President Javier Milei’s administration appears to be bouncing from crisis to crisis lately. As has become characteristic of the La Libertad Avanza government, within just a few weeks it can feel like they’re either in heaven or hell, carrying the country along with them. This weekend’s elections in Buenos Aires and next month’s national midterms will serve as a barometer as to how the second half of his term will play out.
With the economy seemingly under control and a solid electoral victory in Buenos Aires City that allowed the Milei siblings to subjugate the Macri cousins, it appeared La Libertad Avanza was marching toward political hegemony and re-election in 2027. The confirmation of Cristina Fernández de Kirchner’s guilty sentence in the ‘Vialidad’ public works corruption case was the cherry on top. Milei, his sister and presidential chief-of-staff Karina, and controversial political advisor Santiago Caputo—together known as the “iron triangle”—had somehow navigated turbulent waters including the ‘$LIBRA’ cryptocurrency scandal and even incriminating images of Laura Belén Arrieta’s ten undeclared pieces of luggage arriving from Florida. They had emerged victorious in their epic battle against the “caste,” overcoming multiple obstacles.
That situation has now been turned on its head, as a fragile economic situation has put financial markets on edge while corruption scandals associated with the “iron triangle” continue mounting.
Financial Turbulence and Policy Missteps
Recent weeks have seen financial turbulence following the Central Bank’s botched “disarming” of a short-term instrument known as “Letras Fiscales” or “LEFIs” that banks used to manage liquidity. In their attempt to “heal” the Central Bank’s balance sheet, BCRA Governor Santiago Bausili and Economy Minister Luis “Toto” Caputo, under President Milei’s supervision, failed to convince the banking sector to transfer their portfolios onto other short-term peso-denominated instruments. This led to a massive jump in private-sector interest rates that ultimately forced the Central Bank’s hand.
As the peso-dollar exchange rate surged 4.4% in July, the Caputo-Milei team resorted to extremely high real interest rates to contain the financial situation, attempting to prevent excess pesos from flowing into dollars. This put additional pressure on economic output, which has stagnated over recent months, creating further distress for the population. As Milei and his economic team struggle to contain financial stress, his popularity and expected electoral victory face threats.
The Scatturice Network Expands
While the economy provides the backdrop, multiple corruption cases continue eroding the Milei administration’s credibility. An investigation by corruption specialist lawyer Natalia Volosin, published in Noticias magazine, sheds further light on businessman Leonardo Scatturice’s dealings. Scatturice has become the gatekeeper to Donald Trump’s MAGA world for the Milei crew and owns the firm employing the aforementioned Arrieta.
The VIP treatment she received at Jorge Newbery Airport in Buenos Aires, including lack of controls for her ten pieces of luggage, suggests collusion with authorities answering to Santiago Caputo. According to La Nación, Scatturice—a former spy who became a millionaire in just a few years—has won at least 17 state contracts since Milei took office, totaling more than $90 million through his firm OCP Tech and other subsidiaries. Rather than being a pure “libertarian,” Scatturice is a pragmatist who has dealt with governments of different ideological inclinations.
Volosin’s investigation indicates a close working relationship with Daniel Hadad, the media mogul behind Infobae news site, which has consistently produced favorable coverage of administrations in power. A Hadad family member also employs Arrieta, suggesting these connections aren’t mere coincidences. More revelations are expected to surface.
At the same time, leaked audios from Diego Spagnuolo, Milei’s former personal lawyer and ex-head of the Andis national agency for the handicapped dealt a blow to Karina and her lieutenants, the Menem cousins. Spagnuolo is very clear about supposed bribes paid by pharmaceutical companies in the context of purchases by Andis, to the tune of 5 to 8 percent, which were funneled directly into the pockets of the Menems and Karina. These have sparked a full blown credibility crisis that goes all the way to the President, and the government has struggled to react.
Deep State Networks and Shell Companies
The Scatturice and Spagnuolo cases continue illuminating the relationship between certain businessmen and government power structures—a sort of “deep state” aimed at enrichment. In the Milei administration, one main node of this network appears to be advisor Caputo, who isn’t officially a public servant but rather a freelancer, and therefore doesn’t have to disclose wealth or assets. Another node is Karina and the Menems.
Interestingly, “Caputito,” as he’s mockingly called, is currently employed by Zefica SA, a shell firm owned by the Costa family. He’s the only employee of a company that’s part of a business group founded by a longtime family friend, hired just two weeks after Milei took office. That firm is under investigation for a recent suspicious operation in which two family members injected $800,000, as reporter Camila Dolabjian reported. This triggered a witch hunt within the UIF money-laundering watchdog, led by Paul Starc, who was promoted by Caputo. The Costa family’s other firm, Camalu SA, employs Francisco Caputo, Santiago’s brother, among others.
The $LIBRA Investigation Deepens
These connections between certain characters and the government recall the worst “caste” vices, something society acknowledges according to opinion polls. Until now, however, they haven’t impacted La Libertad Avanza’s voting intentions. The most challenging accusations reach the libertarian administration’s apex—the Mileis themselves.
The ‘$LIBRA’ cryptocurrency scandal investigation has progressed in both the United States and Argentina. Prosecutors have located $500,000 in funds associated with the scam operation allegedly belonging to Manuel Terrones Godoy and Mauricio Novelli, Milei inner circle members who brought Hayden Mark Davis to the Casa Rosada. According to prosecutors, they relied on influencer Julián Serrano to attempt hiding the funds. While he has denied involvement, the case’s graphic nature spotlights Javier and Karina, who came to office promising to triumph against the “caste” and eradicate such behavior.
Electoral Crossroads
With elections approaching, it’s crunch time for both government and opposition. Economic turbulence comes at a complex moment for the La Libertad Avanza coalition. Continued corruption accusations put additional pressure on the president, who still maintains solid polling support.
Aided by absorbing Macri’s PRO and the lack of any unifying leader among multiple Peronist brands, the Milei siblings could perform relatively well in this weekend’s Buenos Aires Province local elections, going on to win the October national election. However, if they fail to contain the peso-dollar exchange rate and inflation begins rising, the electorate could express dissatisfaction at the ballot box, also pointing to shady Casa Rosada dealings.
Volatile Political Landscape
The administration that promised to drain the swamp now finds itself navigating increasingly murky waters. The economic model that brought Milei to power faces technical challenges, while the anti-corruption message that resonated with voters confronts mounting evidence of the very behaviors it promised to eliminate.
Whether the “iron triangle” can weather this storm of economic headwinds and corruption scandals will determine not only their electoral prospects but the broader trajectory of Argentina’s political experiment. The coming days will test whether Milei’s popularity can withstand the dual pressures of economic stagnation and credibility erosion, or whether the volatile dynamics of Argentine politics will claim another victim.
As the saying goes in Argentine politics, nothing guarantees survival in this unpredictable landscape. The administration that seemed destined for hegemony now faces its most challenging test, with the electorate holding the ultimate judgment on whether the promise of change can survive the reality of governance.
This piece was originally published in the Buenos Aires Times, Argentina’s only English-language newspaper.