What happened
President Donald Trump Tuesday explicitly tied his $20 billion bailout for Argentina to upcoming elections in the South American country. If President Javier Milei’s party loses ground in the Oct. 26 midterms, “we are not going to be generous with Argentina,” Trump told reporters at the White House with his ally Milei seated nearby. “If he doesn’t win, we’re gone.”
Who said what
Trump made the “highly unusual decision to intervene in Argentina’s currency market after Milei’s party suffered a landslide loss in a local election last month,” The Associated Press said. That “crushing defeat” spooked investors and prompted Milei’s government to sell off “precious dollar reserves at a feverish pace” to shore up the peso, aiming to “stave off what many economists see as an inescapable currency devaluation” until after the midterms.
The Trump administration announced last week that it would buy $20 billion worth of pesos. The “U.S. lifeline has for now stopped a run on the peso that risked snowballing into a deeper financial crisis,” The Wall Street Journal said. But Argentina’s stock market dropped more than 4% Tuesday after Trump tied the bailout to a Milei midterms victory. That blunt endorsement turned the lifeline into “life preserver made out of lead,” said former IMF executive director Hector Torres.
Trump’s “bailout of Argentina has come with political blowback at home,” too, with Democrats accusing him of “helping out a foreign government and wealthy investors while the U.S. government remains shut down because of a dispute over extending health care subsidies,” The New York Times said. American farmers “have also criticized the move, given that China has been buying soybeans from Argentine farmers instead of American growers.” U.S farms, The Washington Post said, “have yet to receive their own relief from Trump’s trade war.”
What next?
The details of the financial package “remained scant,” the Journal said. Notably, said the AP, “there has been no word on how Argentina, the IMF’s largest debtor, will end up paying the U.S. back for this $20 billion, which comes on top of IMF’s own loan for the same amount in April” and “an earlier IMF loan for $40 billion.”
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