Javier Milei, Argentina's libertarian leader, has expressed his admiration for President Donald Trump, ahead of their inaugural meeting at the White House.
This sentiment aligns with the strengthening ties between Milei's administration and the Trump government. Milei's forthright approach, characterized by substantial cuts in government expenditure and critique of progressive movements, has garnered attention from conservative circles in the U.S.
According to the Associated Press, Milei took to social media to commend President Trump for his role in securing a ceasefire in Gaza, following a destructive two-year conflict between Israel and Hamas. "Your commitment to life, freedom, and peace has restored hope to the world," Milei wrote.
He further expressed his honor in considering Trump not only an ally in defending these values but also a cherished friend and a model of leadership that inspires those who believe in freedom.
The rapport between Trump and Milei has been accompanied by financial backing from the U.S. for Argentina, including a $20 billion bailout. Analysts suggest that Milei's visit to the White House has two primary objectives. Firstly, to negotiate tariff exemptions or reductions for Argentine products, and secondly, to understand how the U.S. will implement a $20 billion currency swap line to bolster Argentina's peso and replenish its foreign currency reserves ahead of the crucial midterm elections later this month.
The Trump administration decided to intervene in Argentina's currency market following a significant defeat for Milei's party in a local election last month. This loss, coupled with setbacks in the opposition-dominated Congress, led to a crisis of confidence.
Voters in Buenos Aires Province expressed their dissatisfaction with increasing unemployment, shrinking economic activity, and ongoing corruption scandals. This led to investors selling Argentine bonds and the peso, as concerns grew that support for Milei's free-market program was waning.
As the peso continued to weaken, Milei intensified efforts to stabilize the economy. He met with Trump on Sept. 23 while in New York City for the United Nations General Assembly. A series of cordial meetings between the two leaders preceded an announcement by U.S. Treasury Secretary Scott Bessent, who publicly promised Argentina a $20 billion financial lifeline. Markets responded positively, and investors expressed relief.
In the days that followed, Argentine Economy Minister Luis Caputo spent hours in meetings in Washington to finalize the agreement. Reassurance came last Thursday, when Bessent announced that the U.S. would allow Argentina to exchange up to $20 billion worth of pesos for an equal sum in dollars.
Bessent added that the U.S. Treasury directly purchased an unspecified amount of pesos, stating that the success of Mileis program was of systemic importance.
The Trump administration faced scrutiny over the decision, given Argentinas history of multiple debt defaults and ongoing U.S. budget challenges. For Argentina, the move came at a critical time. Milei, aware of how a weak currency could threaten his efforts to control inflation and affect his popularity, hopes to prevent what many economists see as a possible currency devaluation until after the Oct. 26 midterm elections. A devaluation of the peso would likely fuel a resurgence in inflation.
Marcelo J. Garca, political analyst and Director for the Americas at the Horizon Engage political risk consultancy firm, commented on the situation. Milei is going to the U.S. in a moment of desperation now," said Garca. He needs to recreate market expectations and show that his program can be sustainable, Garca added. The government is trying to win some time to make it to the midterms without major course corrections, like devaluing or floating the peso.
Milei was vague when pressed for details on his talks with Trump, expected later on Tuesday. Officials said he would have a two-hour meeting with the U.S. president, followed by a working lunch with other top 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 often crossed paths with Kirk on the speaking circuit of the growing global right.
We dont have a single-issue agenda, but rather a multi-issue agenda, Milei told El Observador radio in Buenos Aires Monday. Things that are already finalized will be announced, and things that still need to be finalized will remain pending.
Democrat lawmakers and other critics questioned whether the Trump administrations currency swap deal favored political allies, arguing it could burden American taxpayers. There has been no word on how Argentina, the IMF's largest debtor, will repay the U.S. for this $20 billion, which comes on top of the IMFs own loan for the same amount in April. That loan followed an earlier IMF package of $40 billion. Despite this support, Milei's government has already missed the IMF's early targets for rebuilding currency reserves.
"The U.S. 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, a former Treasury official now at the Council on Foreign Relations. I worry that this may prove to just be a short-term bridge and wont leave Argentina better equipped to tackle its problems, he added.
Before his flight, Milei expressed strong appreciation for U.S. support, saying it helped Argentina counter the local franchise of 21st-century socialism and spoke optimistically about the countrys economic potential. There will be an avalanche of dollars, Milei said. Well have dollars pouring out of our ears.
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