Trump Hosts Argentina’s President Milei as US Offers $20 Billion Support
Argentina’s libertarian leader is expressing admiration for Donald Trump as he prepares for his inaugural White House meeting with the US president on Tuesday. This strategy has played a pivotal role in reshaping President Javier Milei’s financially challenged nation into one of the Trump administration’s most steadfast allies. The enthusiastic statements are familiar territory for Milei, whose bold reductions in state spending and confrontations with woke leftists have garnered him support from US conservatives. “Your commitment to life, freedom and peace has restored hope to the world,” Milei wrote on social media Monday, congratulating the US president on securing a ceasefire deal in Gaza, where a truce is holding after a devastating, two-year Israel-Hamas war. “It is an honour to consider you not only an ally in the defence of those values, but also a dear friend and an example of leadership that inspires all those who believe in freedom,” he said.
The relationship between Trump and Milei has recently yielded significant benefits for Argentina, culminating in a $20 billion bailout. Experts indicate that Milei arrives at the White House with two distinct objectives. One is to negotiate US tariff exemptions or reductions for Argentine products. The other is to observe how the United States will execute a $20 billion currency swap line to support Argentina’s peso and restore its dwindling foreign currency reserves in advance of the important midterm elections later this month. The Trump administration took an unprecedented step by intervening in Argentina’s currency market following a significant defeat for Milei’s party in a recent local election. Amid setbacks in the opposition-dominated Congress, the party’s significant defeat has led to a crisis of confidence, as voters in Buenos Aires Province express their frustration over rising unemployment, declining economic activity, and emerging corruption scandals. Concerned that this might signal a decline in public backing for Milei’s free-market agenda, investors offloaded Argentine bonds and sold the peso. Argentina’s Treasury started losing valuable dollar reserves rapidly, attempting to stabilize the currency and maintain its exchange rate within the limits established by the recent $20 billion agreement with the International Monetary Fund. However, as the peso continued to decline, Milei became increasingly desperate. On September 23, he met with Trump during his visit to New York City for the United Nations General Assembly. A whirlwind of congratulatory gestures and cordial exchanges between the two swiftly transitioned into US Treasury Secretary Scott Bessent openly assuring Argentina of a financial lifeline amounting to $20 billion.
Markets responded positively, and investors expressed a sense of relief. In the subsequent days, Argentine Economy Minister Luis Caputo dedicated hours to meetings in Washington in an effort to finalize the agreement. Last Thursday brought reassurance as Bessent announced that the US would permit Argentina to exchange up to $20 billion worth of pesos for an equivalent amount in dollars. Bessent stated that the success of Milei’s program held systemic importance, noting that the US Treasury directly purchased an unspecified amount of pesos. The Trump administration faced a challenging situation as it navigated the public perception of providing assistance to a nine-time serial defaulter during a US government shutdown that resulted in widespread layoffs. However, for Argentina, it arrived just in time. Aware of how a weak currency could threaten his flagship achievement of taming inflation and hurt his popularity, Milei hopes to stave off what many economists see as an inescapable currency devaluation until after the October 26 midterm elections. A devaluation of the peso would likely ignite a resurgence in inflation. “Milei is going to the US in a moment of desperation now,” said Marcelo J. Garca. He must reshape market expectations and demonstrate that his program can be sustainable, Garca added. “The government is attempting to buy time to reach the midterms without significant changes, such as devaluing or floating the peso.”
Milei remained non-specific when questioned about the particulars of his discussions with Trump, anticipated later on Tuesday. Officials indicate that he is scheduled for a two-hour meeting with the US president, which will be succeeded by a working lunch with other senior officials. He was also expected to participate in a ceremony at the White House honoring Charlie Kirk, the prominent right-wing political activist who was fatally shot last month. Milei frequently encountered Kirk while navigating the speaking circuit of the rising global right. “We don’t have a single-issue agenda, but rather a multi-issue agenda,” Milei told. Finalized matters will be announced, while those still in the process of finalization will remain pending. The specifics of any conditions tied to the currency swap deal by the Trump administration remain ambiguous, leading Democratic lawmakers and other critics to denounce it as a case of Trump favoring loyalists while burdening American taxpayers. There has been no indication regarding how Argentina, the IMF’s largest debtor, will manage to repay the US for this $20 billion, which is in addition to the IMF’s own loan for the same amount issued in April. Additionally, that one followed a previous IMF loan amounting to $40 billion. Despite the assistance received, Milei’s administration has already failed to meet the IMF’s initial objectives for restoring currency reserves. “The US should be concerned that Argentina has had to return for $20 billion so quickly after getting $14 billion upfront from the IMF,” said Brad Setser. “I worry that this may prove to just be a short-term bridge and won’t leave Argentina better equipped to tackle its problems,” he added. However, during the radio interview prior to his flight, Milei maintained an optimistic demeanor. He expressed enthusiasm about US support rescuing Argentina from the local variant of 21st-century socialism and eloquently praised Argentina’s economic potential. “There will be an avalanche of dollars,” Milei said.
