Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: A check-in on Argentine President Javier Milei’s presidency, Brazil’s Jair Bolsonaro faces new legal woes, and Panama fences off part of the Darién Gap.
Monitoring Milei
Argentine President Javier Milei has now been in office for seven months. He has made dramatic changes—in both domestic and foreign policy—that would usually take much longer to enact.
In late June, Argentina’s legislature approved a sweeping economic reform package, marking a victorious moment for Milei. Although it was watered down during negotiations—privatizing, for example, fewer state companies than originally intended—the package gave big investors tax benefits.
“Unlike other candidates and other administrations, this one is credible in its intent to address Argentina’s fiscal deficit,” Torcuato di Tella University economist Eduardo Levy Yeyati told Foreign Policy. Argentina has now run a fiscal surplus for five months.
Even before the economic reforms, Milei had been using executive actions to enact severe austerity, plunging Argentina into a recession. But his approval rating has remained higher than experts such as Levy Yeyati expected—standing at around 50 percent as of June.
That might be in part due to Milei’s messaging, which “separates himself from the political caste,” said Ana Iparraguirre, a political scientist at GBOA, a consultancy. Plus, she added, “so far, he has kept his main campaign promise, which was to control inflation.”
Still, to pass the economic reform bill and lay the groundwork for the rest of his agenda, Milei had to make compromises with the mainstream politicians he has long criticized. His own fringe political party and its allies hold just 15 percent of seats in the lower house of Argentina’s legislature and even fewer in the Senate. In a departure from his usual messaging, Milei this week posed for a photo with powerful provincial governors who largely hail from traditional parties, pledging in a declaration to work together on policy issues.
He wants “to maintain this anti-caste identity,” but inside Argentina, “he needs those votes to govern,” Iparraguirre told Foreign Policy. “That’s where his international strategy comes into play. … He goes abroad and gets in a fight with [Prime Minister Pedro] Sánchez in Spain.”
This past week, Milei headlined a conservative conference in southern Brazil with former Brazilian President Jair Bolsonaro and skipped one of the most important events in Argentina’s diplomatic calendar, the annual leaders’ summit of South American customs union Mercosur.
For months, Milei has also traded barbs with left-wing Brazilian President Luiz Inácio Lula da Silva, a fellow Mercosur leader. Lula indirectly criticized Milei during his campaign, saying that he hoped Argentines did not choose a president who “thinks privatizations will solve Argentina’s problems”; Milei has called Lula “corrupt” and incorrectly labeled him a “communist.”
Spain’s Sánchez similarly warned against Milei during the campaign. Milei then spoke out against Sánchez and his wife at a far-right event in Spain, leading Madrid to recall its ambassador to Buenos Aires.
Milei’s spats with Sánchez and Lula don’t just abandon presidential decorum. They are also part of a broader realignment of Argentina’s foreign policy toward to the United States and Israel—and away from traditional regional partners as well as China. During the campaign, Milei threatened to pull out of Mercosur and said of China that “we don’t make deals with communists,” referring to the Chinese government on another occasion as an “assassin.”
When Milei was elected last November, Argentina had been relying on a currency swap line from China to continue repaying its debt to the International Monetary Fund (IMF). But by December, rumors began swirling in Argentine media that Beijing would suspend the line. To keep making its IMF payments, Buenos Aires secured a loan from the Development Bank of Latin America and the Caribbean, in part thanks to support from Brazil. But Milei proceeded to publicly lambast Lula’s administration.
The chill in Argentina-Brazil ties is “enormously worrying,” said Juan Gabriel Tokatlian, an international relations scholar at Torcuato di Tella. “Argentina needs Brazil more than Brazil needs Argentina.” Even former Argentine President Carlos Menem, a free marketeer of the 1990s who said he wanted “carnal” relations with the United States, visited Brazil more than 20 times as president.
Although the costs of alienating international partners might not be immediately visible to Argentine voters, they are still high, Tokatlian told Foreign Policy. Mercosur is exploring potential new trade deals with countries including Japan and the United Arab Emirates; if Milei is absent from the negotiating room, Argentina’s concerns may get less weight. States from other groups Milei has spurned—such as the Arab League—may keep that in mind in United Nations votes concerning Argentina.
In recent months, Milei’s administration has somewhat moderated its tone toward both China and Brazil, with Foreign Minister Diana Mondino making trips to both countries. Milei appears to be trying to salvage some of the relationships he previously seemed intent on destroying. After Mondino traveled to China in late April, Beijing and Buenos Aires confirmed the extension of their currency swap agreement.
Still, Tokatlian expects the damage of Milei’s first seven months of international policy to linger. “Foreign ministries and countries have memories, and things stay on their hard drive,” he said.
Upcoming Events
Sunday, July 14: Argentina and Colombia face off in the Copa América final in Miami.
Thursday, July 25, to Friday, July 26: Finance ministers and central bank chiefs of G-20 countries meet in Rio de Janeiro.
Sunday, July 28: Venezuela holds a presidential election.
What We’re Following
An aerial view shows deforested areas near the Pira Paraná River in Vaupés province, Colombia, on Nov. 10, 2023.Juan Pablo Pino/AFP via Getty Images
Colombian conservation. On Monday, Colombia’s environment ministry reported its lowest national deforestation rate in 23 years. Around 305 square miles of forest was destroyed in 2023, compared with around 477 square miles in 2022. Illegal logging, mining, and ranching are among the causes of deforestation in Colombia. Just over half of the destruction was in the Amazon rainforest.
The 2023 numbers reflect the initial success of forest protection policies that include paying forest residents not to cut down trees for activities such as agriculture. President Gustavo Petro’s government has also sought to include appeals for forest preservation in ongoing peace talks with various guerrilla groups.
Still, preliminary reports from 2024 suggest that deforestation has risen this year, in part due to especially dry conditions caused by the El Niño weather pattern.
Glittering graft. Jair Bolsonaro’s actions during his administration, from 2019 to 2023, continue to dog him in Brazil’s legal system. On Monday, federal authorities unsealed recommended charges against the former president, saying he embezzled more than $1 million in jewelry he received from Saudi Arabia and failed to declare.
Bolsonaro did not immediately comment on the recommended charges, though he has previously denied wrongdoing related to the jewelry.
Accounting for Beryl. Hurricane Beryl didn’t just reveal how well Caribbean islands’ physical infrastructure can stand up to mega-storms. It also tested their financial and debt infrastructure, including via so-called catastrophe bonds.
Jamaica become one of the first countries to take out a catastrophe bond as part of its disaster insurance plans in 2021. The government in Kingston pays a relatively high interest rate on the bond, which the World Bank helped structure. Jamaica is among the Caribbean nations most prepared for hurricanes, Bloomberg reported last week.
In theory, a major storm would trigger a payout for reconstruction. But Beryl’s air pressure was too weak to activate the bond, underscoring the importance of the fine print in such deals. Clauses that would allow for pauses in repayment after an extreme weather event are also increasingly being negotiated into other, more general-purpose bonds for island nations.
Question of the Week
Which team did Colombia eliminate in the Copa América semifinals on Wednesday?
Uruguay eliminated mighty Brazil in the quarterfinals but could not withstand Colombia’s national team in the next round, even as Los Cafeteros played the second half of the semifinal match with 10 men. On Sunday, Colombia will face world champions Argentina in the Copa América final. We’ll have more on the tournament in next week’s newsletter.
FP’s Most Read This Week
- The Return of the Military Draft by Raphael S. Cohen
- This Time, NATO Is in Trouble for Real by Stephen M. Walt
- Why the U.S. Needs to Upgrade Its Fighter Jets Now by Kamran Bokhari
In Focus: Mulino’s Moves in the Darién
Migrants arrive at a migrant reception center in Lajas Blancas, Panama, in the Darién Gap, on June 28.Martin Bernetti/AFP via Getty Images
On the campaign trail this year, Panamanian President José Raúl Mulino said he would “close” the treacherous jungle border between Colombia and Panama known as the Darién Gap. Annual northward migration through the area surged to around half a million people last year.
Many of the migrants passing through the Darién Gap report fleeing danger and thus may qualify for protection under international refugee law. Until now, Panamanian authorities had—like their Colombian counterparts—focused on providing migrants with humanitarian assistance rather than blocking them.
Mulino’s comments alarmed migration and human rights experts, who said shutting down the border would cause bottlenecks and lead migrants to seek even riskier transit routes.
Now, after taking office on July 1, Mulino’s policy is coming into view. Panama and the United States last week signed a deal in which Washington will train Panamanian border officials and pay Panama to deport certain undocumented migrants, though details on which were not immediately made public.
It is the first known agreement by which the United States will attempt to fund deportations in a foreign country, the Washington Post reported. The U.S. Department of Homeland Security said the program will include “protection screening” for the migrants. U.S. officials have said migrants should seek out newly opened regular pathways to come to the United States.
As further details of the U.S.-Panama deal emerge, the Panamanian government on Wednesday announced that it had fenced off at least four popular crossing points on the border, saying that migrants should instead use a crossing it dubbed a “humanitarian” point, where service provision from groups such as the Red Cross and United Nations will be concentrated.
Mulino’s government said the new steps were leading to “effective control” of the border. But Colombian President Gustavo Petro criticized Panama’s moves, saying that more “barbed wired in the jungle” would lead to “drowned people.”