Javier Milei
Trump’s $40 Billion Shadow Over Milei’s Midterm Triumph
Buenos Aires: Argentina’s midterm elections have ignited a diplomatic storm after United States President Donald Trump’s remarks appeared to tie Washington’s financial aid to the victory of Argentine President Javier Milei. While Milei’s coalition, La Libertad Avanza (LLA – Liberty Advances), secured a commanding lead in the October 26 vote—capturing 40.8% nationwide against the Peronists’ 31.7%—opposition leaders are accusing Washington of blurring the line between public endorsement and political interference.
This upset, exceeding pre-vote polls of 30–35% for LLA, not only flipped Peronist strongholds like Buenos Aires province (41.5% vs. 40.8%) but also defied Milei’s recent scandals, including “Karinagate” involving his sister and a drug-trafficking probe against an ally.
Trump’s comments, made just days before the vote, suggested that U.S. support hinged on Milei’s re-election prospects. “If he loses, we will not be generous with Argentina… we’re not going to waste our time,” Trump said during an October 14 briefing at the White House, as the U.S. Treasury unveiled a potential $40 billion currency-stabilisation facility for Buenos Aires—a package comprising a $20 billion central-bank swap already inked and a further $20 billion in proposed debt purchases and private investments.
When Milei’s win became official, Trump doubled down, telling reporters that “Milei had a lot of help from us… a BIG WIN,” crediting his “strong endorsement” and Treasury Secretary Scott Bessent’s role in averting a peso collapse after Milei’s September provincial setback. The two statements have since dominated headlines across Latin America and spurred debate about how economic leverage intersects with electoral sovereignty, especially in a region scarred by past U.S. interventions.
The results themselves mark a decisive shift in Argentina’s political balance. Milei’s bloc won more than 40 per cent of the national vote, a roughly 9-point margin over the Peronist coalition, expanding his representation in both chambers of Congress.
With roughly 64 seats in the lower house—up from 37, pushing the bloc to about 101 total—and 14 fresh gains in the Senate (to around 20), the libertarian president now commands the legislative muscle to push forward his sweeping austerity agenda, including veto-proof majorities and blocks on impeachment threats. Analysts note that this insulates Milei against Peronist roadblocks, enabling bolder moves like tax simplification (eliminating 20 levies) and labour deregulation—reforms that have already tamed inflation but at the cost of a 3.5% GDP contraction in 2024, driven by subsidy withdrawals and tight monetary policy.
Markets reacted swiftly, interpreting the mandate as a green light for Milei’s “shock therapy.” The peso appreciated by about 10 per cent in early trading after the results were confirmed, while the Merval index rocketed nearly 20–30 per cent in two days—its sharpest rally since Milei’s 2023 upset—pushing bonds to record highs and slashing “country risk” from distressed levels. Investors viewed the outcome as a reaffirmation of Milei’s market-oriented reforms, which include deep cuts to public spending (tens of thousands of jobs axed), deregulation (a new ministry targeting monopolies), and efforts to overhaul the central bank’s authority—yielding Argentina’s first fiscal surplus in 14 years and positioning 2025 for 5% growth, per World Bank forecasts. Inflation, once above 200 per cent annually, has reportedly fallen to around 30 per cent (monthly 2.7% in October), though poverty still affects nearly half of Argentina’s population—down from a 53% peak in early 2024 but lingering amid recessionary pains like stagnant wages and subsidy slashes.
Yet, the controversy surrounding Washington’s influence has overshadowed Milei’s economic story. Argentina’s opposition parties launched the social-media campaign #PatriaOColonia (“Homeland or Colony”), denouncing Trump’s remarks as a form of “electoral blackmail”—a hashtag that exploded post-October 14, amassing thousands of posts framing the aid as “remote control” by the U.S. Treasury, per Cristina Fernández de Kirchner’s viral audio clip played at rallies outside her house arrest site. Several former diplomats argued that Trump’s statements violated diplomatic convention by directly linking aid to a preferred political outcome, evoking historical suspicions of U.S. meddling from the 1940s Perón era to CIA-backed coups. So far, Argentina’s National Electoral Chamber and international observers—from the Organization of American States to European Union monitors—have found no evidence of foreign funding or interference in the vote itself, describing the process as transparent and orderly, with turnout at around 75 per cent.
For Milei, the outcome delivers both empowerment and exposure. His strengthened hand in Congress allows him to accelerate controversial structural changes—like pension tweaks and labour flexibility—but it also raises expectations among his supporters and scrutiny from those who fear austerity’s social costs, including a 5% GDP rebound in 2025, hinging on IMF talks and lithium exports to counter China. The president has already appealed to moderate lawmakers to cooperate on fiscal reform, warning that paralysis would undo Argentina’s fragile recovery—echoing his victory speech: “Today begins the construction of a great Argentina.”
In Washington, administration officials insist the $40 billion financial arrangement reflects strategic continuity, not coercion—aimed at stabilising one of Latin America’s largest economies (~$650 billion GDP) and aligning it with broader U.S. goals on currency transparency and rare-earth supply chains. They note that Argentina’s central-bank swap and aid packages were designed to bolster reserves (now around $33–35 billion) amid $278 billion debt woes, not sway ballots. Yet the optics—a close ideological ally of Trump securing an immediate windfall after victory—have reinforced perceptions of transactional diplomacy, with X users quipping “MAGA: Make Argentina Great Again?”
For Argentine voters, the episode has crystallised the tension between national pride and economic pragmatism. The country’s chronic inflation, debt exposure, and political fatigue—exacerbated by Peronist legacies—created an opening for Milei’s anti-establishment message, yet Trump’s remarks risk framing his success as externally aided rather than domestically earned, with polls showing 58% opposing the aid’s conditions. Analysts warn that such narratives could erode the legitimacy of reforms even before they take effect, especially if 2025’s projected 5% growth falters amid overvalued-peso risks (depreciated <30% vs. 117% inflation).
As the dust settles, the facts are clearer than the interpretations: Milei’s legislative victory is genuine; Trump’s support was overt but not legally intrusive; and Argentina’s path forward will test how far financial dependence can coexist with political autonomy in a volatile regional order—where U.S. dollars may steady the peso but test Argentina’s enduring sense of sovereignty.
– global bihari bureau
