Is Argentina Back from the Socialist Precipice?

Treasury Secretary Scott Bessent confirmed that he met with Argentine President Javier Milei on April 14. In an interview with Bloomberg TV, Bessent conveyed the US administration's support for Argentina and the president's economic reforms, bringing the Latin American nation "back from the precipice." Is this the beginning of a beautiful friendship?

Argentina Keeps Racking up Wins

Since winning the election in December 2023, President Milei has secured victory after victory for Argentina. The light of liberty is slowly resurrecting a country devastated by the stench of socialism. Inflation has cratered, the government has registered surpluses, private investment has flooded various sectors, and housing affordability has improved.

The Argentine government's latest achievements included scrapping currency and capital controls and establishing a $20 billion loan program with the International Monetary Fund: $12 billion from the World Bank and $10 billion from the Inter-American Development Bank. These two moves bolstered overall confidence (based on Wall Street's reaction) and could attract even more investment into the nation.

JPMorgan Chase analysts perhaps produced the best commentary on Argentina's situation. "The policy advancements represent a significant step forward, enabling the country to unlock a potential that has been stifled for decades due to poor policy-making,” they wrote in a note.

The Trump administration wanted to extend its support for the Argentine leader and his actions. "I wanted to come here today to show support for President Milei and his commitment to what I think is historic in terms of bringing Argentina back from the precipice," Bessent told the business news network. But he also had a message for the libertarian-leaning, chainsaw-carrying, wild-hair-wearing president: Bring your “A game” for trade negotiations.

Bessent, a seasoned Wall Street veteran billionaire, stopped short of determining whether Buenos Aires could establish a zero tariff rate – the 10% universal tariff rate was applied to Argentina. Echoing the sentiment of his White House colleagues, Bessent noted that trade discussions are more than tariffs. They are focused on various issues, including non-monetary barriers, currency manipulation, and industry subsidies.

The China Syndrome

Despite the words of encouragement, the United States is not altruistic in its desire to see Argentina succeed. Indeed, Washington possesses a geopolitical interest in the region.

For the last several years, Latin American nations have conceded domestic mining rights to China in exchange for financial assistance. Since 2005, the Chinese regime has extended more than $120 billion in loans to Latin American and Caribbean nations, leaving governments drowning in a sea of IOUs. Washington is paying attention.

"China has signed a number of these rapacious deals marked as aid, where they've taken mineral rights. They've added huge amounts of debt onto these countries' balance sheets," Bessent said. "They're guaranteeing that future generations are going to be poor and without resources. And we don't want that to happen any more than already has in Latin America."

Milei’s economic overhaul of Argentina means the country can forego selling its sovereignty to the highest bidder - in this case, China.

Rich Like an Argentine

Before the Second World War, a common phrase was observed in the English lexicon: “Rich like an Argentine.” Indeed, Argentina had been one of the wealthiest nations on the planet. Unfortunately, a casual fling with socialism metastasized into a horrific divorce from prosperity, leaving the Latin American state feasting on microwave dinners and stewing in its own filth inside its roach-infested Bachelor Arms apartment. But Argentina has ostensibly rekindled its love affair with free market economics.

While Argentina has been a case study of what free market economics can do for a country ravaged by years of leftist orthodoxy, the wider Latin American region has undergone a political transformation. Decades-long authoritarian rule has been fading to black – nation by nation. President Nayib Bukele in El Salvador, President Javier Milei in Argentina, and President Daniel Noboa in Ecuador have revealed to their constituents that they do not have to accept perpetual conditions of despair and destitution. Will progressives put these ideas back in the box? Fortunately for the victims of Marxist thinking, there is no going back.