Last Sunday, President Javier Milei’s La Libertad Avanza party came a distant second in Buenos Aires province legislative elections. It was the party’s first major electoral defeat since taking office in 2023. From the outset, capturing ground in Peronism’s stronghold seemed like a tall order — but its loss by a margin of almost 14 points came as a surprise.

In the first of our new series, Herald Talks: Analyst Insights, we spoke to Juan Germano, chief executive of Isonomía Consultants, about the results.

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This version has been lightly edited for length and clarity.

Peronism won in Buenos Aires province by over 13 points. That’s not what the government was expecting. How surprising was that?

The margin was the shocking part. Any non-Peronist force running against a unified Peronism in Buenos Aires province will have a tricky time. What’s interesting about this vote was that it was split from the national elections, and we saw that a big factor the power of mayors was: how they know the territory. The elections had always been held at the same time as national elections before, so this was a good moment to compare. In almost 80% of municipalities, the party in power locally won the vote, whether that was LLA or Peronism. 

Plus, LLA is a new political force that doesn’t have the local presence that perhaps PRO or the UCR had in the past. 

Milei recognized defeat and said mistakes had been made, but also said that LLA would stick to its path. Has the government done anything to correct course ahead of October?

Once we’d learned the surprising results, it was important to analyze the first words of the president. Milei acknowledged the loss, which doesn’t always happen, but we still don’t know what real changes he’s proposing in terms of political strategy. In my view, when you have massive losses, you always need big changes. If they’d lost by four points, you could discuss tactics, marketing, and messaging. But with a result like this, it’s more profound. The government needs to make some real changes.

Milei’s first announcement after the elections was the creation of a working group with people he’s already been collaborating closely with, like his spokesman Manuel Adorni, his sister Karina Milei, Deputies president Martín Menem, and a few cabinet members. That doesn’t seem like a government that’s making changes, does it?

I agree with you. On the other hand, this government has always been institutionally weak: no governors, a few lawmakers, almost no mayors. But it’s also been quite bold: changing the style of ballot in October, the Ley Bases, deciding to run against PRO in the city of Buenos Aires. That combines boldness with institutional weakness. 

Congress played along with the government for the first year and a half, until $LIBRAgate, but something has changed in recent months — and that was that they went to play with their own candidates in provinces where the government had been making arrangements with the governors. That changed the dynamic. And at the same time, things got difficult in Congress.

Let’s suppose the government has a good election in October. Maybe a bit worse than we thought a few weeks ago, but still. If that happens, then for the next two years, he’ll have – not enough votes to pass legislation, but he can guarantee the minority he needs for the veto.

In terms of public opinion, we’ve just had a corruption scandal in which leaked audio recordings accuse the president’s sister of taking kickbacks in exchange for contracts with the national disability agency. But a lot of people just don’t really have any money. Which is more important in terms of the vote?

It’s difficult. A little bit of both, I think. Milei took office in 2023 and it was extremely clear that Argentines had one mandate for him: end inflation. And he was quite good at that. In March 2024, 44% of Argentines said the main problem was inflation. That number has fallen to below 10%. 

That creates new demands on the government regarding crime, corruption, purchasing power, employment, etc. The mandate has changed, and it won’t be enough for the next two years. 

There’s also been a gap between the idea of Milei solving Argentina’s problems and Milei solving my problems. He was always better at solving Argentina’s problems. Inflation was a macro problem — but corruption was also a big problem. That’s why what happened with the audios has created some heat for the government. 

We’ve seen the dollar and country risk taking off since the elections, suggesting that a certain segment of the business community isn’t happy with the results. What are the key political risk indicators going into October?

A really bad or good election for the government will change the dynamic of Congress a little bit, but it’s not a massive change.

Right — half of the chamber of deputies and a third of the senate are up for renewal.

Correct. Of course, getting low 30s [percentage] is not the same as low forties, in terms of optics and incentives. But whether it’s a good election or a bad one, to carry out structural reforms he’ll need to make arrangements with PRO deputies, Peronist governors. The dynamic of Congress is the same.

What does change is what we Argentines, the market, and international analysts feel might be happening. Because again, institutionally he’s been quite weak. The government doesn’t analyze Congress the way political science books do: he never made a coalition. Instead he always looked out for the magic number to defend a veto, which is 87 deputies. 

What three indicators are you looking at between now and October?

Turnout. If you analyze how many voters chose Peronism versus four or eight years ago, it’s basically the same. The low turnout was a former LLA or PRO voter [not voting]. So one thing to follow is whether these voters now decide to show up.

Number two — massive losses, in my view, demand massive changes. So what will that big change be? Economic? Political? The magnitude of the loss in the province demands something more profound. 

And number three — October’s result has more to do with optics than real power in Congress. It’s more about the rest of the system’s perception of what kind of government we’ll have for the next two years.