FinGurú - The triumphs of Argentina and the dangerous path ahead with Javier Milei by Poder & Dinero

Robert Evan Ellis from Opidata for Poder & Dinero and FinGurú

The balance sheet of Milei's government

From June 29 to July 3, I traveled to Buenos Aires, Argentina, to preside over a panel and participate in an event sponsored by the Organization of American States (OAS) that brought together law enforcement and other leaders from across the region. During my time there, I spoke with a number of Argentine officials, experts from other countries, and other experts about the country's political, economic, and security dynamics.

The achievements of Javier Milei's government in the fields of economy and security in less than two years are impressive, although his stabilization of the Argentine economy has come at a significant cost to most of the country's inhabitants.

Economic adjustment: achievements and costs

In economic terms, President Milei has managed to balance the fiscal budget by cutting more than 50 government agencies, drastically slowing federal spending and substantially cutting discretionary income transfers to the provinces. After a significant increase in inflation to 300%, caused by a necessary government devaluation of the Argentine peso, inflation, which has been endemic for a long time in Argentina, has now dropped to 1.5% monthly and is expected to stay low.

President Milei's policies have not only stabilized the peso but also allowed it to be freely convertible, laying the groundwork for new economic activity from both foreigners and Argentines, for whom access to dollars and protection against inflation and exchange rate risk have been prerequisites for investment that have long been unrealized. President Milei's programs have further reduced the poverty rate to almost half, down to 38.1%, and have generated a year-on-year growth of Gross Domestic Product (GDP) of 5.8% in the first quarter, with a forecast growth of 5.5% for the entirety of 2025.

Expanding strategic sectors

At the sectoral level, several industries that are key generators of foreign currency revenues, including oil, mining (including lithium), and agriculture, are expanding with significant new projects, facilitated in part by a new incentive regime for large investments, RIGI. Significant advances include numerous lithium projects, as well as the fields of Vaca Muerta shale and an associated gas pipeline to transport the produced natural gas.

Internal and border security

In the realm of security, the policies of President Milei's Minister of National Security, Patricia Bullrich, including significant improvements in prison control, have significantly reduced gang violence in Rosario, long a key battleground for cocaine trafficking from Peru and Bolivia on barges headed to Europe.

In the northern part of the country, bordering Bolivia, the Administration's security policies, including the Güemes Plan, have made significant progress in dismantling the Castedo, which dominated illicit activities along the Bolivian border. In addition, the deployment in April 2025 of 10,000 military personnel to the northern border as part of the "Roca Operation" has helped, although only partially, to control the hundreds of informal border crossings with Bolivia and Paraguay.

In terms of internal security, another significant achievement of Patricia Bullrich and her team was preventing discontent over the difficult economic measures implemented by President Milei, including deliberately orchestrated mobilizations by unions and other entities linked to Peronist resistance, from paralyzing the economy or politically destabilizing President Milei.

The government has further advanced in reducing the violence of the violent Mapuche organization Ancestral Mapuche Resistance (RAM) through a tougher stance towards the organization, designating it as a terrorist organization, combined with a crackdown on the group's occupation of private land, tolerated by the previous government.

The relationship with the United States

In both economic and security matters, Milei's positive relationship with the United States seems to be bearing fruit. The current U.S. government has played an important role in the support of the International Monetary Fund (IMF) for Argentina's policies, including the extension of a $20 billion loan necessary to further stabilize the country’s fiscal position, as well as a lenient treatment in a progress review for the disbursement of $2 billion from those funds. The purchase by Argentina of the much-needed fully-equipped U.S. F-16 fighter jets from Denmark, six helicopters, and other capabilities is also underway. Regarding land systems, the country is advancing in the purchase of U.S. Stryker 8×8 Light Armored Vehicles (LAV), and the first eight are on their way to be received for evaluation by the Argentine Army. These positive advances were reflected in an exceptionally positive meeting between Argentine Defense Minister Luis Petri and U.S. Defense Secretary Pete Hegseth.

Political landscape and electoral projection

In reflection of these successes in economic and security matters, President Milei's once small libertarian party, La Libertad Avanza (LLA), is about to make significant advances in the October midterm elections. The Peronist opposition is largely disorganized without a clear leader: ex-Peronist presidential candidate Sergei Massa is undermined by his perceived responsibility as Minister of Economy in the collapse of the Argentine economy that largely fueled Milei's election. The former President and Vice President Christina Fernández de Kirchner (CFK) has been sentenced to house arrest and lifetime barred from running for political office. While she still has a core support base among 30% of the Argentine population, for many others, the corruption charges for which she was convicted discredit not only her but also her Peronist allies. Meanwhile, the younger generation of Peronist leaders who could replace her, including the far-left Axel Kicilloff and Máximo Kirchner, are viewed by many as too young, too radical, too uninspiring, as well as being stymied in their growth by Fernández's not entirely complete exit from the political scene. In combination with their more traditional center-right ally, the PRO, La Libertad Avanza could even gain a dominant position in Buenos Aires province, long a bastion of leftist Peronism, and currently governed by Kicilloff.

Fragilities and latent risks

Despite the well-deserved triumphs of the Milei administration, the government's successes in economic, political, and security matters are possibly fragile.

In economic terms, although the Gross Domestic Product (GDP) is expanding, new investments are slow to materialize due to In emerging, and many skeptical of Argentina's repeated "boom and bust" economic cycles, they wait at least until the midterm elections, and possibly until the next presidential elections, to see what Milei and his party can achieve in terms of a legislative majority, giving greater confidence that their policies will be permanent. While consumption in Argentina is expanding, particularly of luxury goods, weakness in the demand for food and basic household goods, and the rising indebtedness of consumers are warning signs of financial stress among the middle and lower classes in Argentina that could slow down or even undermine long-term economic growth.

In fiscal matters, although Milei's policies and support from the IMF have played a key role in stabilization, almost half of Argentina's fiscal reserves come from a currency swap agreement with the People's Republic of China. While the PRC recently renewed the swap agreement, it had previously used the suspension to send a threatening message to President Milei in response to his anti-PRC rhetoric during his presidential candidacy and at the beginning of his term.

In terms of security, Argentina faces significant indirect risks from its South American neighbors. These include elections and an increasingly deepening economic and political crisis in neighboring Bolivia that could also facilitate a surge in smuggling, drug trafficking, and other illicit activities if Bolivia becomes a failed state. Many in Argentina are also concerned that the country could become a target for terrorism by Iran or Hezbollah following the recent conflict among Iran, Israel, and the United States, due to the strongly pro-American and pro-Israeli stance of Milei's government, however well-founded and courageous it may be.

In political matters, many consulted for this work foresaw potential challenges to Milei's continued success. On one hand, some saw the risks of his often uncompromising cross-style, however inspiring it may be for some, being politically counterproductive. Some also pointed to his orientation toward promoting his party, La Libertad Avanza, in local and regional elections, sometimes at the expense of fostering partnerships with allied parties. On the other hand, they noted that La Libertad Avanza is still struggling to have quality candidates across the country.

Within Milei's inner circle, there were talks of internal struggles between the president's sister, Karina Milei, and his main political advisor, Santiago Caputo. In other public manifestations of differences between Milei and members of his government and political allies, the president noticeably avoided greeting his vice president Victoria Villarruel at a public event on May 25, 2025, in addition to calling the mayor of the Buenos Aires Federal District, Jorge Macri, a "traitor."

Beyond the internal political struggles, several consulted for this work expressed concern about Milei's focus on economic matters at the expense of necessary reforms in complementary areas such as education and social issues.

In foreign relations, some interviewees worried about whether Milei's close alignment with U.S. President Donald Trump would continue to secure favorable treatment for Argentina, noting that Milei could not secure a personal meeting with President Trump at his Mar-a-Lago resort during his recent visit to Florida. Furthermore, Argentina still lacks a U.S. ambassador, with the confirmation of Trump’s candidate, Peter Lamelas, still not in sight.

**China: between containment and local influence**

The consulted for this work also expressed their concerns about the duality between Milei's government addressing U.S. concerns about China at the national level and the PRC's advances at the provincial and local levels that could ultimately expand PRC influence, creating dilemmas for President Milei and challenging his good relations with the United States.

Examples of Argentina's restriction on projects that represent a strategic concern for the U.S. include the temporary freezing of a PRC initiative to build a strategically located commercial port in Tierra del Fuego. Another positive example is the delay of a commercial space facility operated by the Chinese company Emposat, in Río Gallegos, in the south of the country.

On the other hand, such receptiveness to the strategic risks of China's advancement at the national level contrasts with the expanding economic engagement of the PRC and the associated influence throughout the country at the provincial and local levels. This expansion is particularly evident in the northern provinces rich in lithium sought by PRC-based companies, and geographically close to other strategic PRC projects, such as several bioceanic corridors involving from Peru to Brazil, including a possible route through Bolivia, as well as improved road corridors and possibly railways connecting Chile through Argentina, Paraguay, and Brazil.

The PRC's presence in Argentina's digital sectors, including the country's significant dependence on Huawei equipment, particularly the Clarín Group, which dominates both telecommunications and media in the country, is also a growing strategic risk, as it poses risks through potential PRC access to sensitive Argentine government data and communications, as well as commercially sensitive intellectual property transmitted and stored in Huawei-supplied infrastructure.