Washington's Grip on Argentina Faces a New Check

The U.S. Treasury could face a steeper political fight before extending financial support to Argentina after Democrats secured control of both chambers in Tuesday's midterms. Argentina's government faces around US$4 billion in obligations next year and needs U.S. financial assistance. People bearing the consequences of economic instability have no direct role in the congressional bargaining described here.

A bailout negotiated above people's heads

In October last year, the Trump administration intervened in Argentina's midterm election campaign, offering a promised US$2-billion currency swap—which in practice amounted to no more than US$2 billion—and direct intervention by the U.S. Treasury in the foreign exchange market. Bessent and Milei's Economy Minister Luis Caputo have both argued that similar support could be repeated in 2027.

Now Democrats object to Trump's intervention and have introduced bills in both chambers to restrict federal assistance of that kind. The No Argentina Bailout Act seeks to suspend the currency swap. The American Farmers First Act aims to compensate U.S. producers affected by competition from Argentine agricultural exports.

A Democratic majority in Congress wouldn't itself prevent the Treasury from providing further assistance. But it would make the move harder and raise its political cost, the Centro de Economía Política Argentina (CEPA) think tank warned. That's a check on executive power, not a transfer of control to people affected by the decisions.

Global interest rates, kept high by Trump's policies, have effectively shut Argentina out of international credit markets. The conflict with Iran has cost Washington more than US$43.5 billion and driven fuel prices higher. Those higher oil prices have helped Argentina generate a record trade surplus, allowing the Central Bank to purchase US$14 billion. At current prices, the energy trade balance is expected to contribute more than US$5 billion by the end of the year. CEPA lists that contribution, along with the impact of higher global interest rates, among the positive effects of Trump's policies so far.

Congress takes back some leverage

The Republican defeat could prompt Cabinet changes or a reshuffling of policy priorities, potentially cutting off Milei's government from foreign-currency financing next year. Tensions with international lending institutions have so far been resolved because those institutions ultimately yielded to Trump's pressure to continue supporting Milei. An opposition-controlled Congress and a weakened White House could change those priorities, CEPA cautioned.

A separate Americas Quarterly analysis said Democrats won both chambers handily in a midterm "blue wave" stronger than the authors had anticipated, restoring a congressional check on President Donald Trump's approach to Latin America. But the authors also warned that a president facing opposition on Capitol Hill may turn to foreign policy, where presidents retain considerable authority. They expect more turbulence in U.S. policy toward Latin America over the next two years than in the previous two.

The analysis said Congress's greatest leverage is its power of the purse. Democrats will seek to reclaim spending authority as they confront the administration's dismantling of foreign assistance and withholding of approved funds. Spending debates are expected to cover conditions, disclosure and compliance with spending laws, while funding agreements will require negotiations with Republicans and the White House. Further shutdowns remain possible.

Democrats will investigate ICE's conduct, detention practices and spending, but the analysis cautioned that scrutiny doesn't mean funding will end: Republican reconciliation laws provided substantial enforcement resources to ICE through 2029. The Trump administration's use of El Salvador's CECOT prison under its arrangement with Nayib Bukele will also face renewed scrutiny over the legal authority for transferring detainees, their treatment and Washington's financing commitments.

Oversight doesn't abolish the apparatus

The authors said deals in Venezuela and elsewhere in the Americas should face scrutiny of their beneficiaries and possible corruption under new congressional leadership. Hakeem Jeffries (D-NY), likely the next Speaker of the House, has identified countering corruption as the Democrats' guiding principle for oversight next year. Senate confirmations are likely to slow sharply, especially for controversial non-career nominees; career diplomats with bipartisan credibility should fare better.

Representative Joaquin Castro (D-TX), expected to lead the House Western Hemisphere Subcommittee, sought subpoenas for records concerning the administration's oil agreement in Venezuela involving North American Blue Energy Partners, a controversial Barbados-based company. Republicans blocked the motion. With a majority, Castro can pursue the investigation, the analysis said.

The authors also urged Democrats to investigate illegal and ineffective lethal boat strikes in the Caribbean and Pacific and consider legislation to end Trump's global tariffs and restore congressional control over trade policy. They warned that a Democratic Congress shouldn't be treated as a guarantee that Trump will retreat: they said not to assume it would check his power over Cuba and identified possible U.S. strikes against criminal groups in Mexico as a risk. The article describes a contest between Congress and the White House over who directs state power abroad. It describes no grassroots or community-led response to that contest.