Argentina’s Milei paradox: Washington’s ally, Beijing’s trading partner

The drive to push liberal economic ideology to its limit – reflected in public spending cuts on a scale never seen before in Argentina, his combative rhetoric and controversial style, and the stated goal of dismantling the state from within – has proven to be far more than electoral promises. From day one, it has been the defining mark of a disruptive government.

The land of beef and football spent decades pursuing multilateral integration, consistent with the post–Cold War order. Argentina positioned itself the community of nations as a country of peace and diplomacy through its engagement with the regional body Mercosur and its role within the G20 (Opens in new window). The country also took a leadership role within the UN-driven decolonisation agenda, given its particular interest in the Malvinas/Falklands dispute.

From that platform, and through close ties with global powers such as Brazil, Russia and China, Argentina’s potential integration into the BRICS bloc appeared all but assured by late 2023 – foreshadowed that year at point 91 of the Johannesburg Declaration (Opens in new window) of the BRICS leaders’ summit. Trade complementarity with the bloc offered a chance to deepen ties further with its principal partners and to foster new commercial opportunities.

But then Milei won, ushering in what might be called “the Argentine paradox”.

An admirer of Margaret Thatcher and her neoliberal politics (Opens in new window), Milei became a promoter of a new – or rather old – geopolitical view so anachronistic that, well into the 21st century, he revived an anti-communist crusade not seen for decades. As a result, years of accumulated diplomacy were wiped away in a single stroke, and Argentina voluntarily transformed itself – without significant external pressure – into a proxy for the United States. Its first move, mere days before the scheduled accession, was to reject the invitation to join the BRICS bloc (Opens in new window), citing ideological incompatibility with its members. China and Brazil were recast as adversaries, framed as “communist” governments with which Argentina needed to cut ties.

The discursive inconsistency was more than evident: without its principal trading partners, the country’s trade balance would be unsustainably negative. The currency swap line between the Argentine and Chinese central banks (Opens in new window) accounts for roughly 50% of Argentina’s total reserves. Beyond that, a complete alignment with Washington offers no economic benefit, given the limited competitiveness of Argentina’s productive base.

The Milei government moves as a pawn of US interests, openly targeting countries at the direct or indirect behest of the hegemon to the north – and that carries a diplomatic cost. For example, at the UN, and breaking diplomatic tradition, Argentina voted against the end of the United States embargo on Cuba (Opens in new window) for the first time in history. It has produced some historic setbacks, notably the weakening of bilateral relations with Brazil after Milei openly campaigned against President Lula da Silva on Brazilian soil (Opens in new window). And yet, in economic and trade terms, the relationship remains as close as it has been in recent decades.

This uneasy balance raises more questions than answers, since the threads holding it together are visible – and worryingly thin. How dependent is Milei’s foreign policy on the Trump factor, and what would a recalibration look like in the event of a defeat at the US midterms? What would Lula’s continuity as Brazil’s president mean, economically and politically, for the region?.The road ahead will be challenging for the Milei administration. Any major shift from the actual course could undermine the stability of his project and directly affect his chances of reelection next year.