(Bloomberg) -- For the first time since he stormed to power in 2023, Argentina’s Javier Milei is on the political defensive after plunging his government into a massive cryptocurrency scandal. A trip to Washington gives him a chance to get back on his front foot.
Milei arrived in the US capital Thursday seeking reprieve from the saga that’s still unfolding nearly a week after he promoted a memecoin on X that surged before quickly collapsing. Planned weeks in advance, the visit couldn’t be better timed to help Milei shift the focus back to his economic successes in the presence of political friends.
Elon Musk gave him the roaring welcome he hoped for Thursday at the Conservative Political Action Conference, the Trump-friendly gathering that sees the Argentine as one of its own. Milei handed Musk a glistening power saw the DOGE chief, clad in dark sunglasses, a chain and a black cap, held before an elated crowd and touted as “The chainsaw of all bureaucracy.” Milei later sat down with International Monetary Fund chief Kristalina Georgieva, seeking to cement an agreement to help boost Argentina’s economy.
“Today, I welcomed President @JMilei to the IMF to discuss Argentina’s stabilization and growth plan, which is delivering significant results,” Georgieva posted on X. “Our teams continue to work constructively toward a new IMF program.”
As Milei paraded around Washington, Argentina’s senate passed his bill to suspend the country’s primary elections into law, boosting his chances ahead of a crucial midterm vote. By skipping the usual August primaries and going straight to October elections, Milei stretched the runway for his government’s positive economic results to translate into a more resounding victory at the polls.
“This trip was intended to shore up the relationship with the Trump administration, especially in the wake of tariff threats, and go to the international lending institutions to push the IMF deal over the finish line,” said Kezia McKeague, managing director at Washington-based consultancy McLarty Associates. “Now, conveniently, it’s serving a third purpose, and it’s the domestic one.”
Until last week, Milei had done little but wow investors by taking his famous chainsaw to Argentina’s bloated public budget, wrestling inflation to a nearly five-year low. His popularity remained surprisingly durable at home even amid a brutal recession Argentina is still climbing out of — in part because of a brash public persona, wielded through his incessant use of social media, that takes relentless aim at the country’s political establishment.
But last Friday, he promoted a cryptocurrency called Libra just as it launched, only to delete the post and walk back his support after the coin collapsed hours later.
The situation has spiraled since: Hayden Davis, a key figure behind the token, played up Milei’s involvement in the saga even as the Argentine’s team sought to minimize any connections. Davis also bragged in a text message to another investor that he had paid Karina Milei — the president’s sister and closest adviser — to get Milei to do his bidding, according to separate news reports published Tuesday.
Davis denied to CoinDesk, the crypto industry site that published screenshots of the messages, that he had made any payments to the president or his sister, or sent the messages. Milei denied any wrongdoing in a television interview Monday.
The scandal has tested the two pillars of Milei’s popularity: His mastery of libertarian economics and his credentials as an anti-corruption crusader. At best, he made a humiliating mistake by getting involved in something he knew nothing about. At worst, he’s facing questions about potential bribery in his inner circle. The impact on Argentine assets has been relatively muted, with the local stock index falling about 6% on Monday only to fully recoup those losses and edge up further Wednesday.
Last week’s incident has, however, provided a small opening for Argentina’s opposition, which has filed more than 100 lawsuits and an impeachment inquiry. The effort to remove Milei from office is unlikely to move forward. But he is nevertheless in need of a narrative-shifting win, and it’s possible he may find it in Washington. His government has been in talks with the IMF for months over a new program that could provide a fresh injection of cash to help it lift currency controls, and support from the US — the lender’s biggest shareholder — is critical.
A new deal would be Argentina’s 23rd with the institution, and how to lift capital controls has been a major sticking point. Milei’s team has insisted on controlling the peso’s depreciation rate to keep consumer prices in check, but the IMF has pushed for a more flexible currency policy.
Economy Minister Luis Caputo said Monday that Argentina and the IMF only need to iron out final details. It remains unclear how close they really are, but Milei’s saga may add urgency to his quest to cement the deal, said Marcelo Garcia, director of the Americas for Horizon Engage, a consulting firm in Buenos Aires.
“Until now, the government seemed in no real hurry to reach an agreement with the IMF,” Garcia said. “This political crisis might change that.”
Trump’s tariff threats are also weighing on Milei. The plan to impose reciprocal levies on nations that place steep costs on US goods has thrust highly-protectionist Argentina onto the frontlines of a global trade war, posing a challenge to Milei even as he has cozied up to the US leader.
But it’s CPAC, where Milei is poised to deliver a speech Saturday, that may provide Milei the biggest personal boost. He’s poised for a rowdy reception from a crowd of conservatives that have embraced him on social media and at the same event a year ago, and among whom the crypto scandal has hardly registered. Milei’s team has emphasized that he will speak on the same day as Trump.
“This trip is well-timed,” said Benjamin Gedan, director of the Wilson Center’s Latin America program in Washington. “Milei will be greeted warmly in the US, where he is seen as a magician who vanquished inflation and brought order to Argentina’s crisis-prone economy.”
(Updates with Musk and Georgieva meetings in third and fourth paragraphs, Senate vote in fifth paragraph.)
