Settlement (ISDS) mechanisms that effectively allow them to sue the very state that allowed them to invest in the first place, if their businesses are affected by future legislation.

It should be noted that various corporations that have expressed interest in RIGI are notorious for having already used ISDS clauses in investment agreements to sue countries in the global South. These include Rio Tinto, Chevron, Shell, and Pan American Energy.

Despite this unprecedented, favourable investment climate, international investors are still wary of putting their money into Argentina. Existing mining operations have been the subject of fierce protests in some provinces, and putting money into projects that typically last for three decades is a risk if there is no buy-in from local authorities or communities.

The result in Buenos Aires province will have done nothing to heighten investor confidence, and all eyes are now on the national mid-term congressional poll scheduled for October, when half of the deputies and a third of the senators have to stand for re-election. Further opposition victories there will make the rest of Milei’s term of office extremely problematic.

The clear victor in recent weeks has been Buenos Aires’ Peronist governor, Axel Kicillof. Within certain parameters, provincial governors can choose when elections take place, and in Buenos Aires, Kicillof came under intense pressure from his party to run them concurrently with the national midterms, as has been customary in the past.

His insistence that they would be better served by holding them separately has been entirely vindicated. He has also been a key figure in ensuring that the warring factions within the Peronist movement were able to present a united front and may well emerge as a candidate for the next presidential elections in 2027.