Washington has conditioned Argentina to distance itself from China if it wants support in negotiations with the International Monetary Fund, said Mauricio Claver-Carone, the United States State Department’s special envoy for Latin America and President Donald Trump’s strongman for the region. However, this will prove extremely difficult for the South American country, as its economy is too deeply intertwined with China.
After claiming that the US wants Milei to be “successful” and recognizes “the enormous sacrifice he has brought about with all the fiscal reforms,” Claver-Carone said, “what we do eventually want is for the famous credit line Argentina has with China to come to an end.”
“We want to be sure that any potential agreements with the IMF do not end up prolonging that credit line or swap that they have with China. While they have that credit line, China will always be able to extort [them]. So, for us, the goal with the Fund program would be to ensure it doesn’t strengthen China’s position with that credit line. That’s our priority,” he added.
The statements came at a key moment for Argentine President Javier Milei, who is seeking a new program with the IMF for an estimated $20 billion. His announcement of wanting IMF support was interpreted as a sign of fiscal discipline and financial support intended to reassure markets after weeks of exchange rate volatility and social tensions over fiscal adjustments.
Argentina maintains a currency swap with the People’s Bank of China for the equivalent of more than $18 billion, a portion of which has been used to back up international reserves. Although Milei’s libertarian government has distanced itself politically from Beijing, the swap remains a key tool for maintaining financial stability.
The IMF declined to comment on possible political conditions and, for now, Buenos Aires has not responded to the US official’s statements.
Despite Argentina’s ideological shift, China continues to maintain a strategic position in the Argentine economy. The East Asian country is Argentina’s second-largest trading partner, behind Brazil, and a key player in the industrial and infrastructure sectors. Chinese companies such as the automaker BYD have expressed interest in establishing local production plants, while other conglomerates are already involved in transportation and telecommunications projects.
This commercial and investment network complicates any unilateral decision to disengage and reinforces the geopolitical nature of the dilemma facing the Argentine government.
It is also the first time that Trump has imposed such stringent conditions on Milei, in what had previously seemed to be a fairly friendly relationship. The Argentine government had already assumed the US’s support before the IMF, and that is what is now at risk.
American pressure also reveals the limitations of a relationship that, until now, had been perceived as personal rather than institutional. The main change is that the relationship, which had been merely one of affinity, could be broken, considering that the White House did not exempt Argentina from the 10% tariffs it imposed on the rest of South America.
At stake is not just a one-time endorsement, but a change in the rules of the geopolitical game. The US has abandoned any attempt to conceal the trade war. Trump has thrown away the last 35 years of free-market advocacy by the White House.
At the same time, Milei has already renounced strategic neutrality, lining up behind NATO, the US, and Israel, but the problem is that it seems that even that is not enough in this context for Trump to alleviate pressure on Argentina.
It would be very costly for Argentina to end relations with China. To renounce the swap, Argentina would have to pay out $6 billion, which it does not have. This swap line serves as a backup for the Central Bank’s dwindling reserves at a time marked by financial uncertainty.
Although the Milei administration’s official discourse disdains China’s role in the Argentine economy, the link with the Asian giant appears unavoidable. Beijing is not only Argentina’s second-largest trading partner but also one of its main investors in key sectors such as mining and energy. Large-scale projects, such as hydroelectric dams, solar farms, and the potential installation of an electric vehicle plant, are just a few examples that demonstrate the importance of this relationship.
China plays a fundamental role for Argentina, beyond the president’s personal opinions. In this regard, the Libertarian administration faces a delicate dilemma, given that Milei is in a difficult position. It is clear that sacrificing ties with China seems very difficult, but the message from the White House is very strong.
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This article was originally published on InfoBrics.
Ahmed Adel is a Cairo-based geopolitics and political economy researcher. He is a regular contributor to Global Research.
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