19 Nov Is Argentina on Track to Escape Its Structural Traps?
By,
Fabián Calle, Senior Fellow, MSI²
Anyone who has been able to attend his classes and lectures remembers Guillermo O’Donnell with respect and admiration. Undoubtedly, he is one of the most important social scientists ever produced by Argentina and the region.
His works are prolific and incisive, combining simple language that is no less assertive for its simplicity. Nevertheless, two of his writings clearly stand out for analyzing and breaking down cyclical and key phenomena in Argentina’s political and economic processes. We refer to State and Alliances in Argentina, 1956–1976, published in 1976, and An Impossible Game: Competition and Coalitions Among Political Parties in Argentina, 1955–1966, which came out in 1972.
In the first of these, O’Donnell explains the cyclical Argentine economic crises from the mid-20th century onward, largely driven by the shortage of dollars following a more or less brief period of economic expansion, increased imports, and overvaluation of the national currency. This resulted in devaluations, loss of purchasing power, rising exports, and falling imports. The loss of 13 zeros from the peso throughout those decades is a clear demonstration of this nerve-wrecking roller coaster.
Meanwhile, in the second text referenced, the author focuses on a dynamic that characterized the period from 1955 to 1973. In other words, Peronism could not return to power, but at the same time, it had the capacity to hinder the governability of its civilian and military rivals.
For those already gray-haired and/or interested in Argentine history, it will be clear that after the return of democracy in 1983, some of those dynamics were far from disappearing. The governments of Alfonsín and De la Rúa did not finish their terms; Macri’s government came under sustained pressure during its last year and a half, opening a well- or ill-intentioned debate over whether he would be able to hand over the presidential sash on December 10, 2019. Not to mention what happened with the Milei presidency in the first months of 2024 and in the three to four months preceding the recent legislative elections, where his resounding victory effectively dismantled all hypotheses of an institutional crisis.
Having completed this brief review of recent history, let us turn to the central idea guiding us. The fact that Macri managed to finish his four-year term and that Milei won the elections of 2023 and 2025, as well as the sharp level of internal strife and clashes within Peronism and its allies on the left, could give us some indication of a possible end to the Argentine institutional karma highlighted by O’Donnell in 1972, one which, with some changes and mutations, never ceased to be present after 1983.
Regarding the cyclical trap between the appreciation and devaluation of the peso and the subsequent balance-of-payments crises, some profound changes appear to be taking shape. The first we may mention is the steady progress Argentina has been making as a producer and increasingly as an exporter of oil, gas, and lithium.
In medium-term horizons, mining is also emerging, especially in the case of copper. Patagonia’s cold climate and its renewable energy sources are generating growing interest in capital-intensive sectors such as artificial intelligence. Not to mention the continuous productive and technological improvements in the agricultural sector. The desired fiscal discipline—beyond the short term and political leaning—together with increased exports of energy and minerals, would open the possibility of a gradual reduction in agricultural export taxes.
Lastly, but no less importantly, is the clear strategic decision of the United States to support Argentina and see it as a geopolitical partner in areas such as the South Atlantic and Antarctica, as well as a growing supplier of strategic raw materials and fertile ground for artificial intelligence. Washington’s support in April 2025 for a broad agreement with the IMF for USD 20 billion, and even more so the decisive intervention of the U.S. Treasury Department in the execution of a USD 20 billion swap and the purchase of more than USD 2.1 billion worth of pesos last October, are powerful signals in that direction. All of this was crowned by the announcement of a broad trade and investment agreement between the two countries.
The prophecies about the collapse of the peso after the October elections have been buried by reality. Devaluation lobbies and those actors who gambled on a “the worse, the better” scenario encountered an unexpected and solid wall in front of them. One built on the combination of a broad majority of Argentine society that does not want to return to past failures and the clear national interest of the United States in having a stable and prosperous political and economic partner in the region.
For those political leaders and citizens who consider themselves or declare themselves Peronists and resort to the cliché “Braden or Perón” in 2025, it would be very advisable for them to carefully study what Perón himself did up to 1955 in his interaction with Washington; during his exile in five U.S.-aligned countries —Paraguay, Venezuela, the Dominican Republic, Panama, and Spain— and needless to say, between 1973 and 1974.
The version of an anti-Western and anti-capitalist Perón that some present does not withstand the facts and, as Perón himself used to say, “the only truth is reality.”
Lastly, it is worth considering that if the great Guillermo O’Donnell were among us, he might be tempted to produce revised and updated versions of his two formidable classics.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of the Miami Strategic Intelligence Institute (MSI²).