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Former President Donald Trump has suggested that a $20 billion US financial package intended to stabilize Argentina’s currency is, in part, an effort to influence the upcoming legislative elections in the South American nation.
During a meeting at the White House with Argentina’s libertarian President Javier Milei, Trump indicated that continued US support for Argentina hinged on the success of Milei’s party in the elections.
Milei praised Trump’s past efforts at peacemaking and expressed confidence that the former US president’s policies would foster economic growth.
Argentina is currently facing economic challenges leading up to its midterm elections on October 26, which are widely viewed as a referendum on voters’ appetite for Milei’s austerity measures and free-market reforms.
Speaking openly during Tuesday’s meeting, Trump acknowledged the electoral implications of the financial assistance.
“The election is coming up very soon,” he stated. “It’s a very big election.”
Trump added, “Victory [for Milei] is very important. Your poll numbers I hear are pretty good. I think they will be better after this.”
“And, you know, our approvals are somewhat subject to who wins the election.”
While Argentina’s next presidential election is not scheduled until 2027, Trump cautioned that US support would be significantly different under a “socialist” administration.
“If he loses, we are not going to be generous with Argentina,” Trump affirmed.
Milei, in turn, attributed Argentina’s economic difficulties to political opposition.
“This liquidity problem that Argentina has is a result of the political attacks we have suffered from our opponents,” he explained to Trump.
Trump’s support for Milei, who assumed office in December 2023, has been openly expressed.
He characterized the financial aid as “just helping a great philosophy take over a great country,” and the White House has presented it as support for a key regional partner.
However, Trump’s direct connection of the $20 billion currency swap to Milei’s electoral prospects is noteworthy, especially given his previous criticisms of foreign interference in elections.
Recent provincial elections in Buenos Aires saw Milei’s La Libertad Avanza coalition (Freedom Advances) underperform expectations, unsettling markets concerned about the future of his economic agenda.
His party has also faced a number of recent corruption allegations.
If Milei’s party loses seats or fails to gain ground in the upcoming midterms, his government’s ability to enact further reforms could be compromised.
Several key vetoes initiated by Milei have already been overturned by Congress, where his party lacks a majority.
The question remains: will US support prove decisive?
Argentine stocks declined following Tuesday’s press conference.
The intervention, initially intended to stabilize the Argentine economy, now appears contingent on Milei securing greater political support.
Financial markets seem skeptical that Trump’s endorsement will significantly bolster Milei’s electoral chances.
The currency swap was intended as a financial lifeline for Argentina’s peso, which has been depreciating for years.
Milei had been utilizing the country’s reserves to prevent a drastic devaluation of the peso as a means of controlling inflation.
However, this strategy was depleting reserves ahead of $20 billion in debt payments due next year.
This situation raised concerns among investors about a potential financial crisis should Argentina default on its debts again.
Some analysts believed that Milei might be forced to allow a significant currency devaluation, which would trigger a surge in prices as the value of people’s savings diminished.
Many economists have suggested that such a move would be “political suicide.” The US intervention may, therefore, help avert such a scenario.
However, it remains uncertain whether this will resonate with ordinary voters. Opinion polls suggest growing weariness among Argentines regarding Milei’s stringent austerity measures.
While his supporters commend him for reducing inflation and the deficit,
these measures have entailed significant social costs, including substantial cuts to pensions, education, healthcare, infrastructure, and subsidies for transport and utilities.
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