U.S. Backing of Milei Government Faces Economic Headwinds in Argentina
BUENOS AIRES - Despite a surge of support from the U.S. government following Javier milei’s election, Argentina’s economic challenges persist, with the peso continuing to face downward pressure and questions arising over the sustainability of current intervention strategies.
The initial optimism following Milei’s victory quickly dissipated. Argentina’s central bank intervened to stabilize the weakening peso by utilizing its dwindling dollar reserves. Afterward, U.S. Treasury Secretary Scott bessent declared the U.S. would “do what is necessary” to support Argentina, an open-ended commitment signaling importent backing for the new administration.
However, the peso’s post-election gains “faded fast,” according to financial observers. Manny believe allowing the peso to float freely is crucial,despite the likelihood of an initial devaluation.As an example,9,000 pesos held since January have lost 16% of their value,equating to $6.30 at current exchange rates. This illustrates the scale of potential losses as the U.S. treasury undertakes limited purchases of Argentinian assets.
The extent of U.S. involvement already surpasses the 1995 Mexican bailout, as the U.S. is directly purchasing Argentinian pesos rather than providing loans with conditions. This approach has drawn potential criticism from some Republicans and angered U.S. cattle producers concerned about President Trump’s plans to increase Argentinian beef imports.
Trump’s options should the situation deteriorate include deepening U.S. market involvement or pursuing behind-the-scenes maneuvering, reminiscent of former President Bill Clinton’s efforts to expedite an IMF bailout for Russia prior to the 1996 election. Reports indicate Trump is already collaborating with major banks, including JPMorgan Chase and Bank of America, to create a supplemental aid package. JPMorgan Chase CEO Jamie Dimon met with Milei in Buenos Aires shortly before the election.
Despite these developments, Argentina faces an uncertain future. The naval training vessel ARA Libertad recently completed stops in Costa Rica and Portugal before arriving in Baltimore, a symbolic journey contrasting with its past involvement in an african port standoff. Ultimately, the article concludes, Argentina’s success hinges on its ability to forge an independent economic path, with or without continued U.S. assistance.
