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The Trump administration moved forward Thursday with a controversial $20 billion financial lifeline to Argentina, a bailout critics say benefits politically connected investors while the U.S. government remains shut down and American farmers struggle without aid.
Treasury Secretary Scott Bessent confirmed the package, saying the funds will come through a currency swap with Argentina’s central bank and a direct U.S. purchase of pesos. Terms were not publicly released, but Treasury officials said the move was designed to stabilize Argentina’s cash-strapped economy ahead of critical legislative elections later this month.
“Argentina faces a moment of acute illiquidity,” Bessent wrote on X. “The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets.”
President Javier Milei, Argentina’s libertarian leader and a close Trump ally, is expected to visit Washington next week to discuss the deal.
Bailout raises ethical, political concerns
While the White House framed the action as a defense of a key Western Hemisphere ally, critics said the real beneficiaries are wealthy U.S. investors — including friends and former colleagues of Bessent — whose hedge funds have major holdings in Argentine bonds.
“The Trump administration is bailing out billionaires while American workers go without pay,” said Sen. Elizabeth Warren (D-Mass.), who on Thursday helped introduce a bill to bar Treasury from using the Exchange Stabilization Fund for foreign rescues. “Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first.”
Democrats say the deal effectively rewards investors such as Stanley Druckenmiller and Robert Citrone, both former colleagues of Bessent from his time managing George Soros’s investment fund. Their firms — Duquesne Family Officeand Discovery Capital Management — hold significant stakes in Argentine debt and equities.
Two people familiar with the talks said Citrone was in close contact with Bessent in the days before the Treasury announcement, warning that Argentina’s economic collapse could push the country closer to China. “If Milei loses, the U.S. could lose one of its strongest allies in Latin America,” one source said.
A Treasury spokesman declined to comment on those conversations. Druckenmiller said he had “no communication” with Bessent about the Argentina deal.
Market reaction and investor gains
The bailout immediately buoyed Argentine financial markets. Dollar-denominated bonds due in 2035 climbed sharply, and the peso rebounded against the dollar. Economists warned, however, that the relief could be short-lived without structural reforms.
Major investors including BlackRock, Fidelity, and Pimco are also heavily exposed to Argentina’s debt. Analysts say the Treasury move could protect those portfolios from steep losses — a perception fueling political backlash at home.
“Call it what you want, but it’s a bailout,” said Monica de Bolle, senior fellow at the Peterson Institute for International Economics. “It’s a country in crisis, it’s running out of dollars, and the U.S. is giving it dollars. That’s a bailout by definition.”
Strategic motives and China factor
Bessent and administration officials insist the program is not a gift to investors but a strategic investment aimed at curbing Chinese influence in South America. Beijing currently supports Argentina with an $18 billion currency swap, giving China leverage over its trade and mining sectors.
In recent negotiations, U.S. officials pushed Buenos Aires to scale back ties with China and open its uranium and lithium reserves to American companies, a person familiar with the talks said.
“The success of Argentina’s reform agenda is of systemic importance,” Bessent said in a statement Thursday. “A strong, stable Argentina which helps anchor a prosperous Western Hemisphere is in the strategic interest of the United States.”
Political risks at home and abroad
Milei’s government faces rising political headwinds after suffering losses in a key provincial election last month. Another defeat in the upcoming legislative races could imperil his austerity program, which Trump has praised as a model for conservative governance.
Meanwhile, Trump faces criticism at home for prioritizing foreign bailouts over domestic relief. The U.S. government shutdown has furloughed hundreds of thousands of federal workers, and farmers have been waiting for long-promised subsidies delayed by budget gridlock.
“It is inexplicable that President Trump is propping up a foreign government while he shuts down our own,” Warren said.
The legislation to block Treasury’s use of the stabilization fund faces long odds in a divided Congress. But the political fallout underscores how Trump’s foreign economic interventions — once a hallmark of his presidency — are now colliding with populist anger at home.
