Milei's Argentina: One month on from the midterms
As Milei continues to nurture and grow the Argentine economy, America and China fight for influence with the world's only libertarian state.
In case you missed it, Rt Hon Steve Baker FRSA will be hosting a live Question and Answer session here on Voices for a Free Future for paid subscribers in two weeks, 18:30 GMT on Thursday the 4th of December. Find out how to submit a question here.
We are pleased to continue our new series: What is happening in Argentina! Each month, Fighting for a Free Future Associate, Luke Lucas, will report for Voices for a Free Future on what has been happening under the world’s only libertarian presidency.
It seemed prudent to pick up where I left off last month, that Milei’s libertarian policies will nurture the Argentinian economy and prove that small state governance is the right way to allow modern economies to succeed. However, that doesn’t really lead to much. The Overton window hasn’t shifted further, Western media haven’t reported much, and there hasn’t been enough time for any significant policies… on the surface. At a secondary glance, the Merval index spiked further on October 30th, peaking at almost 50% of its pre-midterm value. However, the leading cause of this was a rally to float the Peso, which Milei shut down within a week, and the Peso has been declining since.
It took a hefty amount of digging to produce this update, so please, stay with me, strap in and pay attention, and most importantly, enjoy the libertarian ride.
The two big things that have happened since the election on their own are not fantastic news, but with a bit of interpretation and construction, it has probably been one of the most interesting economic and geopolitical moves this year.
Framework for Agreement on Trade and Reciprocal Investment
The USA announced the Framework for Agreement on Trade and Reciprocal Investment. At first glance, this seems to be a neutral trade agreement between the two nations, a bit of push and pull. Argentina relaxes some of their barriers to foreign investment, such as the statistics tax/fee, and in return, the USA will provide a presence in Argentina in return for access to its E-Sphere: Argentina is allowing exclusive access to some of its natural minerals to the US in return for not imposing tariffs on internet services. That’s the heart of the agreement from initial reporting, there is ironing out and a fully-fledged agreement to be signed, but following on from the Whitehouse declaration, this is a very paraphrased “too long didn’t read” of my interpretation of the agreement.
This agreement aims to boost the bilateral economic relationship by opening markets and promoting cooperation in strategic areas. The White House statement echoes this:
The initiative contemplates tariff benefits, opening up agricultural and industrial markets, common regulatory standards, the protection of intellectual property and cooperation in areas like labour, the environment and digital trade.
On the face of it, the agreement seems to impose far more requirements on Argentina than benefits. Argentina will provide preferential market access for US goods in return, and the USA will remove tariffs on certain unavailable natural resources. Argentina will also allow goods that comply with applicable US standards to enter Argentina without additional conformity assessment requirements. Most importantly, Argentina and the United States will cooperate to facilitate investment and trade in critical minerals.
Now this is the exciting part.
Lithium is one of the most important strategic resources in the modern world because it sits at the core of the modern world. Lithium batteries are used for smartphones, electric cars, and energy systems. It is at the core of energy transition, digital technology and global economic competition. But it goes beyond just being a battery; it affects climate policy, transportation, geopolitics and manufacturing.
Argentina forms part of what is known as the lithium triangle, the area between Argentina, Chile and Bolivia. And Argentina is the third biggest source of Lithium in the world, behind Australia and Chile. But despite this, 60-70% of the world’s refined lithium comes from China. The USA making a play in Argentina for a “trade in critical minerals” would mean that the USA can source lithium directly from an ally. Argentina’s almost 200m tons of lithium is held in salt brines, which are significantly cheaper to extract than from the USA’s clay deposits. And this trade deal facilitates USA investment in mining. It reduces barriers to entry and promotes a Western supply chain of lithium independent of China.
When you look at this trade deal from a purely economic perspective, it doesn’t make that much sense. It feels as if the USA is opening more to Argentina than it should, but based on Argentina taking on commitments, however, when you piece it all together, the USA is staking a claim in Argentina and opening itself up to lithium resources.
The Glacier Law
On top of this trade deal, Milei declared an intent to remove the Glacier Law to allow for more mineral extraction in the Andes. So far, this has been painted as allowing for more copper extraction. Currently, Argentina is barely touching its copper reserves ($4bn annually) whilst Chile is currently extracting around $50bn per year. Although Argentina’s reserves are about 60% those of Chile, it shows a discrepancy in the ratio of minerals being extracted.
The glacier is defined by the Argentinian Institute of Nivology, Glaciology and Environmental Sciences (IANIGLA) based on unclear criteria. Milei believes that the glaciers are too large and block Argentina’s “God-given” right to extract their natural resources and curtail the country’s mining operations.
If you haven’t pieced it together, the Lithium Triangle basically follows the Andes, if Milei is repealing a law to allow for more mineral extraction in this area, whilst declaring an intent to form a trade deal with the USA that allows for easier foreign investment and presence, then the logical conclusion is that they are teeing up for an effective Lithium trade deal.
But this would be too easy if it were that simple. Provinces own mining concessions. The Argentine constitution gives provinces authority over subsoil resources. Therefore, a Lithium project in Salta cannot simply be approved by the federal government as the province has the final say. However, the national government still shapes the sector. It controls export taxes, currency control, environmental standards, and foreign investment frameworks.
Combining the trade deal with the USA and repealing the Glacier Law, it seems unlikely that a province which has spent decades struggling to gain foreign investment to stabilise its economy would prevent investment that will likely cause jobs, wealth and prosperity in the region.
The importance of this
Well, China has been making electric cars and natural fuel cars in Argentina for the last few years, so this could disrupt that market. On top of this, China has been increasing its Lithium presence in Argentina. In February 2025, Ganfeng Lithium officially began the first phase of Marinana lithium project in Salta. In August 2025, Ganfeng and Lithium Argentina (Swiss-based) formed a Joint Venture to extract up to 150,000 tons of Lithium. All this market movement came with a $5bn bilateral currency swap with China, designed to help with Chinese investment.
We have seen in the last decade the USA reaping a trade war with China.
It shines a light back to the $40bn that Trump promised Argentina if Milei won the election, $20bn of this was in the form of a currency swap, quadruple what China has. Although there were calls to reject this bailout, as some argued it was a foreign national impeding on a sovereign election. But with Milei’s “chainsaw approach” it is not hard not to see that Trump was only promising this money if Milei won in the midterms because he knew that with deregulation in Argentina, then it would be an attractive prospect for international investment, and this was only likely under Milei’s regime.
 |
|