Does he mean handle or choke-hold?
President Donald J Trump’s hallmark modesty was on full display yesterday when he was asked on Air Force One about the mid-term elections in Argentina. The POTUS congratulated himself for Javier Milei’s unexpected success in Argentina’s mid-term elections on Sunday, saying: “he had a lot of help from us,.. I gave him an endorsement, a very strong endorsement.”
That wasn’t all, of course. The Trump administration also provided a $20 billion swap line while also brokering a $20 billion Wall Street-led bridge loan. How much money has been used or will be used is far from clear. That was just six months after the International Monetary Fund extended a $22 billion loan, backed up by an additional $12 billion from the World Bank and $10 billion from the InterAmerican Development bank.
All of these institutions are Washington-based and their support comes with big strings attached. Without that support, the Milei government would never have made it to the elections with an in-tact economy. The central bank would have run out of reserves months ago and the currency would have collapsed even more than it has. Instead, investors are celebrating, including some who are very close to US Treasury Secretary Scott Bessent:
Milei was also grateful for the support:
Revealingly, Trump pointed out that his administration is “sticking with a lot of the countries in South America, we are focused very much on South America, and we’re getting a real strong choke hold handle on South America, in a lot of ways.”
Washington’s debt trap diplomacy and overt election meddling has paid off in Argentina. After giving Argentine voters a choice they probably couldn’t refuse, between supporting President Milei’s La Libertad Avanza (LLA) or suffering another sovereign default followed by a full-blown financial crisis, Javier Milei’s party won 40.8% of the votes against 31.7% for the Peronist opposition.
I’m not sure about the “free” dollars of which Stoller speaks: one thing Argentines know better than most is that financial bailouts tend to come with a hefty price tag attached. If anything, that’s likely to be ever truer for a US Treasury-led bailout than an IMF-led one.
“Free” Market Bailouts
As the final results came in, “free” market idealogues around the world heralded Milei’s triumph as proof that Austrian-style economics can indeed work miracles, while completely forgetting to mention the two $40 billion bailouts that made it all possible. Nothing shouts “free” market like a government-arranged bailout by the world’s biggest empire.
A case in point:
Here’s a nice little take-down of David Frum’s glowing endorsement of Milei:
Admittedly, we will never really know how much of the result was due to the Trump administration’s extortion tactics. An article by CELAG’s Alfredo Serrano Manc suggests that Argentina’s right-wing parties tend to pick up around 40% of the vote regardless of the state of the economy.
In the 2003 presidential election, 40.8% of the electorate voted for Carlos Menem, the former president whose currency peg between the peso and the dollar had led to a currency crisis, bank runs, bail-ins and an IMF-led bailout just a couple of years earlier. The same thing happened with Mauricio Macri in 2019, when 40.2% of the electorate voted for his conservative bloc just after it had requested an IMF-bailout, the biggest in the Fund’s history.
After suffering a landslide defeat in the regional elections in Buenos Aires province in September, La Libertad Avanza’s victory in Sunday’s legislative midterms shows Milei can still count on a broad electoral base, writes Valentina Neto for the Catalan newspaper La Vanguardia:
“Milei’s victory shows that he still has significant support, despite the fact his policies to fight inflation have reduced the purchasing power of the working classes, have emptied the order books of small and medium-sized companies and have ravaged pensioners, who have seen their benefits sharply reduced. But that 40% of votes shows that Milei has a solid base among the upper classes and parts of the middle class — precisely those who have access to the dollar in an economy highly dependent on the US currency.
Cloning Milei
The victory is arguably even more important for the Trump administration as it is for Milei, argues Neto:
Praised by the financial markets, which make money off him, protected by the IMF, which endorses his austerity policies, the Argentine is currently the star that shines brightest in the constellation of populisms of the global far right. From Giorgia Meloni to Nigel Farage, from Viktor Orbán to Isabel Ayuso, everyone loves Milei and everyone wants his chainsaw project to end well in order to make clones of him elsewhere. It doesn’t seem to matter that he calls himself a libertarian yet the first thing he does [at the sign of trouble] is resort to state aid… from the United States.
This is a key point we raised previously — that the success, or at least seeming success, of the Milei project in order for it to be replicated in other countries across Latin America:
As the Argentine expert in international relations, Juan Gabriel Tokatlian, notes, the Trump administration’s “unprecedented” decision to bail out Argentina has more to do with geopolitical considerations than economic ones:
…
There is a possibility that in one year’s time South America will be almost totally identical, politically speaking, to the United States. We have elections in Chile, which could be won by ´´[the right-wing populist] José Antonio Cast, elections in Peru, which could be won by someone on the right, elections in Colombia, which could bring the right back into power, elections in Brazil which Bolsonaro could win [NC: presumably in reference to Jair’s son, Eduardo], the second round of elections in Bolivia, which someone on the right will win.
The first country to turn sharply right is likely to be Chile, where conservative free-market candidate Jose Antonio Kast is tipped to win in next month’s elections. Kast is politically aligned with Jair Bolsonaro in Brazil, Milei, and Spain’s far-right Vox party. His German-born father was apparently a member of the Nazi Party, according to recent revelations that appear at odds with the candidate’s own statements about his father’s role during the Second World War.
Meanwhile, Bolivia has a right-leaning coalition government for the first time in 20 years. The government will be headed by President-elect Rodrigo Paz, a senator from the Christian Democratic Party. Paz is the son of former President Jaime Paz Zamora (1989-1993) and the great-nephew of former President Víctor Paz Estenssoro, a revolutionary in the first of his four terms (1952-1956) and a neoliberal in the last (1985-1989).
A Bailout Beckons?
The day after the elections, Paz pledged to re-establish ties with the US and voiced his support for Venezuela’s regime-change leader, Corina Machado. One of Paz’s first acts will be to visit Washington, cap in hand.
Next week we will have a trip to Washington because that is where the multilateral institutions are located, such as the World Bank, with which we have been in intense negotiations.
After a long period of relatively stable growth, Bolivia’s largely oil and gas-dependent economy is in a deep rut, with a chronic lack of foreign currency, surging inflation and, ironically, fuel shortages, making it a prime candidate for IMF support.
Given the Fund’s tarnished image in Bolivia (and just about everywhere in Latin America), Paz insists he won’t be seeking an IMF bailout. Analysts at Citi beg to differ, however, saying the correct question is not whether Paz will go to the IMF but rather how quickly, as some kind of restructuring is desperately needed. An unnamed IMF official told Reuters that he had already spoken to Paz before the elections.
This will not help the Bolivian people or its economy, of course, but it will place the Bolivian nation and its resources, including the world’s largest deposits of lithium, firmly under US control. And there will presumably be the usual structural adjustments attached.
Despite Trump’s frequent criticism of the IMF, senior Trump officials, including Bessent, are fully aware that the Fund is still the world’s most important multilateral lender of last resort. That makes it a vital weapon of economic control. As Yves has repeatedly asserted, the BRICS association has not even tried to create a genuine competitor.
According to Bessent, the Trump administration, “far from stepping back, […] seeks to expand U.S. leadership in international institutions like the IMF and World Bank”. As we reported in early May, Washington is once again looking to use the Fund as a weapon to further not only its economic interests in Latin America but also its geopolitical goals:
The irony is that Trump’s global trade war, by weakening international trade precisely at a time when countries are grappling with currency and debt crises, makes it even more likely that countries will need the IMF’s assistance.
But that support should not be taken for granted, Bessent recently said:
“Argentina deserves the IMF’s support because the country is making real progress toward meeting financial benchmarks. But not every country is so deserving. The IMF must hold countries accountable for implementing economic reforms. And sometimes, the IMF needs to say ‘no’.”
That presumably includes having the right sort of allies. As the Wall Street Journal reported last week, one of the key conditions for the Treasury-led bailout package was that the Milei government “limits China’s influence over the distressed South American nation”:
Treasury Secretary Scott Bessent has spoken in recent weeks with Luis Caputo, Argentina’s economic minister, about curbing China’s ability to access the country’s resources, including critical minerals. In addition, they have discussed granting the U.S. expanded access to the country’s uranium supply, according to people with knowledge of the conversations.
Administration officials are trying to counter Beijing’s influence by encouraging Argentina’s leaders to strike deals with U.S. companies as a way to jump-start infrastructure projects and investments in key sectors such as telecommunications, the people said.
China is Argentina’s second-largest trading partner after Brazil and the top buyer of its agricultural exports.
As readers may recall, Bolivia was one of nine countries announced as BRICS partner countries in January. Paz himself has described the BRICS alliance as a “positive scenario that one should not neglect”. Whether he still holds that opinion after his upcoming visit to Washington is a whole other matter.
From Narco Terrorists to Terrorist Protesters
Another country that is looking to further cement its “vassalisation” by the US is Ecuador. As the country’s Miami-born president, Daniel Noboa, mobilises the police and armed forces against indigenous groups and declares a state of emergency in 10 of the country’s 24 provinces, the US celebrates its “best relations in decades” with the country. The groups are protesting against the government’s removal of subsidies on diesel, which led to a 60% spike in prices of the fuel.
As Human Rights Watch reports, the Noboa government has accused the protesters of “terrorism” and frozen the bank accounts of indigenous and environmental groups and leaders. It has also proposed to install US military bases in strategic points of the country, such as the Amazon, Esmeraldas, Guayaquil, the border with Colombia and the coastal region.
That was after passing a resolution in late 2024 enabling the US navy to use the Galapagos Islands for control and patrol activities in the area. As a result, the US is now able to install military personnel, weapons and other equipment on the island chain well as dock ships and submarines at its ports.
The Galapagos has been recognised as a UNESCO Natural Heritage Site since 1978 while Ecuador’s constitution expressly prohibits the establishment of foreign military bases — something Noboa is determined to change with a referendum in November. The agreement signed with the US also grants US soldiers and their contractors certain privileges, exemptions, and immunity in Ecuadorian territory.
Normally, when a Latin American government passes legislation that contravenes its national constitution, shrieks of outrage inevitably erupt from Western governments. Not this time. One might also think that such a development would have attracted the interest of the Western media, especially given the threat it poses to a UNESCO Natural Heritage Site and the environment in general, but crickets.
The ostensible purpose of all this military activity is to combat drug trafficking, illegal fishing and other illicit maritime activities in the region. But as with the boat strikes being carried out in the Caribbean, and now also the Pacific, the US’ real goal is to combat China’s rising economic influence in South America, regain control of South America’s strategic resources, and (in the case of the Galapagos base) project and protect US power in the southern Pacific.
False Flag Accusations
Put simply, it is about waging war. And that is precisely what we are seeing in the Caribbean as the US continues to expand its military build-up off Venezuela’s coastline, including by sending in the USS Gerald R Ford, the navy’s “most lethal combat platform”.
The USS Gravely is scheduled to dock at the port of Port of Spain from October 26-30. According to Trinidad and Tobago’s Ministry of Foreign and Caricom Affairs, the 22nd US Marine Expeditionary Unit will be conducting joint training with the TT Defence Force during the same period.
The Trinidad and Tobago government has described any talk of a possible war between the US and Venezuela as “fear mongering”.
Venezuelan Foreign Minister Yván Gil has accused the TT government and the CIA of plotting a false flag attack on a US military ship in order to blame Venezuela and justify an aggression against the Caribbean country.
“Venezuela has clearly informed the Government of Trinidad and Tobago about the CIA-led false flag operation: attacking a U.S. military vessel… then blame Venezuela, to justify an aggression against our country,” Gil said on Monday.
The minister claimed that a criminal cell financed by the CIA linked to the operation was in the process of being dismantled, and called on the island to assume historical responsibility. Hours later, Venezuelan Vice President Delcy Rodríguez urged Maduro to suspend all gas agreements with Trinidad and Tobago in retaliation for allowing itself to be used as a staging ground for US intervention in the region.
Meanwhile, unconfirmed rumours are circulating that Wagner mercenaries have landed in Venezuela to support the country’s defensive operations…
Nick Corbishley 