The administration of US President Donald Trump has expressed its backing for Argentina’s President Javier Milei, aiming to enhance his prospects in the upcoming midterm elections – the onus now rests on him to secure victory. Milei, 54, is approaching the final stretch of the campaign trail, buoyed by favorable winds from Washington, even as Trump this week seemed to link support to his ally’s success in the October 26 election. Argentina’s President journeyed to the US capital amid a series of unfavorable headlines, encompassing scandals related to corruption and drug trafficking, resistance in Congress, and weeks of currency volatility necessitating interventions in the foreign exchange market. Nonetheless, Trump praised Milei as a “great leader” on Tuesday during a significant meeting at the White House – although the US president indicated that the anticipated financial aid for Argentina is contingent upon the outcomes of this month’s midterm elections. “Your poll numbers I hear are pretty good, but I think they’ll be better after this,” Trump stated while hosting right-wing Milei at the White House, just days after his administration pledged US$20 billion to support the peso. “And you know, our approvals are somewhat contingent upon the outcome of the election, because if a socialist… wins, it alters the sentiment surrounding investment decisions,” remarked the Republican leader, noting that the election is being “observed globally.”
Trump issued a warning to Argentine voters regarding the potential withdrawal of aid should his ally face defeat. “If he loses, we will not extend generosity towards Argentina,” he cautioned. “I align myself with this individual due to the validity of his philosophy.” There exists a possibility that he may emerge victorious, though it is equally plausible that he may not. My assessment leans towards a favorable outcome for him. Should he secure victory, our allegiance remains; conversely, a loss would prompt our departure. When questioned by reporters regarding the potential failure of Washington’s rescue package, Trump remarked: “Anything can fail.” Government officials subsequently countered the interpretation of the remarks, asserting that US support is assured until the conclusion of Milei’s term in office in 2027. Milei, during his inaugural visit to the White House, expressed gratitude to his US counterpart for backing the “free world” in the face of the “threat of 21st-century socialism globally.” In a interview, he sought to alleviate market concerns by reaffirming his backing for an additional two years. He also stated that Trump’s aid package was designed to assist his nation in fulfilling its debt obligations. Trump also suggested discussions regarding a bilateral trade agreement during the meeting at the White House. “We want to assist Argentina,” he stated. “One of the methods available to us is that they possess an excellent product, and historically, we engaged in substantial trade.” Trump also stated that Argentina might engage in trade with China, but should refrain from undertaking “anything with the Chinese Armed Forces.” Numerous government officials have refuted claims suggesting that the United States has requested Argentina to terminate its current currency swap arrangement with China’s Central Bank, valued at US$18 billion and renewed in the previous year. On Sunday, Economy Minister Luis Caputo dismissed any immediate intentions to dollarise the economy or modify the floating exchange rate band, amidst speculation regarding potential changes following the election. “The United States is prepared to continue purchasing pesos,” he stated.
Argentine stocks experienced a notable increase on Wednesday, while sovereign bonds saw a temporary spike following the confirmation from US Treasury Secretary Scott Bessent regarding the department’s efforts on a second US$20-billion “facility” for Argentina within a two-month period. The new programme would elevate the total pledged US assistance for the country to an impressive US$40 billion. Bessent informed reporters in Washington that the new aid “would be adjacent to our [currency] swap line” announced in September, which already amounted to US$20 billion. The new bailout is expected to originate from “private banks and sovereign wealth funds” and will be “more aimed at the debt market,” reflecting increasing apprehensions regarding Argentina’s capacity to fulfill its impending debt obligations. Bessent announced this development one day following Trump’s hosting of Milei at the White House. Milei approaches next week’s election with diminished prospects, having failed to stabilize Argentina’s ailing peso, even after depleting the Central Bank’s dollar reserves in an attempt to support it. Bessent last week stated that the US Treasury had commenced purchasing pesos to assist in bolstering the currency. The purchases persisted into the middle of the week. Milei is encountering increasing dissent within Congress regarding his austerity measures and continues to grapple with the fallout from a corruption scandal involving his sister and key advisor, Karina Milei, alongside a media uproar concerning connections between a suspected drug trafficker and one of his former leading candidates for legislative office, José Luis Espert. In the previous month, the ruling party experienced a significant setback in a regional election in Buenos Aires Province, which is regarded as an important indicator of the current level of support for the administration.
Opinion polls indicate that his alliance is closely competing with the centre-left opposition in the midterms; however, Milei’s La Libertad Avanza coalition is anticipated to significantly underperform in securing an outright majority. While Bessent’s announcement alleviates certain financial apprehensions prior to the October 26 vote, it renders the outcomes more binary, noted Santiago Resico. “The ambiguity surrounding US intentions concerning the aid package undermines the significance of its magnitude,” he stated. Political scientist Gustavo Marangoni stated that Milei’s party had “no chance of winning a majority,” forecasting that he would secure approximately one-third of the available seats. This represents a notable enhancement over La Libertad Avanza’s current standing in Congress, where it occupies a minority position in both chambers. Carlos Melconian expressed strong discontent regarding Trump’s comments, labeling them as “a quasi-colonial incursion” into Argentina’s affairs. “Trump doesn’t want to save the country, he only wants to save Milei,” stated centrist Senator Martin Lousteau (Unión Cívica Radical) in a social media post. On Wednesday, Bessent affirmed that Milei would maintain US backing as long as he was able to veto congressional legislation that did not align with his agenda. “It is not election-specific; it is policy-specific,” he stated. “As long as Argentina maintains sound policy measures, US support will be forthcoming,” he stated.
Milei implemented substantial budget reductions following his assumption of office in December 2023, driven by a commitment to address persistently elevated inflation rates and rejuvenate the faltering economy. However, his reforms resulted in tens of thousands of public servants losing their jobs, led to a significant decline in consumer spending, and left many of Argentina’s most vulnerable citizens struggling to make ends meet. During a interview aired on Wednesday, the 54-year-old president stated he had “no intention of changing course until the end of my term.” “I am dedicated to the objectives of reducing taxes, deregulating, and sustaining economic growth,” he stated. In a subsequent interview with A24, Milei declined to provide additional commentary on US trade discussions. “We are currently engaged in the process, but I prefer to withhold any announcements until we have completed the final adjustments.” There exists consensus regarding trade positions. He stated, “It’s the preliminary phase [to a free-trade agreement].”