Argentina’s Struggle for Stability – Council on Foreign Relations

Report on the Political and Economic Situation in Argentina

Introduction: Navigating Crisis Towards Sustainable Development

Argentina, the third-largest economy in Latin America, is at a critical juncture, facing profound economic and political challenges that directly impact its ability to meet the Sustainable Development Goals (SDGs). A history of economic volatility, characterized by massive debt and hyperinflation, has hindered progress towards SDG 8 (Decent Work and Economic Growth) and exacerbated societal divisions. The current administration under President Javier Milei has initiated sweeping reforms aimed at achieving fiscal stability. However, these measures have significant implications for SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities). The nation’s path forward is contingent on balancing economic stabilization with social welfare, strengthening institutions in line with SDG 16 (Peace, Justice and Strong Institutions), and leveraging international partnerships as outlined in SDG 17 (Partnerships for the Goals).

Political Landscape and Institutional Framework

Historical Context and Governance Challenges

Argentina’s political history is marked by instability, cycling between democratic and military rule following its independence in 1816. The legacy of Peronism, a populist philosophy introduced by Juan Perón, has shaped the nation’s approach to social welfare and economic intervention. While policies under Peronism expanded health benefits and labor rights, its authoritarian aspects created long-term challenges for democratic governance.

• Eva Perón’s Legacy: The advocacy of Eva Perón was instrumental in passing women’s suffrage, a milestone for SDG 5 (Gender Equality).
• The “Dirty War”: The military junta’s rule from 1976 to 1983, known as the “Dirty War,” resulted in an estimated 10,000 to 30,000 forced disappearances, representing a severe violation of human rights and a setback for SDG 16.
• Democratic Consolidation: Since 1983, Argentina has maintained democratic rule but continues to struggle with institutional weakness, corruption, and deep political polarization, which undermine the effectiveness of governance and public trust.

Contemporary Political Dynamics and Social Divisions

The modern political scene is highly fragmented, reflecting a societal rift known as la grieta. This polarization obstructs policy continuity and sustainable governance. The 2023 election of Javier Milei of the far-right Libertarian Party signaled a public rejection of the traditional political establishment.

1. Justicialist Party (Peronist): Advocates for welfare-state policies and economic intervention, historically dominating Argentine politics. Internal fragmentation has contributed to its waning popularity.
2. Radical Civic Union (UCR): As the oldest surviving party, it generally favors fiscal responsibility and human rights, representing the urban middle class.
3. Republican Proposal Party (PRO): A center-right party supporting free-market and socially conservative policies.
4. Libertarian Party: President Milei’s party champions drastic state reduction and free-market principles, alongside conservative social stances that challenge progress on issues related to SDG 5.

President Milei’s administration has implemented radical changes, including slashing government ministries and curbing central bank functions. These actions, while aimed at economic stabilization, have been met with scrutiny, particularly following corruption allegations and electoral defeats, highlighting ongoing challenges to achieving transparent and accountable institutions under SDG 16.

Economic Performance and Sustainable Development

A Century of Economic Volatility

Argentina’s economic history is a paradox. Once among the world’s wealthiest nations, it has experienced a dramatic decline due to unsustainable spending, reliance on commodity exports, and recurring debt crises. This boom-bust cycle has consistently undermined efforts to achieve stable and inclusive economic growth as envisioned in SDG 8.

• Market Reforms and Crisis: Market-friendly reforms in the 1990s ended in a devastating 2001 economic crisis and the largest debt default in the country’s history.
• Kirchner Era Revival: A global commodities boom in the 2000s allowed for economic recovery and repayment of IMF debt, but policies of price controls and nationalization led to renewed public debt.
• Recent Instability: Subsequent administrations have struggled with worsening economic conditions, leading to a record $44 billion loan agreement with the IMF in 2018 and further debt restructuring, reflecting persistent challenges in achieving macroeconomic stability.

Current Economic Challenges and Policy Responses

With a GDP of approximately $633 billion, Argentina’s economy has significant potential. However, it faces severe headwinds that impact social well-being and sustainable development.

• Inflation and Poverty: Inflation reached 211 percent in December 2023, severely eroding purchasing power and increasing poverty, directly contradicting the aims of SDG 1.
• Austerity Measures: President Milei’s government achieved a budget surplus by making large cuts to public spending. While praised by the IMF, these cuts have gutted infrastructure investment, impacting SDG 9 (Industry, Innovation, and Infrastructure), and have social consequences that challenge SDG 10.
• Natural Resources and Energy: Argentina possesses vast shale oil and gas reserves, alongside significant potential for renewable energy, which is critical for SDG 7 (Affordable and Clean Energy). It is also a key source of lithium, an essential component for the global transition to green technologies, linking its economic future to SDG 12 (Responsible Consumption and Production).

International Relations and Partnerships for the Goals

Regional Role and Cooperation

Argentina is a regional power and an active member of multilateral groups such as Mercosur and the Organization of American States. Its relationships with neighbors are crucial for regional stability and achieving shared development goals.

• Mercosur: The trade bloc represents a key framework for regional economic integration, aligning with the principles of SDG 17.
• Security Cooperation: Argentina collaborates with Brazil and Paraguay to address illicit activities in the Tri-Border Area, a partnership that supports regional peace and justice under SDG 16.
• Geopolitical Tensions: Disputes over maritime boundaries and the influence of external powers like China create complexities in regional relations. The unresolved claim to the Falkland Islands remains a point of contention with the United Kingdom.

Global Strategic Alliances

Argentina’s foreign policy is shaped by its economic needs and political orientation, with key relationships managed to support its development agenda.

• China: As Argentina’s second-largest trade partner and a major investor under the Belt and Road Initiative, China provides critical development finance and currency swap lines. This partnership under SDG 17 is vital for infrastructure (SDG 9) and financial stability, though it presents strategic challenges.
• United States: Relations have fluctuated but are currently strong under President Milei, who has positioned Argentina as a pro-West ally. As a major non-NATO ally, Argentina receives strategic support, including a recent $20 billion currency swap line to stabilize its financial markets, a clear example of a partnership for the goals (SDG 17).
• European Union: The EU is a major trade and investment partner. The pending EU-Mercosur trade agreement offers significant potential for enhancing economic ties and promoting sustainable practices, further advancing the objectives of SDG 17.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty – The article mentions Argentina’s struggle with “rising poverty,” which is a direct concern of this goal aimed at eradicating poverty in all its forms.
• SDG 5: Gender Equality – The text references a key historical achievement in gender equality by noting that Eva Perón “pushed Congress to pass Argentina’s women’s suffrage law.”
• SDG 7: Affordable and Clean Energy – The article touches upon Argentina’s energy sector, mentioning its large “shale oil and gas reserves” while also noting that “the government is increasingly looking to harness renewable energy.” It also refers to Chinese financing for a “nuclear power plant.”
• SDG 8: Decent Work and Economic Growth – This is a central theme of the article, which extensively details Argentina’s economic history of “boom-bust cycles,” “prolonged financial crisis, massive debt, and triple-digit inflation.” It discusses GDP, fiscal deficits, and efforts to stabilize the economy, all of which are core to SDG 8.
• SDG 16: Peace, Justice and Strong Institutions – The article highlights significant challenges related to this goal, including a history of political instability, military rule, “the Dirty War,” “corruption,” “low public trust in institutions,” and deep “political polarization.”
• SDG 17: Partnerships for the Goals – The article extensively discusses Argentina’s international financial and political relationships, including its loan agreements with the International Monetary Fund (IMF), currency swaps with the United States and China, trade partnerships with Brazil and the EU, and its membership in multilateral groups like Mercosur.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty. The article’s statement about Argentina “grappling with rising poverty” directly relates to this target.
• Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership in political, economic and public life. The historical mention of the passage of the “women’s suffrage law” is a foundational step toward achieving this target.
• Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. This is connected to the government’s stated intention to “harness renewable energy.”
• Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The entire discussion of Argentina’s economic struggles, including its GDP of “$633 billion,” hyperinflation, and efforts to achieve a “budget surplus,” is relevant to this target of achieving stable and sustainable economic growth.
• Target 16.5: Substantially reduce corruption and bribery in all their forms. This is addressed through mentions of a “corruption scandal” implicating the president’s sister and the conviction of a former vice president who was “permanently barred from public office” due to fraud allegations.
• Target 16.6: Develop effective, accountable and transparent institutions at all levels. The article points to challenges in this area by describing “persistent institutional challenges,” “low public trust in institutions,” and deep political divisions (“la grieta”) that lead to policy instability.
• Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. This is exemplified by the numerous financial packages mentioned, such as the “$44 billion loan agreement with the IMF,” a “$20 billion currency swap line” from the U.S., and nearly “$8 billion” in development finance from China since 2005.
• Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. This is relevant to Argentina’s role in the “Southern Common Market (Mercosur) trade bloc” and its participation in the “EU-Mercosur trade agreement.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 1.2.1: Proportion of population living below the national poverty line. The article implies a negative trend for this indicator by stating that Argentina is “grappling with rising poverty.”
• Indicator 8.1.1: Annual growth rate of real GDP per capita. The article provides several data points that measure economic performance, such as the GDP of “$633 billion in 2024” and the achievement of a “budget surplus… amounting to 0.3 percent of GDP.”
• Indicator related to economic stability: Inflation rate. While not a formal SDG indicator, inflation is a key measure of economic stability. The article provides precise figures: inflation reached “211 percent in December 2023” and later “fell to around 33 percent by August 2025.”
• Indicator 16.5.1: Proportion of persons who had at least one contact with a public official and who paid a bribe to a public official… The article provides qualitative evidence related to this through its discussion of “corruption scandal[s]” and the conviction of a high-level official, which reflects on the prevalence of corruption.
• Indicator 17.3.1: Foreign direct investment (FDI), official development assistance and South-South cooperation as a proportion of total domestic budget. The article provides specific monetary values for international financial assistance, which serve as direct inputs for this indicator. Examples include the “$12 billion” IMF loan package, the “$20 billion” U.S. currency swap, and the “$18 billion” in Chinese state loans.
• Indicator related to international trade: Total value of exports and imports. The article provides data for this, noting that “trade in goods [with the EU] totaling more than $17 billion in 2024.”

4. SDGs, Targets, and Indicators Identified in the Article

Source: cfr.org