The United States bail out Argentina

The U.S. Treasury has just announced a set of massive financial support measures for Argentina:

• the purchase of Argentine bonds in U.S. dollars,

• the establishment of a stand-by credit via the Exchange Stabilization Fund (ESF),

• a $20 billion currency swap line with the Argentine Central Bank (BCRA).

Because, contrary to all the bluster of libertarian neoliberals everywhere who, since the rise to power of their mascot Milei, dream of replicating this folly worldwide: Argentina is imploding.

The peso is in freefall, the stock market has collapsed nearly 50% (in dollar terms) so far in 2025, and 40% of the population lives below the poverty line. The much-vaunted budget surplus is obviously a mirage, achieved by slashing pensions, massively cutting social assistance—including care for the disabled. The “great reformer” Milei has plunged the country into a brutal recession.

Despite these “impressive progress” (to quote U.S. Treasury Secretary Scott Bessent), the United States is deploying heavy artillery and is ready to do whatever it takes to support Argentina.

Corruption at the heart of power

Let us set aside the electoral calculations behind the timing chosen by U.S. authorities, since Milei—facing increasingly determined opposition—stands to lose big ahead of the crucial midterm vote on October 26. More serious are detailed allegations of corruption directly implicating the President’s own sister, Karina Milei, a key figure in his administration, who is caught up in a major scandal. Audio recordings suggest she demanded 3% kickbacks from pharmaceutical companies in exchange for contracts with the National Agency for Disability Services (ANDIS). These were nothing less than vital medicines for disabled people, withheld and worsening the suffering of the most vulnerable in an environment already devastated by austerity.

A disproportionate sum

How did the United States come to provide such massive financial support to this regime? The $20 billion promised represents a 2,000-fold increase over the assistance granted to Argentina in 2023, which barely exceeded $8 million. The world’s least reliable sovereign issuer—Argentina—will now expose U.S. taxpayers directly. With U.S. public debt already surpassing $33 trillion, the situation is alarming enough without aggravating it by adding another $20 billion with little chance of repayment. The U.S. government is now reduced—yes—to issuing short-term Treasury bills massively, for lack of sufficient demand for its long-term bonds. As a sign of shaken confidence, yields on U.S. long-term debt are rising slowly but steadily.

Currency Swaps: technical tool or political weapon?

One of the lifelines made available to Argentina by the U.S. is this swap line, a facility that allows a foreign central bank to obtain dollars in exchange for its national currency, with the aim of stabilizing reserves and avoiding a brutal depreciation—in this case, of the peso. Thus, in 2008 and during Covid-19, the Fed opened its taps to major central banks (ECB, BoJ, BoE) to prevent a global liquidity crisis. Argentina, lacking both credibility and stability, cannot be compared to those partners. This swap must therefore be seen for what it really is: a political instrument in the service of Milei. This political bailout is nothing more than a rescue of an incompetent regime. Officially intended to strengthen Milei against “speculators,” it transforms a stability tool into an act of electoral interference. The irony: this same Milei, the supposed champion of a minimalist state, is now turning to a massive state bailout instead of exploring decentralized alternatives more in line with his ideology.

Milei’s failure is obvious

And this currency swap is doomed to be nothing more than a band-aid on a hemorrhage that cannot be stopped. While the Americans risk a government shutdown, billions are being siphoned away to another country where corruption denies the disabled access to care. We truly live in a dystopian matrix where priorities are inverted.