STEPHEN MOORE: How Trump Can Help Accelerate Argentina’s Economic Comeback

Donald Trump and Argentine President Javier Milei have a special relationship. They are both engaged in a crusade to make their economies great again.  Trump was all in helping Milei win his elections earlier this year. He has also offered the Argentines a $20 billion “lifeline” as they adjust to the bumpy path to free-market reforms.  There’s some short-term pain for long-term gain here.

The stakes are gigantic because the whole world is watching Milei’s embrace of free market “shock capitalism,” which, so far, is working.  He has restored sound money (by linking to the dollar), and taken a chainsaw to the bloated state bureaucracy, as he privatizes rather than nationalizes government assets.

Argentina’s tragic detour into the dead end of socialism drove the nation into a half-century long economic ditch with poverty rates skyrocketing.

But for Milei’s capitalist comeback plan to succeed, he must uphold the rule of law and fairly compensate injured parties who lost tens of billions of dollars when the Peronista government stole/confiscated their property.  If that fair compensation isn’t secured, then the international investment that Milei needs to attract to rebuild the economy could be chased away.

One of the most closely watched disputes involves the 2012 nationalization of YPF, the energy giant that raised over a billion dollars from American investors. The company was traded on the New York Stock Exchange.  When leftist Cristina Kirchner was elected president, her government seized a controlling stake of the company and ripped up YPF’s contractual bylaws that required a buyout of minority shareholders. This nationalization scheme was straight out of Fidel Castro’s playbook in Cuba.

The investors in YPF won a 16 billion-dollar legal judgment in the Petersen v. Republic of Argentina case. The courts ruled that Argentina violated commercial contracts governed by U.S. securities law.  Now YPF and the government in Buenos Aires are threatening to ignore the court’s ruling.