The Journal. - Why Is the U.S. Giving Billions to Argentina?

Episode Date: October 24, 2025

Argentinians go to the polls this Sunday in the first major test of their leader, Javier Milei. Voters appear to be losing faith in his bold economic vision to resuscitate the country’s ailing economy. But Milei has a secret weapon: a close relationship with President Trump. WSJ’s Ryan Dubé explains why the U.S. government is bailing out Argentina. Jessica Mendoza hosts. Further Listening: -Argentina’s New President Takes A Chainsaw to the Country’s Government -The Bean at the Center of the Trade War Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

President Trump and Argentina's president, Javier Millet, have a close relationship. If you see the photos of Javier Malay, when he meets Trump, he just seems so happy. He's just kind of in his zone when he's in that environment. Here they are together at a political conference for conservatives in 2024. Make Argentina great to get. Yeah, so Malay has. always been, you know, a top fan of President Trump. He described his, President Trump's loss in 2020 as, you know, a threat to Western civilization.

Those were the words he used. That's our colleague Ryan Dubay. He covers Latin America. Both of them are kind of political outsiders. Both of them were also very critical of kind of leftist, woke political programs. And Malay wanted to rule. align Argentina and his government with the U.S. and with the Trump administration. This Sunday, President Malay will face his first real electoral test since he took office in

2003. That election will indicate how voters feel about Malay's radical overhaul of Argentina's troubled economy. What does Muley's position look like right now? So it's been deteriorating, actually. It hasn't been very good. A few months ago, I think things were looking really up for him and stuff. He was bringing down inflation. Poverty had begun to decline, but starting to show some cracks, I think, in his program. Really, the economy hasn't recovered like they were hoping it would. Now, Malay is hoping his relationship with Trump will give his economic vision a much-needed boost. And last week, Trump said that he would give Argentina a bailout to the tune of $20 billion if Malay's party does well in Sunday's election.

How significant is this? Yeah, it's incredibly significant. You know, the Trump administration is betting heavily on Javier Malay in Argentina. You're trying to pick, you know, the winners in Argentina's domestic politics as well, which is pretty unprecedented. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, October 24th. Coming up on the show, why Trump is trying to rescue Argentina's president.

This episode is brought to you by SAP. From pleasing investors to keeping customers happy, it's your job to make it all happen. Not to worry. With the AI-powered capabilities of SAP, you can streamline costs, connect with new suppliers and manage payroll, even when your business is being pulled in different directions to deliver a quality product at a fair price while paying your people with their worth too, so your business can stay unfazed. Learn more at SAP.com slash uncertainty. This episode is brought to you by SAP. From pleasing investors to keeping customers happy, it's your job to make it all happen. Not to worry. With the AI-powered capabilities of SAP,

you can streamline costs, connect with new suppliers, and manage payroll, even when your business is being pulled in different directions, to deliver a quality product at a fair price while paying your people with their worth too, so your business can stay unfazed. Learn more at sap.com slash uncertainty. When Javier Malay ran for office in 2023, he would often campaign with a chainsaw. So he went on the campaign trail, he was out on the street with his chainsaw waving it around,

and it was kind of to show that this was going to be really a drastic cut. to the public sector and public spending in Argentina. So literally, like, taking a chainsaw to all of it. Exactly. And it sounds like this worked. He got elected. I think that tells you, you know, he was a political outsider coming into this with really no strong establishment support.

So that tells you a lot about, I think, the situation, economic situation in Argentina before he was elected. Just, you know, it was so bad that people were willing to, you know, go a drastically different direction. So it appealed to a lot of people who were really suffering from this very high inflation. To say Argentina has money problems would be an understatement.

The country has received more than 20 bailouts from the International Monetary Fund since the 1950s. And Argentina has struggled to control spiraling inflation. When Malay was elected, inflation was in the triple digits. So he put his chainsaw to use. He quickly cut regulations slash public spending by 30% and fired thousands of government workers.

You know, it worked. I mean, he was able to bring down inflation pretty quickly. It was painful, but people went along with it, it seemed. Millet's cuts helped him balance the budget, and they earned him a huge fan base amongst prominent right-wing figures around the world. One of his biggest supporters is Elon Musk,

who oversaw big cuts to U.S. government spending. Earlier this year, Musk appeared on stage with Millay, also wielding a chainsaw. This is the chainsaw for bureaucracy. Chainsaw! But Millet's dramatic cuts also hurt a lot of Argentinians. To cut spending, you had to stop construction projects. So a lot of the workers lost their jobs because of that.

They had to, you know, they reduced the real increase of pensions. So pensioners, the amount of money that they had at the end of, the month, it would go less than it would before, I guess. You know, they closed ministry. So a lot of those public workers, they lost their jobs as well. And that had a ripple effect across the economy. So consumption declined across the economy, and that impacted, you know, private businesses, for example, factories, shops that are selling clothes, for example. And what are you hearing from people that you've spoken to in Argentina? So I think, I mean, it depends who you ask. There's still a lot of people who defend him, who thinks that you've got to give him more time,

inherited a terrible situation. Other people are saying, you know, like we're closing our factories, we can't make it to the end of the month, and how much longer is this going to go on for it? And Millet's dramatic austerity policies didn't address one very big problem in Argentina's economy, the country's currency, the peso. The Argentine peso is pegged to the value of the U.S. dollar. That basically means the value of the peso doesn't fluctuate according to market rates, like other currencies. One benefit of pegging a currency is that it can help control inflation. In Argentina, the policy has also kept the peso artificially strong,

despite its history of economic trouble. But pegging currencies also comes with some big trade-offs. A strong peso can be good, in that it makes it cheaper to import goods into Argentina. But at the same time, a strong peso makes Argentine products more expensive in foreign markets, which hurts the country's exporters and businesses. For example, because of the strong peso, then local tourism was really hurt because it was more expensive for people to come to Argentina,

to go to restaurants, to stay at hotels, and also for Argentines to stay in Argentina. So a lot of them, they ended up going to Brazil, they ended up going to Chile, where it's actually cheaper. And they would buy goods in those countries as well instead of buying locally. The problem of the peso has dogmile's radical economic vision, and it's limited his ability to push through with the rest of his free market overhaul. So that's the situation. I think a lot of people were willing to kind of give heavy Malay the opportunity to turn the economy around, and probably they still are. But there's also, you know, it's kind of, it's two years into this now, and there's a lot of fatigue, I think, in Argentina.

And then in September, voters expressed that fatigue with Malay's economic experiment during a local election in Buenos Aires. The province holds around 40% of Argentina's population. I think in any other year, it might not have got a lot of attention, but because it was seen as kind of a bellwether for this midterm election coming up, there was more attention placed on that vote. Millet went into that local election feeling very confident and declared it would be a death knell for his opponents, the Parenthood Party. Instead, Millet's Freedom Advances Party actually lost ground.

And that just raised a lot of concerns. Argentines and investors started pulling their money out of Argentina. the peso began to devalue really quickly, and the government kind of had to step in and try to defend it. Things just kind of snowballed very quickly for him. Would it be a stretch to say that the results of this election may have put Mule's economic vision in jeopardy? No, I don't think so.

I think that's definitely what happened. Basically, what happened is that, you know, people start to lose fate, that he will be able to continue with his free market reforms. Coming up, President Trump offers Millay a lifeline. With Amex Platinum, access to exclusive Amex pre-sale tickets can score you a spot trackside. So being a fan for life turns into the trip of a lifetime. That's the powerful backing of Amex.

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plans, real-time insights, and endless ways to move. Lift with confidence while Peloton IQ counts reps, corrects form, and tracks your progress. Let yourself run, lift, flow, and go. Explore the new Peloton cross-training tread plus at one peloton.ca. Just weeks after Javier Malay's party suffered a setback in the Buenos Aires election,

U.S. Treasury Secretary Scott Bessent made an unexpected announcement on X, a rescue package for Argentina. Bessent said that the U.S. government would step in to bail out Argentina's economy in a few ways. The U.S. would buy pesos to prop up the currency's value. The administration would also use taxpayer dollars for a $20 billion currency swap, which is basically a loan. And later, Besson said the U.S. government would help corral another $20 billion loan backed by the private sector. Thank you very much. It's a great honor to have the leader of Argentina, a place that I love, I've been to. Last week, President Trump invited Millet to meet with him at the White House.

economist, and he was saying a lot of very correct things, and he was very much in a conservative mode. At that meeting, Trump made a surprising announcement about the rescue package. Turns out, it has strings attached. Millet can only have the money if he succeeds in Sunday's midterm election. So we would not be generous with Argentina if that happened. If he loses, we are not going to be generous with Argentina. Very shortly after the Argentine market,

really tumbled, I guess. It went down about 40% the stock market index. So that highlighted the concerns of that kind of comments, I guess. Bessent walked back Trump's comments a day later, saying that support for Argentina is not election-specific, but policy-specific. Besant said, quote, as long as Argentina continues enacting good policy, they will have U.S. support. But Ryan says, some Argentinians are interpreting Trump's bailout condition as election interference. One economist, one analyst said he described it as a lifesaver made out of lead. So it's just going to not help at all, I guess. It can make you sink. So the concern about that is that it could backlash for sure.

And Argentines, you know, they don't like having other countries and especially the U.S. intervening in their domestic politics. So it could end up being unhelpful for print and Malay. According to one pollster, Malay's approval rating has plummeted from 50% last year to 35%. And this week, the Wall Street Journal spoke to voters in Buenos Aires about what they think of Malay and the U.S. decision intervene.

Adriana del Carmen Castro Nuovo I'm jubilada. Adriana del Carmen Castro Nuevo is a 64-year-old retiree. As I said earlierment, are negotiators of politicians that don't beneficians to us, not the people.

She believes this agreement between the U.S. in Argentina will only help politicians and not the Argentinian people. Another voter, Alejandro Casano, agrees. He says, Trump only thinks about himself and his country. He added that both Trump and Milley are, quote, deranged. There are two trastornado. This is a transornado and the other is a trastronado

with much more power. We've been talking about Millet's issue. But is there any financial or political risk for the Trump administration to be bailing out Argentina? Yeah, I mean, the first risk is that they end up holding, you know, pesos that become worthless, essentially, and they end up losing financially on that. I think that's a big one. Beyond the economic risk, there's some political danger for Trump here, too. Some in Trump's base are critical of his decision to help Argentina. For instance, American soybean farmers.

This year, those farmers lost their biggest customer, China, who stopped buying soybeans from the U.S. to gain leverage in trade talks. China now imports soybeans from Argentina. And farmers here are wondering why their taxpayer dollars are helping their industry rivals. One of them, Scott Brown from Arkansas, spoke to MSNBC. If Argentina fails, okay, they're my second biggest competition. If we're going to make American agriculture great and make it stand on its own feet, then I need my second.

biggest competitor to fail. So the Trump administration is facing a lot of criticism here. What does the president think the U.S. stands to gain from helping the Malay government? So I think President Trump has taken, I mean, looking more regionally at the U.S. foreign policy to Latin America under President Trump, they are really trying to kind of pick the winners and losers, I guess, in the region. And it's often based on the personal relationship. relationship that different presidents in the region have with President Trump and also the ideological stance. So in Argentina, I think they see, you know, a very close ally to the U.S., someone that they want to

support and they want to make an example, I think for other countries in the region as well, saying that, you know, if you are allied with us, then we will, you know, help you overcome your difficulties. I think as well there's an interest in probably pushing China, which has an important and a growing interest in not only Argentina but in Latin America, kind of sideline China. According to Wall Street Journal reporting, the White House is pushing officials in Argentina to limit China's access to the country's resources, including critical minerals. They're also encouraging Argentina's leaders to strike deals with U.S. companies. Argentina does have a lot of potential to be a really strong economic partner in the region.

It has a lot of lithium, which is needed for electric vehicles, obviously, and a lot of copper potential as well. So I think the Trump administration also kind of sees that potential. So all of this is happening in the lead-up to this big midterm election on Sunday. And let's say Milley gets the number of seats that he's hoping for, and then the U.S. does give this bail out. Could it save the Argentinian economy? I think it's tough to say. I don't, I mean, I think it'll save the moment, probably. But I think there's so many issues with Argentina's economy that to say they'll save the economy, probably

not. I mean, there's so many things that needs to be done. And it'll give have you a melee more time in order to try to advance his agenda. But there are so many problems with Argentina's economy that really just bringing down inflation, which is one of them. They really need to get investments back in, they need to pass labor reforms, pension reforms, and they need some political support to do that. And it's not even clear with that one-third of the seats in Congress,

they'd have to kind of ally with other different political parties in order to pass those reforms. So I think Argentina has a long ways to go, and this would just be giving Malay a little bit more time. So it sounds like it's like a deadlit extension more than anything else. Yeah, I think so. That's all for today, Friday, October 24th.

Additional reporting in this episode from Sylvina Friedlowski, Santiago Perez, Alexander Saidi, and Brian Schwartz. The journal is a co-production of Spotify and the Wall Street Journal. The show is made by Catherine Brewer, Pia Goodkari, Rachel Humphreys, Isabella Japal, Sophie Kodner, Ryan Kenutson, Matt Kwong, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez-Espinoza, Heather Rogers, Pierce Singey, Jivica Verma, Lisa Wang, Catherine Wayland, Tatiana Zemise, and me, Jessica Mendoza. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley, Additional music this week from Peter Leonard, Bobby Lord, Emma Munger, Griffin Tanner, So Wiley,

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