VOAnews.com reports that Argentina’s new president, Javier Milei, has decided against taking China’s offer of financial liquidity through means of a currency swap. Argentina needed cash to pay its International Monetary Fund debt obligation. Argentina was able to get a cash-injection from a Latin American development bank instead.
There was a clear political agenda that was attached to China’s offer of a currency swap. China insisted on knowing whether Argentina was going to go forward with a plan for dollarization. Milei has proposed moving closer to the United States through “dollarization” — getting rid of Argentina’s central bank and its peso, and using the US Dollar as the official currency. The hope is create more financial stablity at the expense of local control of the currency.
China uses its economic clout to tether countries to itself through loan repayments, for example, through the many Belt-and-Road projects. The loans enable China to demand more obedience to the Chinese Communist Party agenda.
Saying “no” to the currency swap deal is another indicator of Milei’s intention to move away from China and towards the United States. Milei has already said Argentina will not pursue membership in BRICS, the economic alliance offered up as a “Global South” alternative, in which China is the biggest player.
