Javier Milei's rhetoric in every international event he attends shows his stubbornness in confronting governments he calls communist as if it were the Cold War. What the President, despite being an economist, does not notice is that his statements towards other presidents have as a consequence a greater economic debacle for Argentina.
This ideological crusade has led him to diplomatic confrontations with nations presided by leftist governments such as Colombia, Mexico, Spain and above all with China, Argentina's second largest trading partner with 33% of exports to that nation according to the Ministry of Economy. This diplomatic crisis is linked to Javier Milei's conception of these countries as non-democratic, which is why he would not seek to trade with them and break off relations.
This fight against the Asian giant is not gratuitous, since it led to the fact that it was not possible to renew the swap; which is a currency exchange between two countries acting as a contingent loan between central banks. In this case, the BCRA gives pesos to the People's Bank of China (PBOC), and the PBOC gives yuan to the BCRA. Without the swap, Argentina has fewer yuan available to finance its imports from China. This may hinder bilateral trade and increase pressure on the country's dollar reserves. The lack of yuan could lead to increased demand for dollars for trade, putting pressure on Argentina's Central Bank reserves and potentially accelerating the devaluation of the Argentine peso.
Without this tool, the Central Bank may be less able to manage exchange rate volatility. Reduced exchange rate stability could translate into higher inflation, negatively affecting the purchasing power of Argentines. The inability to renew the swap may be perceived as a sign of economic weakness, increasing the country's risk perception and making it more difficult to access international financing. A negative perception may discourage foreign direct investment and increase risk aversion on the part of international investors.
This ideological struggle is an opportunity cost in relation to the placement of Argentine products in the market of the second world power, framed in an international context of what Graham Allison, former U.S. Assistant Secretary for Defense Policy and Planning, calls Thucydides Trap in his 2017 book "Destined for War: Can America and China Escape the Thucydides Trap?". This term is derived from the Greek historian Thucydides, who wrote about the Peloponnesian War, a conflict between Athens and Sparta during the 5th century BC.
The dynamic is that the rise of a new power threatens the status quo that the dominant power has maintained. The established power may perceive the emergence of the new one as a threat to its position and seek to curb its rise, while the rising power may feel constrained and seek to expand its influence. In the contemporary context, Thucydides' trap applies to the relationship between the United States and China. The latter is emerging as an economic and military power, thus challenging the long-standing hegemony of the United States. This shift in the balance of power has generated tensions, competition and mutual distrust between the two nations.
On the part of American businessmen, Javier Milei is taken as an international referent and of freedom, but without a counterpart reflected in investments on their part. While Chinese capitals, for example, have 12 mining projects in Argentina, 7 of which are related to lithium, being this element the one that represents the largest amount of mining exports to their nation with 92.1% of the total minerals according to the Secretary of Mining. These investments generate jobs in a sector that is increasingly key for the extraction of minerals used for the construction of cell phone batteries, electric cars and solar panels; products that year after year increase their demand.
Javier Milei acts internationally as if Argentina were a powerhouse, disrespecting any government that does not ideologically agree with him, when in fact it is a peripheral country in terms of Carlos Escudé. This Argentine political scientist in his 1992 book "Peripheral Realism" established Argentina's place as a peripheral country and its need to form an alliance with the only power in the world after the dissolution of the Soviet Union, the United States.
Peripheral countries are highly dependent on the more developed economies, both for the export of raw materials and for the import of manufactured goods and technology. They have little ability to influence global decisions and are often subject to the policies imposed by the central countries or the international institutions dominated by them. These countries do not have military forces comparable to those of the core countries, which limits their ability to project power and defend their interests in the international arena. They are more susceptible to external pressures and interventions due to their disadvantaged position.
Carlos Escudé proposes that these countries should recognize their structural limitations and avoid direct confrontations with the core countries. Instead, seek accommodations that allow tangible benefits without provoking retaliation or isolation. Use diplomacy and other political tools to maximize economic and security benefits within the margins allowed by the international structure. Maintain a pragmatic and prudent foreign policy that prioritizes domestic stability and economic development over ideological objectives.
Despite previous tensions, the dispute with China and its impact on the swap agreement resulted in an increase in interest rates by banks in August. This scenario evidenced a crisis in one of the Argentine Government's objectives: the reduction of the interest rate. Faced with this situation, Javier Milei adopted a radically different stance towards the Asian giant, who went from being described as a "communist tyranny" to being considered an "interesting partner". This transformation in the narrative was expressed by the president during an interview with Susana Giménez on August 30. Milei's change in tone had significant repercussions, culminating in a swap agreement with China that unlocked the entry of yuan into the country. This change in his discourse not only reflected a contradiction in the president's policy, but was also part of a series of changes in his relationship with political figures. For example, Patricia Bullrich, whom Milei had labeled as a "terrorist who plants bombs", is now seen as the best minister, which evidences a remarkable change in his perception. Furthermore, in relation to retirees, Milei went from referring to them contemptuously as "old pissed" to considering them as "old beloved" during the ballotage.
These contradictions in Milei's discourse can be interpreted as a pragmatic strategy to adapt to political realities. However, this attitude conflicts with his proposal to govern under the principle of "revelation", where he is expected to maintain his values and principles despite being part of a minority. This principle is based on unmasking the political "caste" that, according to Milei, has failed the country. The political future of Milei and his party, La Libertad Avanza, will depend on how these contradictions and the expected economic rebound impact public perception. The 2025 legislative elections will be a crucial test for the government. It will be necessary to observe whether voters maintain their confidence in the current administration, despite the inconsistencies in discourse and policies.
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