The Trump administration proceeded with its Argentina bailout, finalizing a $20 billion financial aid package. Treasury Secretary Scott Bessent confirmed the deal, which includes a direct purchase of pesos.
While specific terms weren’t immediately disclosed, Bessent indicated the funds would be channeled through a currency swap with Argentina’s central bank. The bailout has drawn significant criticism, with many arguing it unfairly favors wealthy fund managers who hold Argentine debt, especially while American farmers face hardships and the U.S. government is experiencing a shutdown.
Both nations expedited negotiations to finalize the bailout terms, driven by upcoming legislative elections in Argentina and an anticipated visit to Washington by President Javier Milei, Argentina’s libertarian leader and a staunch ally of President Trump.
On social media, Bessent stated, “Argentina faces a moment of acute illiquidity. The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets.”
The Treasury Secretary also mentioned that American business leaders expressed a desire to strengthen ties with Argentina, affirming the Trump administration’s commitment to supporting its Latin American partner.
However, this decision to bolster Argentina’s economy is fueling concerns that the true motivation might be to safeguard affluent investors whose substantial holdings in Argentine debt would be jeopardized by an economic collapse.
Further complicating matters, numerous prominent hedge funds, including those managed by close associates of Bessent, are poised to gain significantly from this financial rescue. Investment giants like BlackRock, Fidelity, and Pimco hold substantial stakes in Argentina, as do individual investors such as Stanley Druckenmiller and Robert Citrone, both former colleagues of Bessent during his time with George Soros.
Thursday’s Treasury intervention provided a much-needed boost to Argentina’s struggling financial markets, which had been reeling from a severe cash shortage. Dollar-denominated bonds maturing in 2035 saw a recovery to pre-announcement levels, and the peso also strengthened. However, currency experts remain cautious, fearing renewed pressure on the peso without a sustainable, long-term solution to Argentina’s economic challenges.
The perception that the Trump administration is prioritizing a foreign economic rescue benefiting affluent investors—especially during a federal government shutdown that leaves American workers unpaid and while struggling U.S. farmers await assistance—has ignited strong backlash from Democrats, agricultural organizations, and various other groups.
In response, eight Democratic senators introduced legislation seeking to bar the Treasury Department from utilizing its Exchange Stabilization Fund to stabilize Argentina’s financial situation.
Senator Elizabeth Warren, a leading Democrat on the banking committee and a co-sponsor of the legislation, sharply criticized the move: “It is inexplicable that President Trump is propping up a foreign government, while he shuts down our own. Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first and sticking Americans with the bill.”
While the legislation is unlikely to pass, it underscores the significant political challenges Republicans may encounter concerning the Argentina bailout.
Prior to his meeting with Argentina’s Economy Minister Luis Caputo, Bessent maintained that the proposed $20 billion central bank swap line was neither a bailout for Argentina nor a favor to affluent investors.
Bessent asserted to CNBC, “This trope that we’re helping out wealthy Americans with interest down there couldn’t be more false. What we’re doing is maintaining a U.S. strategic interest in the Western Hemisphere.”
For a long time, global investors have viewed Argentina as a prime opportunity for profit, particularly through its government debt. Often, these investors acquire bonds at a discount from the initial lenders, betting that these obligations will eventually be settled or restructured.
This strategy appears to be yielding returns. This summer, a Fidelity fund attributed gains from Argentine debt to offsetting losses incurred from investments in other emerging markets, such as Venezuela and Ukraine.
Significantly, affluent American investors with direct connections to Bessent are poised for substantial gains.
Stanley Druckenmiller, Bessent’s former mentor at Soros Fund Management, runs the Duquesne family office, which was the second-largest investor in Argentina’s primary exchange-traded fund.
Robert Citrone, who founded Discovery Capital Management, considers Latin America his most significant global investment, with Argentina being the largest holding in his regional portfolio. Citrone has previously recounted how, during his time working alongside Bessent under George Soros in 2013, he persuaded them to make a pivotal bet against the Japanese yen, jokingly crediting himself with a large portion of Bessent’s bonus from that period.
In a May podcast interview hosted by Goldman Sachs, Citrone shared, “I kind of convinced George and Scott Bessent at the time to go big on that. And, you know, Scott says I’m responsible for 75 percent of his bonus at Soros, kind of jokingly, over that time.”
Whether Citrone influenced Bessent’s decision to support Argentina’s currency remains uncertain. However, sources familiar with the agreement indicate that Citrone was in frequent communication with Bessent prior to last month’s Treasury announcement, making the case that a currency collapse would severely damage President Milei’s political standing.
According to one source, Citrone reportedly warned Bessent that a loss for Milei in the upcoming elections could push Argentina towards seeking further economic aid from China, potentially causing the United States to lose a key Latin American ally.
Elliott Hulse, a Treasury Department spokesman, did not comment on Bessent’s discussions regarding Argentina with Druckenmiller or Citrone. A spokesperson for Citrone also declined to comment. Druckenmiller, for his part, stated he had no prior or subsequent communication with Bessent about Argentina following last month’s bailout announcement.
Argentine media had previously highlighted Bessent’s connections to Citrone.
President Milei’s party experienced a significant defeat in a provincial election in September, and forecasts suggest another unfavorable outcome in the upcoming legislative polls. Such setbacks could undermine Milei’s ability to pursue his pro-market, austerity policies, which the Trump administration has largely endorsed and emulated.
Even some conservative commentators have criticized the Treasury’s support for Argentina, expressing concern that the deal might inadvertently empower the country’s left-leaning, pro-spending political opposition, expected to perform strongly in this month’s elections.
Sources close to the agreement suggest that Citrone, along with leaders from the Conservative Political Action Conference (CPAC), may have played a key role in lobbying both the International Monetary Fund (IMF) and Bessent to provide aid to Argentina. The IMF had previously extended its own $20 billion bailout in April, a 48-month loan marking Argentina’s 23rd such package from the fund since the 1950s.
Days after the IMF deal in April, Citrone reportedly traveled to Buenos Aires on a plane belonging to a leader of Tactic Global, CPAC’s lobbying arm, to meet with President Milei. This information, detailed by a Trump administration adviser and Argentine media, indicates the plane’s owner, Leonardo Scatturice, a Tactic co-founder, has amassed wealth from profitable government contracts awarded by the Milei administration.
Citrone’s meeting with the Argentine president preceded Bessent’s separate arrival in the capital by only a few hours.
During his visit, Bessent announced the IMF deal, specifying that the funds were meant to assist Argentina in relaxing currency controls while adhering to the government’s austerity measures and spending cuts.
Last month, Bessent declared that the U.S. would offer an additional $20 billion in economic support, aiming to prevent Argentina from conceding valuable mining rights to China, which has historically propped up Argentina’s economy with an $18 billion currency swap.
The U.S. has not specified any safeguards to protect taxpayer funds. Bessent, however, strongly asserted that the proposed currency swap is not a bailout.
He reiterated to CNBC, “We are not putting money into Argentina.”
The decision to support Argentina is politically charged in the U.S., particularly as China has been sourcing soybeans from Argentine farmers over American ones this year. Furthermore, Argentina’s history as the IMF’s most frequent bailout recipient and largest debtor casts doubt on its capacity to repay the United States.
Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, firmly stated, “They can call it what they want, but it’s a bailout. It’s a country in crisis, it’s running out of dollars, and the U.S. is giving the country dollars. That’s a bailout by definition.”
During negotiations, U.S. officials reportedly urged Argentina to reduce its economic ties with China and sought preferential access to Argentina’s uranium and lithium reserves.
However, in Argentina, provincial legislators and governors hold significant authority over such contracts, meaning the U.S. Treasury’s backing of President Milei may not guarantee increased mining rights for American companies.
Bessent reiterated on Thursday that strengthening Argentina is vital for both national and economic security.
He concluded, “The success of Argentina’s reform agenda is of systemic importance, and a strong, stable Argentina which helps anchor a prosperous Western Hemisphere is in the strategic interest of the United States.”