Snug in the arms of Uncle Sam

There are far worse fates than those endured by the victims of neo-colonial exploitation. Countries that keep at bay the scheming capitalists that nationalists and leftists enjoy ranting about are far more likely to impoverish themselves than those that let them in and allow them to take over chunks of the economy. As many are currently reminding us, Argentina prospered mightily after she attached herself informally to the then all-powerful British Empire, but went into decline when Juan Domingo Perón adopted a hostile attitude towards its successor, the United States.

The late Carlos Escudé had it right when he argued that Perón’s unfortunate geopolitical mistake condemned Argentina to the many decades of decadence that reduced her to Third World status and which could still make her poorer than the neighbours she once looked down on. Despite sporadic efforts to repair the damage that was done to the economy by the Peronists in the years that followed World War II by repairing relations with the reigning superpower, Argentina continued to suffer one “terminal” crisis after another.

Less than a month ago, it looked as though she was about to undergo a really big one that would wreck the economy and cause social havoc. Had it not been for the timely intervention of US President Donald Trump and his Treasury Secretary, Scott Bessent, the standard of living of millions of people would already be falling through the floor. Luckily for just about all of us, this is not what is happening – instead, the markets have picked up and so too have those “animal spirits” Keynes said matter so much. Nobody thinks the future will be easy, but optimism about the country’s long-term prospects seems to be back in fashion.

This is certainly the case in government circles; Javier Milei is fully entitled to feel that he is personally responsible for averting Armageddon. By supporting Trump well before the much derided Orange Man swaggered back into the White House, he established the relationship that saved his Presidency – and, along with it, the livelihoods of a great many people – from the turmoil that was fast approaching until the US suddenly stepped in and stopped it in its tracks.

Of course, in return for the help he received, Milei will have to ensure that Argentina remains a faithful ally of the US for at least as long as Trump, or some likeminded successor, is in power. For Milei – who appears to be a true believer in what he thinks Trump stands for – that should not be at all difficult, but there are plenty of people here who would prefer a more independent attitude. Not that long ago, when polls suggested that Argentines were more critical of the US than other Latin Americans, there would have been enough to form a large majority, but it would seem that of late much has changed and that, rather than resenting being helped back on their feet by an arrogant braggart in Washington, most people have come to the conclusion that cutting off one’s nose to spite one’s face would be unwise and therefore feel suitably grateful.

In 1946, it was reasonable for Juan Domingo Perón to hedge his bets when thinking about the strategic options that were then available to Argentina. There was no way he or anyone else could have known that for the next 80 years the United States would dominate the world as Great Britain had done in the 19th century and that the Soviet Union, which many intelligent and well-informed people thought destined to take over, would fall by the wayside and then break apart.

Today, many assume that the international panorama is equally cloudy. They believe China poses a plausible threat to US hegemony. Like their counterparts more than three-quarters of a century ago who admired or feared the Soviet Union, they compare the discipline and single-mindedness of the Chinese leadership with the back-biting chaos prevailing in the US and assume that before too long the world will have to pay tribute to whoever rules the roost in the Middle Kingdom.

While such people may be right when they take note of the divisive nature of US democracy and the poor quality of its most representative politicians, they are almost certainly wrong when they assume that China will continue to flourish for many years to come. This is most unlikely to happen; the Chinese birth rate is so low (about one child per woman), that the population is already shrinking and soon there will be far too few active workers to provide for the rapidly growing army of retirees that will burden public finances. Most other countries, among them Argentina and the US, face a similar demographic crunch, but hardly any – with the exception of South Korea – can be said to be worse off in this respect than China. 

For a while, China will continue to be a useful trading partner, but she does not represent a convincing alternative to the US which, despite its many internal problems, is far better placed to give Argentina what she needs to climb out of the hole into which she has fallen and enjoy a belated period of rapid macroeconomic growth. Milei may be wrong about many things, but he is surely right when he takes it for granted that strengthening ties with the United States, as Carlos Menem tried to do, is better than any conceivable alternative even if it does mean resigning himself to being a very junior partner.

This would not be the case if the main European countries, with which Argentina has many cultural affinities, had managed to get their act together but, as their governments – and, to a much greater degree, their increasingly angry inhabitants – have come to realise, most are going downhill at an alarming pace. Even if they do succeed in solving the problems brought about by a quixotic attempt to reduce their own demographic deficit by incorporating huge numbers of people from societies with which they have very little in common, they will be in no shape to play more than bit parts on the international stage. For good or ill, it would appear that for the foreseeable future the US will continue to be the only superpower worth taking into account and that, if history is any guide, making the most of the privileged place in its sphere of influence that Milei has won will remain the most sensible option available to a country that, over the years, has squandered too many of the opportunities to prosper that the world has given it.