Milei defies political gravity

Argentine President Javier Milei has maintained his popularity despite slashing public spending. [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Seldom do voters reward a political leader who guts public spending, cancels price controls, pulverizes the currency — and promises to stick at it. But [that’s exactly what’s happened]( in Argentina under President Javier Milei. The self-described anarcho-capitalist remains just as popular today as when he stormed to office eight months ago, with approval ratings consistently above 50%. To be fair, he was clear to voters that it would hurt to get South America’s second-biggest economy back on track, but few thought [it would be this painful](. Milei has slashed public spending by cutting pensions and state-sector wages, halting public works and stripping subsidies to wrangle runaway inflation. So far, [it’s working]( Monthly inflation cooled from 25.5% in December to 4% in July. He’s been taking victory laps overseas, meeting with like-minded leaders such as Donald Trump in the US while trading barbs with political foils from regional heavyweight President Luiz Inacio Lula da Silva of Brazil to Spanish Prime Minister Pedro Sanchez. Back at home, another factor working in Milei’s favor is widespread public fury at the free-spending populists who governed Argentina for the better part of the last two decades, with little to show for it but [deepening economic misery](. Exasperation at Peronism reignited last week as a domestic abuse scandal engulfed Milei’s presidential predecessor, Alberto Fernandez. Increasingly incendiary allegations against Fernandez, who made feminism his flagship cause, are likely to keep bolstering Milei. The travails of his opponents can only make unpopular measures tolerable for so long, though. To win midterm elections next year and hang on to power, Milei will have to unravel a complex edifice of capital controls to [restart the slumping economy]( without fanning inflation once more. Even for a risk-it-all libertarian, that’s a hard act to pull off.— [Manuela Tobias]( WATCH: Despite austerity measures, Milei remains largely popular at home. Source: Bloomberg Global Must Reads Israel began talks with international mediators about a proposed cease-fire in Gaza to douse tensions between the Jewish state and Iran. The parties are working on a [three-stage proposal]( presented by US President Joe Biden at the end of May, which aims to suspend hostilities, free more than 100 hostages held by Hamas in exchange for Palestinian prisoners and transfer more aid to the ravaged Gaza Strip. Negotiators will brief Hamas after the gathering. Ukrainian forces said they took 102 Russian soldiers prisoner in the largest single surrender by Moscow’s troops since the war started, as Kyiv’s military claimed to [continue expanding]( its cross-border incursion in the Kursk region. The Pentagon said the US is “still trying to learn more” about Ukraine’s objectives in the offensive, while Russia declared a state of emergency in the Belgorod region, neighboring Kursk. WATCH: Ukraine says it controls 1,150 square kilometers (444 square miles) of Russian territory. Tony Halpin reports on Bloomberg TV. Source: Bloomberg Kazakhstan is drawing a new line in its enforcement of [sanctions targeting Russia]( vowing to put its own economic interests first as it also deepens trade ties with countries from Iran to China. The central Asian nation “won’t blindly follow the sanctions” if they affect domestic companies that are the main employers in their areas, Deputy Prime Minister Serik Zhumangarin said in an interview. The daughter of former Thai leader Thaksin Shinawatra won a parliamentary vote to become the Southeast Asian nation’s [youngest prime minister]( capping a tumultuous period that saw a court oust her predecessor Srettha Thavisin and dissolve the top opposition party. While [37-year-old Paetongtarn Shinawatra]( may continue many of the policies pursued by Srettha’s administration, she [could abandon]( a plan to distribute 10,000 baht ($285) each to an estimated 50 million adults to stimulate the economy, according to local media reports today. Changes in the mpox virus are just the latest challenge facing disease trackers [trying to contain]( an outbreak that’s become a global health emergency, with Sweden reporting the first case of the new variant [outside Africa](. Democratic Republic of Congo needs 3.5 million doses of [vaccines to stop the virus]( that causes unsightly, painful rashes and lesions and has killed about 550 people this year. Candidates in Japan’s race for a new premier are diverging on monetary policy, highlighting the intense focus on whether the government might try to influence the Bank of Japan’s path toward policy normalization after its surprise rate hike on July 31 was [blamed for roiling financial markets](. South Africa’s 10-party ruling coalition is likely to hold together despite its members’ differences, because they see no other viable alternative to run the country, [according to a key power broker]( in the alliance. NATO is bolstering its presence in the Western Pacific by sending warships to more places, a move that risks stoking tensions with China, which is worried about the military alliance’s [growing influence]( in the region. China’s proposed measures to ease marriage registration and make divorces harder have provoked a [public backlash]( reflecting the challenges the world’s No. 2 economy faces in trying to arrest a sharp drop in births. Washington Dispatch Kamala Harris’ campaign proposed a [second debate]( with Trump if her Republican opponent follows through with their planned Sept. 10 encounter on ABC News. Biden was originally supposed to take part in the ABC forum, and after he dropped out of the race, Trump at first declined to commit. When polls [showed him losing ground]( to Harris, he accepted the invitation. Trump said yesterday he believes his strategy of insulting Harris [is boosting his campaign]( despite pleas from his own party to focus on policy. “I don’t have a lot of respect for her intelligence, and I think she’ll be a terrible president,” he said at a news conference at his golf club in New Jersey. Meanwhile, the vice presidential candidates, Senator JD Vance of Ohio and his Democratic opponent, Governor Tim Walz of Minnesota, have agreed to an Oct. 1 debate on CBS News. One person to watch today: Harris will deliver a speech in Raleigh, North Carolina, that will [outline her economic agenda]( including offering as much as $25,000 for first-time homeowners. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television. Chart of the Day European Union tariffs slowed the influx of Chinese-made electric vehicles in July, as the bloc moved to protect its automakers from low-cost competition. The number of new EVs that Chinese automakers registered in the EU last month fell 45% compared with June, according to [research from Dataforce]( which compiled results across the 16 member countries that have reported July figures to date. And Finally Israeli air strikes have left more than 42 million tons of debris across the Gaza Strip, according to the United Nations. That’s enough rubble to fill a line of dump trucks stretching from New York to Singapore. Removing it all [may take years]( and cost as much as $700 million. The task will be complicated by unexploded bombs, dangerous contaminants and buried human remains. Khan Younis, southern Gaza in May. Photographer: Ahmad Salem/Bloomberg Pop quiz (no cheating!) Celebrations in the future capital of which country were scaled back this week because of challenges providing enough food and accommodation in the remote location? Send your answers to balancepower@bloomberg.net. 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