Argentina’s libertarian President Javier Milei won decisive victories in midterm elections Sunday, clinching a crucial vote of confidence that strengthens his ability to carry out his radical free-market experiment — with billions of dollars in backing from the Trump administration.

In the election widely seen as a referendum on self-described “anarcho-capitalist” Milei’s past two years in office, which have included corruption scandals and the scrapping of tens of thousands of public jobs, his right-wing La Libertad Avanza party won more than 40% of the votes, compared with 31% for the left-leaning populist opposition movement, known as Peronism, exceeding analysts’ projections.

Milei, a key ideological ally of President Trump, said his party and allied blocs picked up 14 seats in the Senate and 64 in the lower house of Congress on Sunday, three seats short of a congressional majority.

“I am the king of a lost world,” Milei exulted as his supporters cheered in downtown Buenos Aires on Sunday. “Today we have passed the turning point. Today we begin the construction of a great Argentina.”

Trump vowed to stay “with him” — if Milei won the votes

An Argentine legislative election has likely rarely generated so much interest in Washington, or on Wall Street.

Mr. Trump appeared to condition a $20 billion currency swap deal with Argentina’s central bank, and an additional $20 billion loan from private banks, on a good showing for Milei in the national midterms, threatening to rescind the assistance for the cash-strapped country in the event of a Peronist victory.

“If he wins we’re staying with him, and if he doesn’t win, we’re gone,” Mr. Trump said after welcoming Milei to the White House earlier this month.

Those comments added to mounting pressure on Milei, who has scrambled to avert a currency crisis since the Peronist opposition won a landslide victory in Buenos Aires provincial polls last month. Argentina’s bonds and currency nosedived as markets sensed that the public was losing patience with Milei’s reforms, and analysts predicted a tight midterm race.

To stem the run on the peso, Milei burned through billions of dollars in foreign exchange reserves. Then, in an extraordinary move, the U.S. Treasury came to the rescue, selling dollars to help meet soaring demand for greenbacks and finalizing the international credit line.

In the end, the Peronist alliance performed poorly, underscoring how weak the once-dominant movement has become in the Milei era, largely as a result of internal divisions. Markets were widely expected to rally on Monday.

“For foreign investors, this outcome is a relief because it shows that the Milei program can be sustainable,” Marcelo J. García, the America’s director for the geopolitical risk consultancy Horizon Engage, told The Associated Press. “It leaves the opposition weakened and fragmented, just as it was when Milei won the presidency in December 2023.” 

Trump lauds Milei, who calls him “a great friend” of Argentina

The Peronist coalition has struggled to channel rising public anger with Milei’s painful austerity measures into a new political strategy after delivering the economic shambles that the political outsider inherited in late 2023.

Mr. Trump, during a flight to Japan on Monday, said on his Truth Social network that Milei was “doing a wonderful job.”

“Our confidence in him was justified by the People of Argentina,” Mr. Trump wrote.

Milei responded to the post, calling the U.S. president “a great friend” of Argentina and thanking him for “trusting the Argentine people.”

Axel Kicillof, governor of Buenos Aires province and the most influential elected official in the Peronist opposition, criticized Mr. Trump for his role in helping Milei at the polls.

Kicillof warned that the billions of dollars in financial aid from the U.S. Treasury and investment banks would do nothing to help ordinary Argentines squeezed by Milei’s cuts to subsidies or forced out of business by a contracting economy.

“I want to make it clear that neither the U.S. government nor JP Morgan are charitable societies,” he said. “If they come to Argentina, it is for nothing other than to take a profit.”

“The situation is getting worse and worse”

Sunday’s outcome will test public patience for Milei’s cost-cutting measures in the coming months. Although his budget cuts have slashed inflation — from an annual high of 289% in April 2024 to 32% last month — consumer price increases still outpace salaries and pensions.

The electorate appears increasingly polarized between beneficiaries of Milei’s reforms and those who say they’re struggling to make ends meet like never before.

In the financial district of Puerto Madero, luxury car dealerships report sales surging since Milei scrapped import restrictions. Streets bustle with bankers who praise the president for ending a yearslong ban on selling dollars online. Fine restaurants serve Argentine oil executives who gush about his efforts to draw foreign investment.

But at a soup kitchen on the other side of Argentina’s Riachuelo River, Epifanía Contreras, 64, told the AP that she as though she was bearing the brunt of the federal budget cuts.

“You can’t live on 290,000 pesos a month with today’s inflation,” she said, describing how her monthly pension, worth about $200, has shriveled in value as a result of austerity measures. “The situation is getting worse and worse.”

More than 250,000 jobs have been lost since Milei came to power, with around 18,000 businesses closing, according to an analysis published this month by the Center for Argentine Political Economy think tank, as the right-wing administration froze investment in infrastructure, health care, education and other social services.

Voting is compulsory for adults in Argentina, but electoral authorities reported a turnout rate of just under 68% on Sunday, among the lowest recorded since the nation’s return to democracy in 1983. 

“I vote out of obligation, nothing more,” Matías Paredes, 50, a real estate broker whose foreign clientele vanished with Milei’s strong exchange rate, told the AP. “None of these figures inspire optimism. We’re just choosing the lesser evil.”