Buenos Aires, Oct 14 (AP) — Argentina's libertarian leader Javier Milei is heaping praise on Donald Trump ahead of their first meeting at the White House on Tuesday. This strategy has helped transform Argentina, a country struggling economically, into one of the Trump administration's closest allies.
Such enthusiastic declarations are not new for Milei, whose significant cuts to state spending and critiques of "woke leftists" have earned him fans among U.S. conservatives. "Your commitment to life, freedom, and peace has restored hope to the world," Milei posted on social media Monday, lauding Trump for securing a ceasefire in Gaza, which remains in place after a two-year conflict between Israel and Hamas. "It is an honor to consider you not only an ally in the defense of those values but also a dear friend and a leadership example that inspires all those who believe in freedom," he added.
The Trump-Milei partnership has already benefited Argentina, recently resulting in a USD 20 billion bailout. Experts suggest that Milei is heading to Washington with two specific goals: to negotiate U.S. tariff exemptions or reductions for Argentine products and to explore the implementation of the USD 20 billion currency swap aimed to stabilize Argentina's peso and boost its depleted foreign reserves ahead of midterm elections this month.
Amid a Crisis, Turning to Trump
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The Trump administration's intervention in Argentina's currency market was an unusual move, following a landslide loss for Milei's party in a recent local election. Political setbacks and economic challenges, such as rising unemployment and scandals, eroded confidence in Milei's free-market agenda, prompting investors to divest Argentine bonds and sell pesos.
Faced with this crisis, the Argentine Treasury began to deplete its dollar reserves in an attempt to stabilize the peso, conforming to the trading band agreed upon with the IMF. The continued decline in the peso's value pushed Milei to seek help, which he found in Donald Trump during their meeting at the United Nations General Assembly in New York on September 23. The support of US Treasury Secretary Scott Bessent resulted in a promise of a USD 20 billion lifeline, leading to a market rally.
Timing is Everything
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Following this diplomatic activity, Argentine Economy Minister Luis Caputo engaged in extensive talks in Washington. Success was acknowledged on Thursday when Bessent declared that the US would permit Argentina to swap up to USD 20 billion worth of pesos for US dollars, labeling the stability of Milei's program as "systemically important." However, this assistance comes at a challenging moment for the US, dealing with its own government shutdown.
Milei aims to avert a currency devaluation before the October 26 midterm elections, which would likely spark inflation. Marcelo J. García, political analyst at Horizon Engage, highlighted Milei's efforts to maintain stability until the elections without major currency policy shifts.
No Strings Attached
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Milei has kept details of his future discussion with Trump under wraps. The agenda includes a two-hour meeting with Trump and a working lunch with top officials, and attending a White House event honoring Charlie Kirk, a notable conservative figure who was recently fatally shot. Critics wonder about any conditions tied to the swap deal, questioned as a partisan reward by some Democrats.
The financial stakes are significant, given Argentina's position as the largest borrower from the IMF, compounded by USD 20 billion from both the US and a previous IMF loan of USD 40 billion. Despite these financial infusions, Argentina has struggled to meet the IMF's reserve-building targets. Brad Setser of the Council on Foreign Relations expressed concerns over the sustainability of these short-term financial measures.
Nevertheless, Milei remains optimistic, crediting U.S. support for shielding Argentina from "21st-century socialism" and expressing confidence about future economic opportunities. "There will be an avalanche of dollars," he declared with enthusiasm. "We'll have dollars pouring out of our ears." (AP) RD RD
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