Argentinian libertarian economist, Javier Milei, has just been elected president of Argentina. He finds himself now facing a broader and more turbulent economic landscape, characterized by rampant inflation and a nosediving peso. Elected in 2023, Milei wants to push through radical government spending cuts and other fiscal reforms to revitalize the country’s foundering economy. His policies have garnered admiration from various conservative figures in the United States, including prominent entrepreneur Elon Musk, and he has positioned himself as an ally of former President Donald Trump.
Milei made headlines this past week when he became the first foreign leader to meet with Trump. This meeting occurred just following the news of Trump’s victory in the November 2024 US presidential election. This meeting is a sign of how the two leaders’ relationship has deepened. It further illustrates the danger of expanded US engagement in Argentina’s financial crisis.
The stakes for Argentina’s newly re-elected government are even higher than anticipated, as investors have made their displeasure known. The peso continues to devalue. In response, investors are dumping Argentine equities and debt causing a capital flight. In the heart of this fiscal chaos, US Treasury Secretary Scott Bessent did not hesitate. He proclaimed that the US stands “prepared to do whatever is necessary” to assist in stabilizing Argentina’s economy. US government interventions under consideration would include the purchase of Argentine pesos and Argentine dollar-denominated government debt.
Bessent emphasized that “all options for stabilization are on the table,” reflecting a commitment to assist Argentina during this period of uncertainty. The US has committed its support, and it’s creating a tsunami in financial markets. Argentine stocks are through the roof, and prices for the country’s peso-denominated debt have taken flight as well.
Despite this aid, Milei said he felt “enormous gratitude” towards the United States, specifically for this assistance. He stated, “Those of us who defend the ideas of freedom must work together for the welfare of our peoples,” indicating his belief in collaborative efforts to improve economic conditions.
Though very positive steps in forming these strategic partnerships, Milei’s administration will have a very heavy lift. Because since those elections, recent local victories have all gone the way of his opponent’s party, leading to doubts over his leadership. To make matters worse, an ongoing bribery scandal tied to his sister has thrown a wrench into his political fortunes. Argentina faces national mid-term elections in October. These new developments will surely serve as a litmus test on Milei’s radical and divisive economic policies.