Why Trump May Bail Out Argentina and How Climate Investment Could Help Him

By Jacob Weindling | September 22, 2025 | 2:49pm

Photo by The White House

Climate Argentina

Why Trump May Bail Out Argentina and How Climate Investment Could Help Him

Earlier this month, Argentina’s libertarian president Javier Milei’s party Libertad Avanza only won 34 percent of the vote in the country’s largest province around Buenos Aires, losing to the Peronist Fuerza Patria coalition who received 47 percent support. Pre-election polls had this as a tight race, so this came as a surprise, which shocked Argentina’s economy. After the election, a government bond that expires in September 2029 fell by 15 percent to par, as this result plus the growing corruption scandal around Milei’s government led to a crisis of confidence in the Argentine economy. Argentina’s central bank spent $1.1 billion in three days last week to defend its peso as investors fled it in droves. The U.S. helped intervene on Friday to the tune of $678 million, one of the largest interventions in two decades. Today, U.S. Treasury Secretary Scott Bessent said a “large and forceful” bailout is on the table to support Argentina, and they are reportedly discussing a deal with Milei that would cover more than $8.5 billion in debt due in January and July of next year.

Milei is an ally of Trump, and his Treasury Secretary explicitly says this is about protecting their friends. “We’re sending a message that if you do the right thing, if you follow good policies, that if you’re aligned with the values of the United States…we are willing to provide assistance when things move out of equilibrium,” said Bessent. Argentina has already tapped the IMF for $20 billion this year, and Bessent said U.S. support “may include, but [is] not limited to, swap lines, direct currency purchases, and purchases of U.S. dollar-denominated government debt from Treasury’s Exchange Stabilization Fund.”

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To understand why we are here today on the cusp of a bailout for one of Latin America’s largest economies falling into crisis, we must return to an issue familiar to Americans these days: inflation. Argentinians are Bane in the “you merely adopted the dark, I was born into it” meme with Americans as Batman when it comes to inflation. The country has had it be an animating issue in their lives repeatedly since the 1930s, and its most recent battle began back in the mid-2000s when the government was caught faking inflation numbers ahead of an election, spurring a wave of capital flight as investors abandoned an economy they knew they could not trust. Milei was elected with a mandate to tame the inflation ripping the Argentinian economy apart, and he has actually done a pretty good job of getting it down.

Per the Organization for Economic Cooperation and Development (OECD), “the Argentine economy has reached a turning point.” After white hot Consumer Price Index (CPI) annual increases of 133.5 percent and 219.9 percent in 2023 and 2024, inflation is up just 36.6 percent this year and is projected to rise just 14.9 percent next year. Private consumption dropped 2.9 percent last year, and is up 9.6 percent this year, with that split demonstrating how cataclysmic last year’s economic figures were and how drastically improved they are this year. All the figures show that Argentina’s economy is turning a corner right now, but it is a critical moment where the economy is still quite weak and the government is not exactly inspiring confidence in it.

“91 percent of homes in Argentina have some form of debt, and 58 percent of those loans were taken to buy food in 2024,” wrote Al Jazeera about a recent report by the Social and Economic Statistics and Tendencies Institute in Argentina. “Sales have slowed right down in recent months,” said Cesar Martinez, a butcher in Buenos Aires, to Al Jazeera. “People are always looking for discounts, buy smaller quantities, maybe for the day, and tend to pay with credit card; it’s hard to find anyone paying in cash.” He told them that this is all because “the money one makes is never enough to afford everything, even the most basic things.”

Chart via OECD

Inflation is only half the battle, as prices coming down don’t mean much if people still aren’t making enough to get by. Argentina had capital controls and other restrictive forms of fiscal and monetary policy that scare off foreign investors and led to a stagnant economy with rising inflation, and Milei’s libertarian philosophy is to try to take those chains off. His crisis policies have worked to a degree, particularly on inflation, but they have not built a healthy economy yet. And if there’s evidence that he may not be in power for much longer, well, foreign investors are scared the chains may come back on again, or just scared that they don’t know what is coming next after so many big changes, placing Milei’s government between a rock and a hard place.

Ironically enough, one of the sectors of Argentina’s economy that could really help fix a lot of these problems with inflation, wages and investment is clean energy. It’s not out of the realm of possibility that Trump bails Argentina out, and then Argentina turns around and uses that money to fund climate projects, all while ours get shut down. What a world, right?

The flip side is that the Trump administration could attach strings to the bailout, such as no climate investments, which would really hamper Argentina’s effort to grow their economy in a sustainable way that doesn’t lead them to have routine battles with inflation. “The country has the fourth largest offshore wind potential in the world, and the largest potential for onshore wind energy in Latin America and the Caribbean,” writes the OECD. “Argentina is also home to 20 percent of the world’s lithium identified resources and has significant scope to expand production and developing activity in midstream segments of the lithium value chain.”

They also note that despite requiring large quantities of freshwater, “Argentina’s arid regions offer ideal conditions for extracting lithium in an energy-efficient and carbon-friendly manner.” Forget all the altruistic and, well, human aspects of climate change for a second—there is a basic economic reality at the heart of Argentina—that it is a great candidate to exploit the renewable energy revolution for its own economic benefit. Energy prices are always tied to inflation, and if they could get more control over their energy policy and add supply and some more dynamism to the grid, that would help abate inflation further.

The problem is that Milei’s subsidies to the fossil fuel industry crowd out competition from renewables, and he is thinking of leaving a Paris Agreement that helped set up a robust plan to bring foreign investment into Argentina’s floundering economy. This very much is a familiar story about right-wingers discounting obvious economic benefits of technological innovation in the energy sector and handing the 21st century to China. If that story extends to Trump’s impending bailout and it gets anti-climate provisions strapped on to it, the whole effort may fail anyway by hamstringing Argentina’s economy and helping to sweep Milei’s party out of power, further exacerbating the extreme response markets are going through right now.