The recent currency swap that amounted to a $20 billion U.S. loan to Argentina was a completely justifiable strategic move and a legitimate gesture in treasury terms also. Critics who complain that the United States should not be engaging in such largesse while the U.S. government is shut down are misfiring completely. A loan is not a gift, and if President Trump thought the United States would not get its money back, he would not have made the loan. The Democrats shut down the U.S. government to try to force greater spending and strengthen their Senate leader, Chuck Schumer, against a primary challenge from Congresswoman Alexandria Ocasio-Cortez. Trump has made it clear that if his enemies persist in this, he will take the occasion to eliminate a significant number of government jobs that have already been identified as redundant. Trump’s opponents are conflating almost unrelated matters. He wants to encourage the recovery of Argentina from the post-Peron (since 1955) decades of misgovernment that it has endured. In 1945, Argentina had a similar standard of living to that of Canada, and now has less than half Canada’s standard of living (and Canada has not enjoyed overly distinguished government in much of the intervening time).
This is also a step that is consistent with Trump’s policy of encouraging and assisting friendly regimes with a variety of measures, and with proactively countering the so-called BRICS countries that are nibbling at the foundations of American world economic leadership. A number of Latin American countries have effectively “dollarized” their currencies to give their people and prospective investors increased confidence and to facilitate intra-hemispheric trade. Argentina is close to this step, as President Javier Milei, an impassioned Trump supporter, has drastically reduced the rate of inflation. BRICS (Brazil, Russia, India, China, and South Africa), is an imposter of a rival to the G7 (United States, Japan, France, Germany, UK, Italy, and Canada). Of BRICS' principal members, only China is a seriously powerful economic country, but is somewhat beleaguered; India is an authentically growing and very large, though still somewhat dysfunctional, developing country; Brazil is suffering from the Latin American disease of chronic fiscal irresponsibility from which Milei is trying to liberate Argentina; Russia is a war-weakened and stagnant oligarchic kleptocracy with a GDP smaller than Canada’s; and South Africa is effectively a basket-case, whose ambassador to the United States Trump expelled recently. Trump has denounced South Africa as a racist, anti-white government, though a new ambassador will be received soon. |
Milei’s experiment with responsible fiscal and commercial government is extremely important, as Argentina has always been, along with Brazil and Mexico, one of the most influential countries in Latin America. If this succeeds, it will be a powerful and influential lesson much noticed, and doubtless emulated, elsewhere in Latin America. It makes a stark contrast with Lula Da Silva‘s sloppy and demagogic socialist system in Brazil. Trump has stated that if Milei loses office in Argentina, he will call this loan. He has also raised tariffs on Brazil because of what he correctly judges to be an oppressive and unjust pseudo-legal persecution of the conservative former president, Jair Bolsonaro. Naturally, Latin America has always been sensitive to the dominating contiguity of the United States and American influence in Latin American political life. These activities of Trump have attracted significant hostility in parts of Latin America. But Trump has made it clear that the United States is now pursuing a strategic game, specifically responding to the efforts of China to gain influence in Latin America through financial investment and economic expansion. Effectively, Trump has said that he will protect and help countries whose governments are democratic and guided by sound free-market principles. This is a very long way from the American practice, under many previous administrations, of propping up dictators subservient to Washington, and as the commandant of the U.S. Marine Corps, Smedley Butler, put it, allowing the United Fruit Company to deploy the Marines in Latin America. What is happening now is a contest of influence between China and the United States, and to an increasing degree between democratic countries with free-market economies and authoritarian socialist or command economies. Franklin D. Roosevelt’s famous and much-admired Good Neighbor policy toward the American republics was essentially the end of allowing U.S. foreign policy in the Americas to be overly influenced by individual or even industrial commercial interests. The United States had specifically renounced the Monroe Doctrine, which effectively preserved to itself the right to prevent the intrusion of any influences from other continents in the Americas that had not already been established prior to the promulgation of the doctrine in 1823. (In fact, it was for the first 40 years an expression of a wish that happened to be shared, and was in fact enforced, by the British, who had no further interest in America than what they already had in Canada and the Caribbean, and did not wish any European power to replace the Spanish and Portuguese whom their populations evicted.) After the U. S. Civil War in 1865, the United States did assert the Monroe Doctrine, starting with the expulsion of Napoleon III’s attempt to establish a French empire in Mexico, and continued to maintain this policy until the end of the Cold War. Roosevelt tolerated Mexican President Lazaro Cardenas’ expropriation of American-owned assets, but warned that he would not tolerate extensive Japanese ownership of land in Mexico. All this was the background for the many disputes between the United States and Cuba and the hair-raising Cuban Missile Crisis of 1962. With the end of the Cold War and the substantial increase in the importance of Mexico, Chile, and Brazil, the continent has been effectively opened up, like other areas, to legitimate competition in both comparative government and freedom of economic development. It is in this context of developing resources and competing political and economic systems that relations between Milei and Trump are unfolding. The Chinese claim they are emancipating the Americas from two centuries of U.S. suzerainty. The Americans are attempting to encourage those governments that respect individual liberty and a free but not unregulated marketplace.
The Trump administration has also made it abundantly clear that it will not tolerate abuse of free trade agreements, such as Mexico has conducted, and even less the ambition of many Latin American countries to dump within the borders of the United States millions of destitute people, including hundreds of thousands of dangerous and violent criminals, whence they ship back substantial amounts of money to the countries from which they have fled.
Trump is confident that the governmental and economic model led and represented by his government and his country will, as in the Cold War, prevail over rivals. He has more respect for the Chinese challenge than President Reagan did for the Soviet Union or Roosevelt for Nazi Germany; he accurately described Russia as a “paper tiger” and China as better at espionage than invention and governed by a completely unscrupulous regime.
The initiative with Argentina fits the Trump administration’s foreign policy exactly. If Javier Milei is successful, Argentina will have greater influence in South America than socialist Brazil, and it will certainly be time for India to cease its nearly 90-year game of economic favoritism with Russia and apply to join the G7. Trump has until recently been relatively gentle with Russia because he does not wish to drive it permanently into the arms of China, and that should be possible to achieve after the Ukraine War.
The real rival is China, and it was just seven years ago that everyone was announcing that China was about to surpass the United States as the world‘s largest economy. No one has offered any such opinion since shortly after Trump first became U.S. president, and it is not a faddish prediction that is apt to rise again soon. https://list.mailexpress.com/archive/77iFVXdnl~331/KJNmJy00sx~331/Y01LCSDPlw~331 |