Argentina’s wake-up call? National strike, politics slow Milei’s broad reforms.

In the teeming crowd in front of Argentina’s National Congress last week, Alicia Ambrosi weaved her way around banners and placards pleading for more economic assistance – and deriding a new president intent on fundamentally changing how the country works. 

The retiree, who once sewed socks in a factory, sees herself as part of the growing number of Argentines slipping below the poverty line. Her pension is roughly $150 a month, about minimum wage, but with climbing inflation, she says she can barely cover basic expenses. 

“If I ate two bananas before, now I eat one,” Ms. Ambrosi says of a brutal economic picture that’s rapidly deteriorating.

The public turnout for the Jan. 24 national strike against President Javier Milei demonstrates the power struggle underway in Argentina today, as the fledgling administration attempts an overhaul of the role of the state. Tens of thousands – mostly those who did not vote for Mr. Milei in the November election – are urging Congress to block the president’s wide-ranging package of economic and legislative reforms, which include privatizing state companies, rolling back environmental protections, and curtailing workers’ rights. 

While the scale of the strike, the first in five years and promoted by powerful unions, was minimized by government officials, days later Mr. Milei was forced to ditch controversial fiscal proposals. It was viewed as a trade-off to secure congressional approval of his broader reforms package. On Friday, his economy minister announced a backtracking on changes to pension plans, taxes, and export-tariff hikes.

“What we’re seeing is a government that emerges out of great political weakness,” says Carlos Fara, a political analyst in Buenos Aires. “It leaves the impression that they have sort of bought into a fantasy” that they hold more power than they actually do. 

Getting worse before better?

Mr. Milei rose to the presidency using fiery rhetoric that promised to dollarize the struggling economy and cut the waste he said was driven by a corrupt political class. He rode the wave of “outsider” status, going from incendiary media personality to legislator and then president in a handful of years. While he secured 56% of the vote in the runoff in November, that was only after forging an alliance with another conservative block. The number of seats that his party controls in the Congress is just a fraction of what he needs to govern.

Since taking office in December, he’s had to confront Argentina’s political reality – softening some of his stances in order to build political capital, and grappling with a worsening economic picture. He devalued the official currency within days of taking office, a move that accelerated inflation, which has now soared past 211% in the past 12 months. December alone saw an average 25% increase in prices, with basic food and hygiene products climbing even further. Bread was up 38% from the previous month, and diapers were 45% more expensive. 

The president has been clear: Life in Argentina will get a lot darker before there is a reprieve. He intends to slash public spending to bring it in line with revenues and to cut key subsidies on which a swath of Argentines have come to depend, such as for utilities and public transit. More than 40% of Argentines live below the poverty line, according to government data.

“I don’t know where we got this idea, that you have to suffer in order to one day be better,” says Antonelia Colletti, a high school art teacher at last Wednesday’s national strike.

Mr. Milei is operating under very thin margins, says Ignacio Labaqui, who teaches political science at the Catholic University of Argentina. He needs Congress to approve certain tools that enable him to implement his plan before his popularity suffers from what is sure to be very difficult months ahead. 

Even “if everything goes well, Milei won’t have a lot of good news until April or May,” says Mr. Labaqui. 

“This is a hyper-minority government. Milei has to be very pragmatic and flexible. ... It’s very difficult for his agenda to advance if he doesn’t negotiate with a part of the opposition.” 

So far, Mr. Milei has shown a propensity for pragmatism, Mr. Labaqui says, giving key government positions to other conservative forces outside his small party, and shelving some of his more controversial ideas, such as dollarization. Other contentious elements of his reform package, such as requiring permission for public gatherings of three or more people, have also been scrapped. 

But Mr. Milei has clung to rhetoric that focuses on the “political caste” as the source of all evil, something he returned to in a recent speech at the World Economic Forum in Davos, Switzerland. The language inherently vilifies those with whom he has to negotiate.

Mr. Milei has yet to fill roles in the public administration, and faces both communication and coordination problems that come from lack of experience, says Mr. Fara. “This is going to be a government that is constantly in problems, unless it has some sort of resounding economic success,” he says. 

Hoping for stability

The big unanswered question is still how much runway Argentines are willing to give this new government. People are exhausted by the revolving door of economic crises. One recent poll suggests nearly two-thirds of Argentines surveyed think Mr. Milei can solve the country’s problems, if given time. Other surveys show his popularity is already taking a hit. 

Andrea Ortigoza voted for Mr. Milei, using a common refrain among supporters: “I wanted a change,” she says. 

And although she’s terrified of rising transit costs and how they will eat into her meager earnings as a housekeeper, Ms. Ortigoza still supports him. 

“We have to give him a chance,” she says. 

But Juan Sucno, a father of two, sees Argentina as caught in a game of roulette. In January, he had to close his motorcycle repair shop because his rent had tripled, while his sales stagnated as the cost of materials shot up. Now he drives for Uber. 

“What I’m hoping for is that [Mr. Milei] can maintain stability,” Mr. Sucno says. “To hope for things to improve is pretty difficult.”