The Election of Javier Milei and Opportunities for Geopolitical Re-alignment

Introduction

On December 10, 2023, Javier G. Milei was sworn in as president of Argentina. His background—radical libertarian economics professor with little experience in government—is a disruption to the political status quo. Despite continued economic calamity and extraordinary political uncertainty, even in Argentine terms, this year’s election has proven to be of historic significance. General dissatisfaction with the traditional Argentine ruling class—referred to by Milei as the “political caste”—delivered a tectonic shift at the polls. His presidency is now set to open a new chapter in the country’s foreign policy, with his government likely to usher in new opportunities for greater U.S. engagement in the Southern Cone.

Javier Milei’s arrival to the Casa Rosada could represent an opportunity for the United States vis-à-vis strategic sectors like energy and space. Global green energy transition efforts represent a key opportunity for long-term cooperation in the hemisphere. Milei’s four-year term provides a critical window to advance efforts in the minerals and natural resources space, namely, lithium, natural gas, copper exploration, and the protection of ocean fisheries. Partnerships and targeted investments in the lithium industry in particular could harness vital energy infrastructure while boosting the production of lithium-ion batteries. In a similar vein, the U.S. government can find common ground in Argentina’s solid technical base and emerging commercial capabilities to advance regional space collaboration efforts. Further, Milei has pledged not to adhere to any bloc led by “communists” while asserting a loud desire for closer ties with the United States and Israel.

However, the new administration is inheriting a country in economic ruin, facing the looming risk of hyperinflation as well as a near total dependence on the People’s Republic of China (PRC) for credit lines. Last month this was on full display during President Alberto Fernández’s visit to Beijing for the tenth anniversary of China’s Belt and Road Initiative (BRI). The persistent influx of Chinese investment and finance has filled the relative vacuum of U.S. influence across South America; arguably, no country in the region has turned as eastward as Argentina has. During Mauricio Macri’s presidency from 2014 to 2019, which also promised geopolitical realignment, Sino-Argentine channels of influence consolidated. Also crucial, the emerging political environment is likely to find Luiz Inácio “Lula” da Silva’s Brazil and Argentina at odds with each other—competing for influence in the region and perhaps on the global stage. And yet president-elect Milei’s personal invitation to Lula to attend his inauguration—thereafter declined by his Brazilian counterpart—suggests he may be willing to soften his tone in the name of pragmatism and “shared prosperity.”

Milei’s Ascendance and Governance Possibilities

The frequent comparison between Milei and other right-wing figures in Latin America, such as Jair Bolsonaro in Brazil and Nayib Bukele in El Salvador, obscures the nature of Milei’s policy agenda and the seriousness of Argentina’s economic challenges. As an unapologetic libertarian infatuated with neoclassical economic thought, Milei is an academic-turned-politician who promises to unshackle the economy from longstanding protectionism through the adoption of austerity measures, the elimination of foreign exchange restrictions, and the potential dollarization of the economy. How many of these reforms he will be able to adopt while lacking majorities in congress is an open question. Milei capitalized on widespread, antiestablishment populist sentiments, a political mood he may seek to harness when facing serious challenges in office. As seen with other populists in the region, how long Milei can blame Argentina’s political class and its decisions for the country’s woes remains a key question for his ability to maintain the support needed to govern. Lack of experience, international skepticism, and, most importantly, a paucity of provincial allies may prove to be significant obstacles.

In sharp contrast to others in Latin America, the populist who has emerged in Argentina professes a desire to “return” the country to its Western and “capitalist” roots. Milei intends to position the country in line with wealthy democracies as an essential measure to “re-establish its erstwhile economic prosperity and political stability.” It is more dubious, however, whether Argentines voted for Milei on the tenets of loud “anarcho-capitalism” versus a simple demand for change. Despite his strong mandate for change, it remains to be seen if Milei can reduce Argentina’s dependence on China to a lesser extent, Russia, and neighboring Brazil. Volodymyr Zelensky’s attendance at Milei’s inauguration ceremony perhaps signals what is likely to come next.

The Milei administration’s success will rest on its ability to reconcile a fragmented, discredited, pro-business, and center-right political platform in Argentina. Ultimately, Argentines may have voted against the Peronist establishment and its failed policies rather than in favor of an aggressive libertarian agenda. For now, acute rejection regarding the previous Fernández-Kirchner administration, coupled with newfound support from former president Macri and presidential contender Patricia Bullrich from the Juntos por El Cambio (JxC) coalition, could enable a more solid political presence at a subnational level. Considering energy- and mining-related policies largely fall under provincial jurisdiction, the incoming administration is likely to encounter hurdles and widespread economic influence from the PRC. At the congressional level, lacking representation, the personalistic and poorly institutionalized La Libertad Avanza coalition will have its negotiation abilities tested to promote its reformist agenda.

Argentina’s Increasing Strategic Importance

With its impressive resource endowment, Argentina’s strategic importance has burgeoned in recent years. Specifically, reignited U.S.-Argentina relations hold the potential to further clean energy transition efforts, enhance space collaboration, and deter illegal, unreported, and unregulated fishing (IUU) while enabling effective competition in view of the PRC’s expanding footprint. In a similar vein, considering Latin America’s hesitant response to the unprovoked Russian invasion of Ukraine, a more Western-oriented Argentina could, once again, become a relevant major non-NATO ally on the defense of human rights amid multiple global conflicts. To be sure, Milei’s election promises a tumultuous time for Argentina, yet the unraveling shock might allow for long-term paradigmatic change—and new opportunities in the geopolitical arena. If the U.S. government is not to miss yet another window of opportunity to re-engage with countries across the Western Hemisphere, Milei’s election should promote the expansion of U.S. interests and commercial networks in Argentina.

It has long been argued that a lack of U.S. engagement with Argentina posed a risk of “losing” the country to the PRC. Indeed, these fears are warranted given Argentina’s previous desire to accede to the BRICS+ and participation in Beijing’s Belt and Road Initiative (BRI) circa early 2022. Unlike López Obrador’s Mexico or Petro’s Colombia, Argentina’s signaled accession to the BRICS was momentous. Despite considerable difficulty in understanding the ethos of this amorphous alliance, BRICS+ is best understood as a grouping of increasingly authoritarian member states—who share anti-Western sentiments—harboring expansionist ambitions, especially in strategic sectors like space. Notably, Chinese president Xi and President Lula voiced support for an Argentina led by Milei’s Peronist opponent. Milei has promised to halt the country’s accession to the geopolitical bloc. Now that he is in office, Milei’s foreign affairs minister, Diana Mondino, underscored that Argentina won’t join BRICS+. Still, increased U.S.-Argentina engagement remains undermined by Milei’s alleged resemblance to other controversial political figures in the region and the more nebulous components of his monetary policy agenda and political identity.

Given the country’s fragile economic position, it remains uncertain if a Milei administration will be able to reverse significant geopolitical inroads made by the PRC. As highlighted by a recent CSIS report, “China has become one of Argentina's major creditors, offering a source of investment during Argentina’s perennial financial challenges.” Sino-Argentine relations have grown stronger in the last few decades and, more significantly, under the outgoing Fernández administration. Increasing political cooperation was succinctly captured by the $6.5 billion second currency credit swap line provided to Argentina’s central bank in the midst of the electoral process—a credit line that the country used to pay its International Monetary Fund loan in converted Chinese yuan. Complicating matters further, as in the case of Uruguay, illegal fishing by Chinese vessels in Argentine waters runs rampant. This is an issue that Fernández was reticent to address given President Xi’s support for his embattled government. Joint efforts to counter IUU fishing, especially given Milei’s call for concern amid limited transparency in dealing with China, represent a vital avenue to revitalize U.S.-Argentina relations.

Expand Partnerships for Minerals Security

In an era undergirded by geopolitical turbulence and the climate crisis, Argentina could become a more relevant actor. The growing importance of critical minerals, particularly lithium and copper, aligns with the changing priorities of the United States and the world, which anticipates a greater need for these minerals than for foreign oil supply in the near future. The latest International Energy Agency’s Net Zero Roadmap Report unveils an enduring demand for critical minerals—crucial for future energy and battery markets—aiming to limit global warming to 1.5°C. Provided its importance for building transmission infrastructure, copper (“the metal of electrification”), will determine the prospects of the energy transition.

Increased U.S. engagement in Argentina could help kickstart both the economy and a mining sector in need of dynamism and more robust methods of sustainability. Argentina holds a pivotal position as the largest source of U.S. lithium imports, with lithium extraction and production enjoying strong political backing in Argentina. However, despite exhibiting a more market-friendly approach than neighboring Chile and Bolivia, in the past, the mining sector has not met its full potential due to government intervention, price controls, and trade restrictions. Yet, Argentina has resources to expand production and achieve exports worth over $18 billion per year by 2030. Currently, there are $30 billion worth of projects in the country’s mining portfolio, half of which are copper-related.

U.S. authorities should strategically capitalize on comparative advantages and consider expanding the Minerals Security Partnership framework to encompass the Southern Cone, starting with Argentina. Furthermore, forging strategic bilateral partnerships that prioritize environmental protection and further nearshoring of critical mineral supply chains is imperative for shaping the energy future. To effectively compete with China in Argentina’s mining sector, it is essential to ensure Western companies adhere to environmental standards. This includes comprehensive monitoring frameworks to enforce transparency, especially concerning optimal water use practices.

An Opening for Space Cooperation

Argentina’ space ambitions date back to the 1960s. Despite persistent brain drain and inconsistent levels of funding, it has met increasingly complex satellite development milestones. Thus, while concern over the PRC’s growing footprint in Latin America is warranted, the potential for more extensive U.S.-Argentina space collaboration exists beyond that.

NASA administrator Bill Nelson asserted Argentina has the technological base and scientific know-how for space cooperation last July. Yet that potential—whether in research or other areas of space activity—has not materialized into major bilateral projects since the ocean salinity mission Aquarius/SAC-D between NASA and the Argentinean space agency CONAE, launched in 2011. In fact, reporting on the Argentinean space program is largely limited to the role of China, which has seeped into the sector both through strategic financing and facilities development. However, China is not Argentina’s only space partner. The many others include Brazil, Denmark, France, Italy—and yes, the United States. Argentina’s solid technical base—including a demonstrated capacity for instrument and satellite design, development, and testing—is coupled with increasingly sophisticated work in Earth observation applications in fields like agriculture and ocean science, both critical to the United States.

The persistence of the space program is notable given the recurring economic crises and limited investment in the national science, technology, and innovation sector, hovering at less than 0.5 percent of GDP. Raúl Kulichevsky, the head of CONAE, recently expressed cautious optimism, celebrating a 2021 law that calls for a gradual increase in ST&I spending to 1 percent of GDP by 2032. This was prior to the election runoff results, however. Even if not materialized, Milei’s threat to shutter the national science agency CONICET and to further slash government spending are sure to lead to near-term destabilization across the ST&I communities. Such uncertainty in government spending is likely to limit interest in new civil space collaboration projects, at least in the near term.

Yet the opportunities for U.S.-Argentina space collaboration are not just programmatic. Within a more strategic footing, the partners could work toward enhanced business-to-business engagement and development of ground rules for responsible space behavior. Decades of space-related activity in Argentina have spilled onto a burgeoning commercial space sector where at least eight startups, per a recent government study of the entrepreneurial sector, are joining mainstays like technology giant INVAP. The United States should continue to encourage measures like those taken by Earth observations satellite company Satellogic to decouple from Chinese investment and move operations to compete in the U.S. market, while reducing burdens for U.S. aerospace companies seeking to do business with commercial partners in Argentina.

Closer engagement on the space governance front, where the United States seeks to create coalitions of countries to advance rules of responsible behavior, is promising and would help shed light on important space security concerns. As a recent signatory to the Artemis Accords—a nonbinding political commitment to reaffirm the principles of current and future space exploration—Argentina joins a U.S.-led space governance effort that includes over 30 countries at all stages of space development. At the same time, and pending ratification, Argentina has agreed to join the Latin America and Caribbean Space Agency (ALCE). Along with ALCE co-champion and host Mexico—also an accords signatory—Argentina could assume a leadership role to advance the space governance implementation discussion from a decidedly Latin American standpoint. While leveraging U.S. space diplomacy goals, such efforts could help integrate and sustain the policy, legal, and regulatory know-how in the region, imbuing stronger adoption of principles that could open the door to bilateral space collaboration projects in the future. 

The Case for Increased U.S.-Argentina Engagement

Economic measures will continue to take center stage in Argentina. The Milei administration might be better off through a gradual approach, however unlikely, to macroeconomic matters. Yet during this transition period, the president-elect and his appointed economy minister, Wall Street veteran, Luis Caputo, have demonstrated signs of pragmatism—notwithstanding their explicit focus on aggressive fiscal adjustment. Moreover, despite the fragility of existing arrangements and an assuredshock therapy,” this new stage of Argentine politics can also benefit from coherent geopolitical realignment towards the West. A stronger alliance with the United States could, in turn, also help offset Argentina’s discomfort with being seen as second to Brazil’s leadership in South America.

The U.S.-Argentina relationship has long possessed latent potential to become truly strategic. While previous leaders—particularly, Bill Clinton and Carlos Menem in the late 1990s—came close, the relationship has never quite blossomed into a fully “strategic partnership.” Both sides would benefit from concrete actions toward change. Expanding cooperation in key areas like energy, minerals security, and space could advance complex multilateral policy efforts and hemispheric priorities. Climate change is no “socialist hoax,” as claimed by Milei on the campaign trail. U.S. authorities will establish clear red lines on important issues that will likely put them at odds with Milei. To be sure, the effectiveness of such efforts may be compromised if President Javier Milei succumbs to longstanding governability challenges, radicalism, and inexperience. But the opportunity for greater geopolitical alignment with Argentina after decades of nearly uninterrupted Peronism is a risk worth taking.

Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Laura Delgado López is a visiting fellow with the CSIS Americas Program, and a Council on Foreign Relations International Affairs Fellow. Gerardo Penchyna Cárdenas is an intern with the CSIS Americas Program.

Gerardo Penchyna Cárdenas

Intern, Americas Program