Javier Milei, the far-right libertarian candidate that has emerged on Argentina’s political landscape with a controversial agenda, will face current Peronist Finance Minister Massa in a run-off for the presidency. On November 19, Argentines will decide between these candidates amid a dire economic situation in which 40 percent of Argentines are living below the poverty line, the inflation rate is over 130 percent, and the Central Bank’s net reserves are at a record low.
Milei’s foreign policy views remain relatively unknown to the public, although what has surfaced is just as controversial as his domestic proposals. His worldview aligns with a particular interpretation of the international order that emphasizes individuals’ influence in international politics. As an example, his interview with Tucker Carlson on X, the platform formerly known as Twitter, in September was reportedly the platform’s most viewed post. That, and praise from Elon Musk, have been interpreted by Milei as marking Argentina’s return to the world’s geopolitical stage.
Inside this approach falls one of Milei’s most significant and well-known foreign policy stances: cutting political ties with China.
In a recent interview, Milei stated that he will not foster political ties with China or any other communist country, relegating relations to the private sector. The assumption that Argentina can fully withdraw from its bilateral relationship with China while companies keep conducting business as usual proves an underestimation of the nation-state-based international order and the overvaluation of individuals, which is how Milei seems to view world politics. Additionally, it ignores how Beijing has responded to similar situations in the past.
Despite his ideological convictions of cutting ties with communist regimes, this would be unfeasible in reality. Milei would face certain material constraints that would make a political distancing from China unviable. These constraints would compel him to act in a way that maintains the status quo of the relationship. This article will analyze three deeply interconnected constraints that demonstrate the infeasibility of these foreign policy proposal, especially amid the critical economic situation Argentina faces.
China as a Lender of Last Resort
Argentina’s financial situation is undoubtedly the most pressing issue it faces. The debt that the country took on with the International Monetary Fund (IMF) was the biggest in the organization’s history. Despite having reached an agreement with the IMF in 2022, the debt burden is the primary challenge for the outgoing administration of President Alberto Fernández and will remain so for Argentina’s next leader. The situation becomes much more challenging when considering the Central Bank’s fragile situation described above.
In this context of urgent financial needs, Argentina has relied on non-traditional credit tools like currency swaps with China. A currency swap agreement was first implemented in Argentina in 2014, amid another difficult financial time for the country, and consists of a contract in which both parties agree to exchange cash flows in their currencies for a specific period of time. Since then, Chinese swaps have consistently grown in importance for Argentina’s finance, having reached 42 percent of the country’s international reserves in 2020. Recently the two sides signed a swap-extension for an additional $5 billion.
The swaps have become Argentina’s primary source of financing in the last few years, as it seriously struggles with borrowing money from international markets or international credit organizations. And thus, cutting political ties with China is practically impossible from a financial standpoint. Nonetheless, it should also be noted that this financial dependence on China brings significant risks to Argentina.
The Trade Partnership and Domestic Stakeholders
Although diversifying trade relations would substantially benefit Argentina in its challenging situation, maintaining strong ties with current key partners remains essential. In this regard, China ranks as Argentina’s second most important trading partner and export destination, ranking only behind Brazil. In 2022, exports to China were worth around $8 billion – constituting 9.1 percent of Argentine exports – setting a historic record in bilateral trade. China represents 92 percent of the export market for Argentine soybeans, 57 percent for meat, and 59 percent for barley.
Those figures underline the difficulty Milei would find in upholding his promise of “not negotiating with communists.” The most obvious reason for the challenge lies in the impossibility of Argentina abruptly replacing such a significant export market, leading to an economic loss the country cannot afford in the current crisis.
Although Milei has stated that he would not prevent the private sector from engaging in business with Beijing, examining similar experiences, like that of Jair Bolsonaro in Brazil, shows that Milei’s cutting of political ties as well as his criticism of the Chinese regime would likely have repercussions for Argentinian businesses. In 2021, Beijing issued threats of economic retaliation against Brazil for political reasons after several points of diplomatic tension with the Bolsonaro government. It is noteworthy here that China exerted this pressure on Brazil despite its far more significant role as a trading partner for China. Argentina could face even more serious consequences from political confrontation with Beijing due to its relative economic insignificance.
Such a situation would pose a serious risk to Argentina’s foreign trade, particularly for the agribusiness industry, one of the most powerful sectors in the country. Consequently, not only would Milei be constrained in this issue by the national need of foreign currency, but also and most importantly he would be constrained by these key stakeholders, who would starkly oppose such a disadvantageous policy for its likely impact on their interests.
The China-U.S.-Argentina Triangle
In an international order marked by increasing competition between the United States and China, any third country like Argentina needs clear support from one of the powers, or to strategically sway between both. Without this, Argentina would see its margin of maneuver in the international system reduced, weakening its position.
Under Milei, Argentina would pursue a full alignment with the U.S. and seek disentanglement from China. Consequently, Milei would be forced to replace the role China plays in the country’s foreign policy with the United States. This would contrast with the “equidistance diplomacy” that Argentina has pursued for the last decade, by which the U.S. has become a key node of support for Argentina during the renegotiations of its IMF loan and the loan of credits from international credit organizations, evenwhile Buenos Aires also consolidated a bilateral relationship with China.
Nevertheless, the United States that Milei wants to align with differs from the one he would encounter.
If Milei becomes president, he will deal with a Democratic administration that supports women’s reproductive rights, affordable healthcare, tougher gun regulations, and the fight again climate change, all of which Milei has described as “cultural Marxism.” With these contrasting values, the key areas for Argentina-U.S. cooperation become narrower, posing a significant hurdle for his strategy of replacing China’s role in Argentina’s foreign policy with the United States.
Regardless of the outcome of the U.S. presidential election in 2024, it is also unlikely that Washington will be willing to provide significant economic aid to Argentina. It is dubious that the United States will provide a $18 billion credit line to Argentina as transferred with China’s swap – that’s more than five times what the U.S. has committed in foreign assistance to Israel in 2022, or almost 25 percent of the American aid to Ukraine since the war there started – nor invest billions in infrastructure projects as Beijing has done under the auspices of the Belt and Road Initiative. Beijing’s BRI funding has not come without great risk to Argentina, but nothing the U.S. can be expected to offer up comes close. Diplomatically, the U.S. will not support Argentina’s historic claims against the U.K. over the sovereignty of the Malvinas/Falkland Islands.
These are some of the core Argentine foreign policy subjects that China has supported and the U.S. will certainly not, becoming another obstacle for Milei’s disentanglement from China and Argentina’s successful international insertion.
Javier Milei has two historic opportunities in the upcoming November run-off. Not only could he become the first libertarian president in the country’s history, but he also could dethrone the powerful Peronist coalition with a barely two-year-old party. This lack of experience, party structure, and territorial power, combined with his heavily ideological views will make it extremely challenging for Milei to govern pursuing such a radical agenda, especially amid such a fragile economic situation.
One of Milei’s biggest foreign policy challenges should he be elected will be the enactment of his foreign policy agenda toward China. As described above, Buenos Aires’ dependence on Beijing has increased considerably, thereby making the need of maintaining trade relations and the financial and geopolitical support crucial constraints that Milei will face if he tries to sever political ties with the Asian nation.
Put bluntly, his plans in this regard are impracticable given these material constraints. Pursuing such an agenda would not only highlight Milei’s misguided approach to international politics but would lead him, and Argentina, into a foreign policy strategy doomed to failure.