President Donald Trump has explicitly tied a $20 billion economic lifeline to Argentina to the political survival of his ally, President Javier Milei, warning that US support will end if Milei loses power. During a White House lunch on Tuesday, Trump made his position clear, stating that the assistance is contingent on Milei remaining in office, underscoring their ideological bond and the strategic importance of the relationship.
The $20 billion aid package, formalized by Treasury Secretary Scott Bessent, involves a currency swap to bolster Argentina’s central bank reserves and stabilize the Argentine peso. This intervention comes after the currency plummeted due to political uncertainties following recent electoral losses for Milei’s party, which raised doubts about his ability to continue economic reforms. Bessent defended the move, arguing it is better to support allies than confront threats like narcotics trafficking, referencing recent US actions in Venezuela.
Milei’s administration has implemented radical austerity measures since taking office in 2023, including firing tens of thousands of public-sector workers and slashing regulations. These efforts have reduced inflation to its slowest monthly pace in over four years, but the economy remains fragile, with high stakes in the upcoming legislative elections on October 26. A defeat for Milei could trigger further instability, making the US lifeline both timely and contentious.
In the US, the aid has drawn sharp criticism, particularly amid an ongoing government shutdown that has furloughed federal employees. Democratic Senator Jeanne Shaheen vowed to ensure accountability for the use of taxpayer funds, while Republican Senator Chuck Grassley questioned why the US would help Argentina while it takes business from American soybean farmers. The timing has amplified concerns about prioritizing foreign aid over domestic issues, with reports of internal disputes within the Trump administration.
Geopolitically, the US views Milei as a key partner in countering Chinese influence in South America, given Argentina’s significant deposits of lithium and copper, resources critical for US manufacturing and technology. However, recent trade tensions, such as China’s suspension of US soybean imports in response to Trump’s tariffs, have complicated relations. Argentina’s temporary removal of export taxes on grains has allowed it to benefit from Chinese demand, creating friction with US agricultural interests.
Trump responded to China’s actions by threatening trade retaliation on social media, illustrating the volatile nature of international economic diplomacy. This episode highlights how personal alliances between leaders can shape foreign policy, with Trump rewarding Milei for his ideological alignment. However, this approach risks making US support dependent on political outcomes rather than long-term strategic interests, potentially undermining regional stability.
The outcome of Argentina’s elections will directly influence the continuity of US aid. A victory for Milei would likely strengthen bilateral ties and ensure continued economic support, while a loss could lead to a withdrawal, jeopardizing Argentina’s recovery and affecting US influence in the region. This situation underscores the intertwining of politics and economics in global affairs, with implications for how superpowers engage with allied nations.