This past November, a hotly divisive election in Argentina concluded with the victory of controversial right-wing libertarian Javier Milei. The first months of his presidency have been as contentious as one would expect from an eccentric conspiracy theorist and Tantric sex instructor nicknamed “The Madman.” Milei’s symbolic “chainsaw” economic policy and ensuing promotion of privatization, deregulation, and dollarization have garnered significant attention from international media.
Yet, his most radical undertaking is his foreign policy. Milei has forecast a major diplomatic reorientation for Argentina, one that steers away from cooperation with neighboring Latin American governments, China, and other members of BRICS (a geopolitical bloc of developing non-Western nations including Brazil, Russia, India, and China). Instead, Argentina is setting its sights on the United States and Israel—an unprecedented transformation of Argentine foreign policy with potentially catastrophic consequences. Most pressingly, pumping the brakes on relations with China will bring dire economic ramifications that Argentina is far from prepared to handle.
Milei’s victory signifies a break from Peronism, named after former president Juan Perón, which influenced a number of administrations in Argentina in the mid-to-late 20th century. Ever-evolving and notoriously difficult to pin down, Peronism blends traits of left-wing populism, nationalism, and social democracy; in terms of foreign policy, it led Argentina, like many nations in the Global South, to take a neutral position during the Cold War, avoiding allyship with both the United States and the Warsaw Pact nations. The Perón government rejected Western economic influence and sought to carve out a non-aligned path for Argentina. This position, however, was abandoned following the 1976 coup d’état and the ensuing seven years of military dictatorship. Even after democratic institutions were restored, neoliberal president Carlos Menem strengthened relationships with the United States and the United Kingdom and left the third-worldist Non-Aligned Movement (NAM).
In the 21st century, however, a new brand of Peronism, nicknamed “Kirchnerism,” emerged under presidents Néstor and Cristina Fernández de Kirchner (CFK), prompting Argentina to weaken ties with the United States. The Kirchner administrations also attracted disdain from the United States due to their role in encouraging the “pink tide” of Latin American nations shifting leftward. CFK’s sustained support for the Chávez and Maduro governments in Venezuela and other notable socialist leaders, like Evo Morales in Bolivia and Luiz Inácio Lula da Silva in Brazil, further strained Argentina-US relations.
As part of the shift toward Kirchnerism, Argentina expanded trade relations with China between 2003 and 2015. These ties only deepened following the 2019 election of Peronist Alberto Fernández—by 2020, China was the country’s largest trade partner. In 2022, Argentina joined China’s major Belt and Road Initiative and was promised $23.7 billion in infrastructure investments from Beijing. In January 2024, Argentina was also set to enter BRICS, which has been notably described by the BBC as a “counterweight to the Western-led world.”
But since Milei’s 2023 electoral victory, Argentina has experienced a complete diplomatic reversal. Milei campaigned on the promise of completely freezing relations with China, referring to the country as an “assassin” and claiming that he refuses to do business with socialists. In December, Milei revoked Argentina’s entry into BRICS due to the bloc’s non-Western orientation (both China and Russia are members), a move that represents his planned economic and diplomatic realignment with the West. When asked about future relations with the left-wing leaders of Brazil, Mexico, Colombia, and Chile, Milei replied, “I don’t have socialist partners.” Political scientist Tomás Múgica has described Milei’s intent refusal to maintain relations with left-wing governments as “rhetoric… reminiscent of the Cold War.” Indeed, his almost dichotomous worldview and claims of socialism threatening the West bear an eerie resemblance to the Cold War-era hysteria that, at the time, Argentina opted out of.
Milei’s concerted “alignment with the liberal democracies of the world” involved strong pro-United States and pro-Israel statements throughout his campaign and presidency, including a visit to Israel following the October 7 attacks. He also ran on the promise of dollarizing the economy, a policy previously adopted by Panama, Ecuador, and El Salvador that involves accepting the US dollar as legal tender in the country—a move that would both symbolically and tangibly bring Argentina closer to the United States. This policy has yet to be implemented, but its proposal comes at a time when US dollars are so scarce in Argentina that an October 2023 International Monetary Fund (IMF) debt repayment was made with Chinese yuan.
Benjamin Gedan of the Wilson Center has described Milei as a “unicorn”: the only prominent Latin American leader who is “ostentatiously pro-American.” Ideology aside, there are practical reasons for Milei to seek closer ties with the United States, including Argentina’s tense relationship with the IMF. The country has notoriously defaulted on international loans nine times; most recently, it sought a $44 billion grant to pay the IMF back for a failed 2018 program. Garnering the support of the United States—the IMF’s largest shareholder—is essential to reopening negotiations about the jeopardized deal. In January, Argentina successfully negotiated $4.7 billion in funding from the IMF, an outcome that, although not directly caused by increased support from the United States, may have been facilitated by closer Argentina-US relations.
Still, the costs of compromising ties with China far outweigh the benefits of increased support from the United States, especially considering the Argentine economy has become increasingly reliant on Beijing in recent years. Not only is China the country’s largest trade partner, but Argentina also has a trade deficit of around $10 billion with China, which could worsen if political ties further deteriorate. Banning imports from diplomatically hostile countries is a tried and true tactic of the Chinese government: In 2020, China famously banned or imposed tariffs on beef, barley, and coal exports from Australia, leading to a 61 percent drop in Chinese investment in the country. Similar actions against Argentina would be damaging enough on their own, but compounded by the existing deficit and downturn in the Argentine economy, they would be catastrophic. China already implemented this kind of sanction against Argentina in 2010, when it suspended soybean oil imports over accusations from the Kirchner administration that China violated anti-dumping laws. Should tensions with China escalate, a potential ban or tariff on Argentine goods could further deepen the trade deficit of a deeply indebted nation desperate for cash.
Debt and foreign loans could pose another threat if relations with China decay. Argentina’s poor record with foreign loan repayment leaves it with few credit options. China, the world’s largest creditor, has historically offered generous loans to Argentina, particularly through the $6.5 billion currency swap on which the country relies to support the Argentine peso. In 2023, Argentina borrowed $5 billion through the credit swap to repay an IMF debt in yuan. Overall, Chinese loans make up 42 percent of Argentina’s foreign exchange reserves, and the yuan has become increasingly significant in the Argentine economy, with a record 28 percent of Argentine foreign exchange transactions being conducted in yuan throughout June 2023. The credit swap has since been suspended after Milei described the Chinese government as an assassin. Given Argentina’s notoriety for defaulting and Milei’s promises of economic shock therapy—a package of massive spending cuts and sweeping privatization that is likely to destabilize the economy for weeks or months—it is unlikely that other governments or institutions will offer loans to Argentina in the near future. The country will have to radically improve its economic performance to continue securing funding from the IMF, especially since it still owes more than $32 billion to the organization. A lack of Chinese support will thus make the country’s economic endeavors incredibly difficult.
Milei’s ideological orientation will almost certainly ameliorate Argentina-US relations, which he views as necessary to support his massive economic reforms. However, pursuing stronger relations with the United States could be especially risky if Milei does not keep Argentina in China’s good graces. In any case, a return to the pre-election state of diplomatic affairs with Beijing is unlikely, if not impossible.
Still, Milei has already softened his approach to the Chinese government, thanking President Xi Jinping for the “congratulations and good wishes” on social media and expressing his “most sincere wishes for the Chinese people’s wellbeing” in a move likely motivated by the potential fallout of the suspended credit swap. This change of tone demonstrates that Milei is willing to be flexible regarding his stance on China in the face of very real economic repercussions. If deteriorating relations with China continue to hurt Argentina’s economy, Milei should make a sharper policy U-turn—the success of his goals for the country might hinge on him doing so.