Argentina: An Overview

Argentina: An Overview

Updated January 23, 2024
Argentina: An Overview
Located on the Atlantic coast of South America’s Southern
President Milei was inaugurated to a four-year term on
Cone, Argentina has a vibrant democratic tradition and is
December 10, 2023. Immediately upon inauguration, the
one of the largest economies in Latin America. U.S.-
Milei administration began implementing policy changes to
Argentina relations have been strong in recent years, and
overhaul Argentina’s economy. It devalued the Argentine
many Members of Congress maintain interest in security and peso by more than 50% to decrease the country’s fiscal
commercial ties, among other aspects of the relationship.
deficit and reduce macroeconomic and trade imbalances.
The Milei administration plans to continue devaluing the
currency by 2% each month as part of its long-term program
Argentina at a Glance
to reduce domestic consumption and restore macroeconomic
Capital: Autonomous City of Buenos Aires
balance. To cut government spending, the Milei
administration announced the termination of 5,000 federal
Population: 47.2 mil ion (2024, IMF est.)
workers upon the expiration of their contracts and
GDP/Per Capita GDP: $621.8 bil ion/$13,300 (2023,
eliminated 9 out of 18 federal government ministries. The
current prices, IMF.)
administration also announced cuts to energy and
Area: 1.1 mil ion square miles (about the size of the United
transportation subsidies. Although Milei ran on an economic
States east of the Mississippi)
“shock adjustment” platform, the pace and breadth of
Real GDP Growth (constant prices): -9.9% (2020); 10.7%
postelection reforms have prompted protests among
(2021); 5.0% (2022); -2.5% (2023); 2.8% (2024, est.) (IMF)
Argentines struggling to afford basic services.
Key Export Trading Partners: Brazil (14%), China (9%),
On December 20, 2023, Milei issued a Decree of Necessity
United States (7%), Chile (6%) (2022, INDEC)
and Urgency (DNU), implementing more than 300
Key Import Trading Partners: China (21%) Brazil (20%),
economic measures. The measures focus on deregulation of
United States (13%), Germany (3%) (2022, INDEC)
Argentina’s economy, including the elimination of price
Sources: International Monetary Fund (IMF), World Economic
controls and a scaling back of labor, employment, and rental
Outlook Database, October 2023, and Argentina National
housing regulations, among others. In January 2024, the
Directorate of External Sector Statistics and International
General Confederation of Labor, a Peronist-allied trade
Accounts (INDEC)
union, filed a legal challenge to the labor reforms in the
DNU before the National Chamber of Labor Appeals. The
Political Environment
court accepted the appeal and blocked the labor reforms
Current President and former economist Javier Milei of the
pending a final ruling on whether the reforms are
far-right La Libertad Avanza (LLA, Freedom Advances)
permissible under Argentine law. The Milei administration
coalition captured 56% of the vote in a second-round runoff
announced it would appeal the stay.
election on November 19, 2023. Milei defeated former
Minister of Economy and candidate of the center-left Unión
Observers expect that President Milei’s LLA, given its lack
por la Patria (UxP, United for the Homeland) coalition
of a legislative majority, will need to forge a working
Sergio Massa, who captured 44% of the vote. Some
coalition with other parties in the legislature to advance its
observers interpreted Milei’s victory as a popular rejection
policy agenda. In late December 2023, Milei sent an
of the once-dominant Peronist political movement most
omnibus bill to the Argentine congress that included 664
articles encompassing reforms to Argentina’s tax
recently led by former president (2007-2015) and vice
and public
president (2019-2023) Cristina Fernández de Kirchner.
debt management systems as well as electoral law reforms.
Argentina’s economic deterioration, marked by high
The proposed electoral law change would increase the
inflation and increasing poverty under the Peronist
number of lawmakers per district. A more controversial
administration of President Alberto Fernández (2019-2023),
proposal would cede some legislative powers to the
was a major factor in the 2023 election.
president until December 25, 2025—with the potential for a
two-year extension. The UxP and other parties have opposed
In October 2023 legislative elections, however, the Peronist
the DNU and the omnibus bill granting Milei extraordinary
UxP regained its status as the largest bloc in the Senate and
powers. The Milei administration has called for and
remained the largest bloc in the Chamber of Deputies. In the
extended extraordinary congressional sessions until
Chamber of Deputies, UxP holds 108 seats. the center-right
February 15 to allow for timely consideration of the
JxC holds 93 seats, and Milei’s far-right LLA holds 38 seats. omnibus bill. The Argentine congress’s sessions
In the Senate, UxP holds 34 seats, JxC holds 34 seats, and
traditionally begin on March 1.
LLA holds 8 seats.
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Argentina: An Overview
Economic Situation
and human rights, civil nuclear cooperation and
After contracting by 9.9% in 2020 due to the economic
nonproliferation, counterterrorism, climate change, science
effects of the COVID-19 pandemic, Argentina’s economy
and technology, and education. Recent U.S. Administrations
began a strong recovery in 2021 with 10.7% growth,
have engaged Argentina on various bilateral, regional, and
followed by 5% growth in 2022. Argentina’s economy
global issues, with some Members of Congress expressing
contracted by an estimated 2.5% in 2023, however, as a
support for such engagement and closer relations.
severe drought limited agricultural exports, rapid inflation
weakened private consumption, and political uncertainty
In November 2023, President Biden spoke with President
hampered investment. By the end of 2023, Argentina’s
Milei by phone to discuss the importance of continuing to
annual inflation rate reached 211.4%, the highest rate since
build on the relationship between the United States and
the 1990s. Argentina’s urban poverty rate, already
Argentina. The pair reportedly discussed economic issues,
increasing before the pandemic, grew to 42% by the end of
addressing food insecurity, clean energy, and human rights,
2020, declined slightly during post-pandemic recovery but
among other issues.
then rebounded to 40.1% in the first half of 2023, according
to Argentina’s National Institute of Statistics and Census.
U.S. Foreign Aid and Other Support. U.S. assistance has
supported activities in Argentina related to environmental
The former Fernández government had negotiated a $44
protection, drug control, strengthening civic space, food
billion, 30-month arrangement with the International
security, local entrepreneurship, and grassroots
Monetary Fund (IMF) in 2022 that, according to the IMF,
development, among others. Argentina’s status as a major
set pragmatic objectives along with policies to improve
non-NATO ally since 1998 makes it eligible for preferential
public finances and reduce inflation. The Fernández
treatment for U.S. transfers of excess defense articles and
government missed many of the program’s targets, however, other defense cooperation. The Biden Administration
due to a series of policy setbacks. In January 2024, IMF
allocated $632,000 in FY2022 and an estimated $650,000 in
staff and Milei administration authorities reached an
FY2023 for International Military Education and Training
agreement—pending IMF executive board approval—that
(IMET) activities. For FY2024, the Biden Administration is
would provide Argentina access to about $4.7 billion to
requesting $800,000 in IMET funding for Argentina.
support implementation of a new stabilization program.
Trade and Investment Snapshot. The United States ran a
One of Milei’s most notable campaign pledges was his plan
$6.0 billion goods trade surplus with Argentina in 2022,
to dollarize Argentina’s economy. Since his inauguration,
exporting $12.9 billion in goods to the country (led by
however, Milei has asserted the need to stabilize Argentina’s mineral fuels, machinery, and electrical equipment) and
economy before dollarization efforts take place. Some
importing $6.9 billion (led by oil, precious metals,
observers argue the dollarization of Argentina’s economy
aluminum, and fish and crustaceans). The stock of U.S.
“would likely fail if implemented.”
Foreign Direct Investment in Argentina was $12.9 billion in
2022, led by information services, holding companies,
Relations with China
manufacturing, and finance. Argentina has been on the U.S.
Over the past decade, Argentina and the People’s Republic
Trade Representative’s Special 301 Priority Watch List
of China (PRC) have significantly increased their economic
since 1996 due to U.S. concerns with Argentina’s protection
and political engagement. In 2014, then-President Fernández and enforcement of intellectual property rights. In 2016, the
and PRC President Xi Jinping upgraded the bilateral
United States and Argentina signed a Trade and Investment
relationship from a “strategic partnership” to a
Framework Agreement that has been the two countries’
“comprehensive strategic partnership”—one of the highest
primary mechanism for discussing bilateral trade and
classifications the PRC designates for its diplomatic
investment issues.
partners. In February 2022, Argentina joined China’s Belt
and Road Initiative. China also operates a space research
Terrorism Issues. Many in Congress have maintained a
facility in western Argentina; the U.S. Southern Command
long-standing concern with regard to Argentina’s progress
has expressed concern that the facility could track and target in bringing to justice those responsible for two terrorist
U.S. satellites.
bombings against Jewish targets in Buenos Aires during the
1990s, namely, the July 18, 1994, bombing of the
In August 2023, the BRICS group, composed of Brazil,
Argentine-Israelite Mutual Association (AMIA), which
Russia, India, China, and South Africa, invited Argentina
killed 85 people, and the March 17, 1992, bombing of the
and five other countries to become new members of the bloc Israeli Embassy, which killed 22 people. Argentina has
of emerging economies. Then-President Fernández
linked both Iran and Hezbollah (the radical Lebanon-based
celebrated the invitation. President Milei reversed course,
Islamic group) to the attacks; in 2019, Argentina designated
however, announcing it was not “opportune” to join the
Hezbollah a terrorist organization.
group. Although President Milei harshly criticized China
during his campaign, he has adopted a more diplomatic
Two resolutions related to the bombings have been
approach toward Beijing since his election.
introduced in the 118th Congress. S.Res. 307 would
commemorate the 31st anniversary of the bombing of the
U.S.-Argentina Relations
Embassy of Israel in Buenos Aires and the 29th anniversary
Relations between the United States and Argentina are
of the AMIA attack and would recommit to efforts to uphold
characterized by robust commercial linkages and shared
justice for the victims of the attacks. H.Res. 600 would
interest and by collaboration on such issues as democracy
condemn the AMIA attack and call for accountability.
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Argentina: An Overview

IF10932
Karla I. Rios, Analyst in Latin American Affairs

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https://crsreports.congress.gov | IF10932 · VERSION 24 · UPDATED