The result of the 2023 Argentinian elections saw the victory of outsider Javier Milei, a self-described “anarcho-capitalist”, in a populist success that seems to echo Donald Trump and Jair Bolsonaro’s. While it is unclear to what extent Milei will be able to implement his pro-small-government, pro-free market programme at home, his election will likely affect Argentina’s geopolitical position, and its importance for global players. Outside of Argentina itself, the US has the most to gain, and possibly lose, from Milei’s presidentship.
Current US-Argentinian relations are cordial but somewhat tense, with some of Buenos Aires’s foreign policy decisions raising eyebrows in Washington. The current Peronist government has exhibited a somewhat ambiguous strategy that can only partly be described as non-aligned. Albeit not overtly courting the likes of Beijing and Moscow, it has followed the lead of other regional powers in pragmatically opening to further collaboration outside of Washington’s sphere of influence with an eye to increasing multipolarity. Argentina’s adoption of the Russian-developed Covid-19 Sputnik vaccine can be read in this light, as can China’s growing influence and pull for Argentinian trade – having become, in 2020, Buenos Aires’s biggest trading partner. During the August 2023 Johannesburg summit, Argentina was officially invited to join BRICS in early 2024, alongside an intercontinental court of candidates including Brazil, Iran and Saudi Arabia. President Fernández’s response strongly signalled in favour of accepting the proposal and was followed in October by the country’s official entry into the New Development Bank (NBD). This, again, can be seen as a further turn towards multipolar pragmatism: the NDB’s promise of accessing a financing platform with generous conditions and credit lines is appealing considering Argentina’s increasingly unsustainable situation in terms of external debt and inflation. It is also appealing because of Argentina’s $43 billion debt with the IMF, which continues to be a point of attrition within Fernández’s coalition. Possibly a concession to the coalition’s anti-IMF and more left-aligned parties, adhesion to the NDB nevertheless sent an important signal for the region’s geopolitical trajectory.
Washington’s worries concerning Argentina’s non-aligned pragmatism primarily have to do with the rising importance of South America as a sphere of economic (and, perhaps, military) competition with Beijing. In part, this is the product of the ongoing rollback of the Obama-era “pivot to Asia”, which necessarily reconceptualises the Pacific as an area of strategic rivalry. Under Trump and Biden, more than a few echoes of old Monroe Doctrine principles – imagining South America as part of the “US’ backyard” – have seemingly reappeared. A recent US foreign affairs subcommittee hearing mentions China’s “malign influence” in Latin America and resurrects old fears of “red” ideological interference in the continent. In this sense, Argentina’s ongoing political instability is also felt by Washington as representing a weak point for the entire strategic architecture of the region. Argentina’s geographic position – controlling the Strait of Magellan and key sea lanes between the South Atlantic and South Pacific and affecting the balance of power of the Antarctic region – appears particularly relevant here.
This considered, the Argentinian elections could superficially appear as reassuring for the US. With Milei’s victory, pragmatic non-alignment is likely to disappear. Hours after the elections, Diana Mondino – likely to become the new Foreign Affairs minister under Milei’s government – was reported as stating that Argentina would not ratify its entry in BRICS. Indeed, the new government appears poised to solidly align its international position with Washington. Not only has Milei repeatedly declared his support for Ukraine and Israel in the context of current international conflicts, as well as ideologically attacking Russia and China for their authoritarianism, but he has also made an almost unprecedented proposal to substitute the peso, Argentina’s national currency, with the US dollar, while simultaneously disbanding Argentina’s Central Bank. While Buenos Aires had already attempted to impose a fixed, one-to-one peso-dollar exchange rate in the 1990s under the frame of “convertibility”, Milei’s proposal would essentially tie Argentina’s economic wellbeing to Washington’s monetary policy. This is further confirmed by Milei’s vow to leave Mercosur, the South American common market, which he has criticised as a “failure”, and which is currently in the process of finalising a trade agreement with the European Union. Milei’s proposal, if enacted, is likely to not only affect the progress of Argentinian regional economic integration, but has a further risk (albeit more remote) of impacting the long-term process of diversification of South American external trade.
Yet, while averting the risk of a strategically important state joining the growing BRICS faction and finding an ideologically friendly and committed government in a period of otherwise shifting political alliances might seem like a completely positive development for Washington, Argentina’s populist turn might reveal itself a double-edged sword. Milei’s calls for dollarisation do not actually entail a fast decoupling from China: as The Diplomat notes, Argentina has increasingly relied on its bilateral currency swap line with Beijing to avert the risk of defaulting with the IMF. Considering the probable necessity for further devaluation of the peso prior to dollarisation, and Buenos Aires’s need to secure substantial amounts of US dollars, it is likely that China will further leverage this instrument to pressure Milei’s government, potentially fostering instability within the country and provoking economic spill-over effects that will be felt in Washington. Most importantly, if Milei’s reform package fails to materialise or to produce desirable results, it is possible that Argentina will plunge into a period of further socioeconomic instability, a situation that might prove to offer the opportunity for a regional increase in the influence of Washington’s strategic adversaries. For these reasons, Washington’s reactions to Milei’s victory have not been particularly enthusiastic, displaying instead a certain caution.