[US midterm election] Millay, the ‘Trump of South America’, is burdened by the weakening of Trump’s position as his biggest ally

Local daily La Nacion reported on the 4th (local time) that the defeat of the Republican Party led by President Donald Trump in the U.S. midterm elections is expected to have repercussions for Argentina's Javier Millais government.

Lanacion analyzed that a weakening of the political influence of President Trump, who was his strongest ally on the international stage, could affect Argentina's debt negotiations with the International Monetary Fund (IMF), financial support from the United States, and the structure of the 2027 presidential election.

President Millay has secured political support from the United States based on his close relationship with President Trump. In particular, cooperation from the United States, which exercises the largest stake and influence in the IMF, is important for Argentina, the largest debtor to the IMF. Argentina's IMF debt amounts to approximately $56 billion (approximately KRW 75.04 trillion).

Even though the Millay government failed to fulfill some of its promises in the agreement with the IMF, President Trump played a significant role in being able to receive friendly support based on U.S. influence. If Trump's political position weakens, the favorable environment that the Millay government has enjoyed may change in future IMF negotiations.

Even in Argentina's midterm elections last year, President Trump was an important supporter of the Millay government.

As the financial markets were shaken after President Millay suffered a crushing defeat to the opposition Peronism in local elections in Buenos Aires, the U.S. Treasury decided to support a currency swap worth $20 billion (about 26.8 trillion won), which led to the Millay government's victory in the federal midterm elections.

However, at the time, U.S. support sparked criticism that President Trump had used his country's resources to support allies' elections, sparking backlash from not only the Democratic Party but also some Republican lawmakers. Even if the Millay government faces a financial crisis again in the future, it is unclear whether the United States will be able to provide the same level of support.

U.S. Treasury Secretary Scott Besant recently said that Argentina is an important ally of the U.S. in Central and South America and that Argentina will actively provide support when needed. However, if it becomes difficult for the Trump administration to pursue its policies as the Democratic Party takes control of the House of Representatives, there may be political restrictions on support for Argentina.

Argentina's internal economic situation is also a burden for the Millay government.

The national risk level recently exceeded 800bp, rising to twice the level of about 400bp last July. This is interpreted as a result that reflects concerns about a prolonged economic slowdown, domestic demand recession, and delayed recovery of purchasing power.

In the end, the weakening of President Trump's political influence is not only a loss of diplomatic support to the Millay government, but is also an important issue that can affect IMF negotiations, financial market stability, and the possibility of additional support from the United States. President Millay, who must prove economic recovery and improvement in people's livelihoods, faces another burden ahead of his re-election in 2027.