Javier Milei and the Long Shadow of the IMF

On Sunday, Javier Milei, the chainsaw-wielding libertarian president of Argentina, emerged as the resounding winner in the country’s mid-term election. His La Libertad Avanza party triumphed in large swaths of the South American nation, taking more than 40 per cent of the vote. The result surprised many, even Milei himself. As austerity had increasingly bitten under his presidency, Milei’s approval ratings had collapsed to the low thirties. Meanwhile, the Buenos Aires governor Axel Kicillof—one of the leaders of the main opposition party, who, as former economy minister, led Argentina’s negotiations with creditors after the 2001 default and remains a key critic of the IMF’s influence—was polling competitively, and beat Milei’s party easily in Argentina’s municipal elections held in September. Against this backdrop, Milei’s latest victory is being interpreted  more as a conditional mandate to stave off an economic catastrophe and to calm markets than a resounding endorsement of Milei himself. 

As Milei’s domestic position has crumbled over the past year, both the International Monetary Fund (IMF) and Washington have intervened to keep him viable. In late September 2025, US Treasury secretary Scott Bessent pledged to “do what is needed” to support Argentina, a move in which the political stakes were entirely transparent: US Treasury support landed just in time to stave off a devaluation ahead of midterm elections. When Argentina needed dollars, the money came. 

IMF funds also continued to flow despite missed targets. For the IMF, Argentina has become both a proving ground and a warning sign. Yet Argentina’s tumultuous economic history is not just about one volatile leader. Instead, it demonstrates how financial institutions built to stabilize the global economy are now using the failing debt architecture as leverage for extraction, and how, in the name of reform, entire countries are being forced to renege on development and climate goals to service debt and appease the markets. 

The Laboratory of Predatory Finance 

On June 30, 2025, in the largest-ever judgment against a sovereign country in a US court, a federal court in New York ordered Argentina to surrender YPF, its majority state-owned oil and gas company. The judgment came in response to an earlier $16.1 billion ruling issued after Argentina’s re-nationalizing of the firm in 2012, under previous president Cristina Fernández de Kirchner. 

So far, the seizure of YPF has been unsuccessful: Argentina has appealed the ruling, arguing that it violates sovereign immunity and would gravely harm national interests. Backed by the US government and several allies, Milei’s administration has won a stay on enforcement while it pursues a full legal and diplomatic defence. Even so, to understand the legal architecture that enabled the court to order the seizure of YPF, we need to look beyond the ruling itself: back to the 1990s and the structural adjustment programs introduced by then-President Carlos Menem. Backed by the IMF, those reforms introduced dozens of bilateral investment treaties that have allowed foreign investors to sue Argentina in offshore tribunals. Indeed, Argentina is now the world’s most-sued nation under bilateral investment law. But Menem’s privatization programme also embedded contractual landmines directly into state assets themselves, including YPF’s 1993 corporate bylaws, which promised minority shareholders compensation if the company were ever re-nationalized. 

When the Kirchner government did re-nationalize YPF in 2012 to regain control over strategic energy resources, it compensated majority shareholder Repsol, but not minority holders Petersen Energía and Eton Park. The government viewed this as an acceptable cost for reclaiming sovereignty over a critical asset. It was a reasonable assumption, but turned out to be fatal. By 2015, litigation finance firm Burford Capital had acquired the distressed minority claims for just $15 million and began systematically weaponizing the 1993 bylaws, transforming what seemed like standard corporate provisions into instruments for sovereign asset seizure.

The elements of the YPF case are neither unique nor exceptional. Instead, the case is a symptom of the predatory financial strategies that have become a structural feature of global debt architecture. Litigation finance firms and hedge funds now actively seek out sovereigns in distress in what the African Development Bank has documented as “vulture funds”: buying debt “at deep discounts with the intent of suing the debtor for full recovery.” These funds pursue returns averaging anywhere from 300 to 2,000 per cent by targeting countries in crisis, thereby transforming financial distress into profit opportunities through protracted litigation. Argentina has become a laboratory for this kind of predatory finance, where each innovation in creditor power exploits the vulnerabilities created by earlier IMF-mandated liberalization. 

Milei’s Extractivist Bet

For Argentina’s president, Javier Milei, the YPF predicament presents a profound paradox. Milei built his career railing against the state and championing privatization, famously brandishing a chainsaw on the campaign trail to symbolize his planned dismantling of public institutions. Yet he now finds himself defending YPF, the very company he once vowed to sell.

Convinced that extractivism represents Argentina’s best economic hope, Milei has doubled down on extraction, advancing lithium mining, oil drilling and metal extraction. Equally, the vast hydrocarbon wealth of the Vaca Muerta shale formation in the country’s Neuquén province promises future export revenues. In this sense, YPF sits at the heart of Milei’s Trump-like politics: proclaiming libertarian values, while binding the nation ever more tightly to creditors, investors, and geopolitical patrons.

The YPF ruling should have prompted a reckoning among Argentina’s creditors—notably the IMF, which has propped up Milei despite mounting evidence that his programme is socially, environmentally and economically catastrophic. Since inauguration, the peso has lost nearly half its value, while in early 2024 poverty surged past 57 per cent, its highest rate in two decades, leaving over 27 million Argentines below the poverty line. Pensioners also bore the brunt, as slashed benefits have forced many to choose between food and medicine.

Beyond such social devastation, Milei has dismantled environmental protections that once constrained extraction. His Ley Ómnibus bill eliminated protection for over 80 per cent of Argentina’s native forests; stripped glacier safeguards and enabling mining in periglacial zones; and introduced tacit approval for controlled burns—in effect, legalizing deforestation through bureaucratic silence. For an agricultural nation that is facing severe cycles of drought, this is economic suicide: deforestation in Gran Chaco and Yungas regions have directly reduced the level of rainfall and have accelerated desertification, threatening the very productivity these policies claim to unleash. The law also opened traditionally protected fishing zones to international exploitation and created the RIGI investment regime, granting extractive industries 30-year tax stability. More aggressively, it threatened provinces with federal revenue cuts for refusing to honour corporate tax breaks—overriding provincial authority and coercing compliance with investor demands.

Previously one of Latin America’s most industrialized nations, IMF prescriptions accelerated by Milei have turned Argentina back into a primary exporter, reliant on volatile commodity cycles and legal vulnerabilities, which undermine development across the continent. Argentina was once uniquely positioned to escape this fate, making its regression under IMF prescriptions all the more devastating. The result: a wave of emigrating young professionals and a deepening brain drain, especially in science, technology, and engineering. Following Milei’s sweeping cuts, applications for domestic research posts dropped sharply, while international fellowships saw a marked uptick. Public research institutions like CONICET froze hiring, slashed doctoral stipends, and delayed project funding. 

Yet, far from condemning the policies that are turning Argentina back into a primary exporter, the IMF’s head Kristalina Georgieva was photographed with Milei wearing a chainsaw brooch, a nod to his “chainsaw economics.” IMF staff meanwhile have praised Milei’s “pragmatic and credible” reforms even as Argentina withdrew from COP29 and ruled by executive decree after Supreme Court prohibition. Every peso cut from education, healthcare, or pensions became a peso for debt service—Argentina is currently the IMF’s biggest debtor, with social devastation mere collateral damage in restoring “macroeconomic stability.” Beyond the theatrical overtures, Milei’s closeness to the IMF may be more about contractual obligation than ideological preference, coupled with the realization that his political survival now depends entirely on his ability to placate the IMF and the US.

Drill, Baby, Drill

Argentina’s terrain of extraction—the wind-lashed plains in the south as well as the parched lithium-rich salt flats of Jujuy and the fragile ecosystems now shadowed by drill rigs and pipelinesare landscapes of both staggering beauty and deep ecological vulnerability. Of these, perhaps none are more important than Vaca Muerta, a 30,000-square-kilometer shale formation that stretches across the Patagonian plains. Holding an estimated 16 billion barrels of oil and 308 trillion cubic feet of natural gas, it ranks as the world’s second largest shale gas and fourth largest shale oil reserve. It is also one of Argentina’s primary remaining assets of value, a crucial source of revenue to pay international creditors.

Argentina’s 2025 Extended Fund Facility with the IMF explicitly commits the country to “deepen structural reforms to boost growth, including via its vast potential in energy and mining.” The program’s quarterly reviews measure compliance through reserve accumulation targets pegged to export revenues from Vaca Muerta shale, lithium extraction and agricultural commodities. Exploitation of these reserves requires industrial-scale hydraulic fracturing in a water-scarce region already experiencing intensifying drought. Each fracking well consumes between 2 and 4 million gallons of water—water that will never return to agricultural or municipal use. In a province where rainfall has declined 20 per cent over the past two decades, and where desertification threatens 40 per cent of productive land, diverting aquifer water to fossil extraction will accelerate the ecological collapse. Wastewater laden with chemicals then contaminates remaining water sources, while methane leaks from wellheads and pipelines accelerate atmospheric warming. Yet, for creditors, these are unfortunate externalities, just part of the business model. 

Under Milei, and protected by IMF conditionality, Vaca Muerta infrastructure escaped the budget cuts that have gutted education and healthcare. In late 2024, Argentina inaugurated a $710 million gas pipeline connecting Neuquén to Buenos Aires—ostensibly reducing Bolivian import dependence, but functionally reversing oil flows toward Atlantic export terminals. A parallel 600-kilometer oil pipeline, Vaca Muerta Sur, under construction to coastal ports for international markets, received financing and political protection precisely because it appears in IMF export revenue projections. These aren’t development projects—they’re collateral infrastructure, built to monetize reserves that creditors can measure on balance sheets. By the end of 2024, Buenos Aires had given itself a security doctrine to keep those dollars flowing: Decree 1107/24 empowers the military to guard “strategic objectives,” a category pliable enough to encompass lithium brine fields and the pipelines that monetise Vaca Muerta.

The Lithium Frontier

Argentina’s second mandated extraction zone lies 2,000 kilometres north, in the Jujuy and Salta high-altitude salt flats—part of the Lithium Triangle spanning Argentina, Bolivia, and Chile which holds over half the world’s lithium reserves. 

The landscape is stark and fragile: arid highland basins at 3,000-4,000 metres above sea-level where Indigenous communities have cultivated quinoa and herded llamas for millennia. It is a place where water is life and life is precarious. Lithium extraction through brine evaporation consumes an estimated 500,000 litres of water per ton of lithium produced; water pumped from aquifers that took millennia to form and will not refill within human timescales. Locals report dropping water tables, drying pastures, collapsing agricultural productivity—externalities that never appear in debt sustainability assessments.

But lithium generates export dollars, which is what, according to IMF policy orthodoxy, Argentina must acquire at all costs. In August 2024, Argentina signed a memorandum of understanding with the United States committing to integrate its lithium and critical minerals into US strategic supply chains through the Minerals Security Partnership, framed explicitly as reducing dependence on China. US secretary of state Antony Blinken praised Argentina’s “extraordinary opportunity” in lithium during a 2024 visit. The underlying logic here is that debt dependence is what makes Argentina a reliable supplier for Western battery supply chains, subordinating resources to creditor-nation industrial policy under the banner of the “green transition”.

In December 2024, also with tacit approval from the IMF, Milei authorized military deployment to guard “Objectives of Strategic Value”, designating oilfields, pipelines, and mining zones as requiring armed protection. Lithium operations in Jujuy now operate under implicit military oversight. Legal groundwork was laid earlier: in June 2023, Jujuy’s government rushed through constitutional reform abolishing most Indigenous land rights and banning road blockades—the primary community resistance tactic. When Indigenous and labour groups protested, police responded with what Amnesty International documented as “illegal, indiscriminate” force: arbitrary detentions, and systematic repression. Dissent was criminalized to clear ground for exports.

Jujuy’s lithium expansion is central to IMF reserve accumulation targets and US supply chain ambitions. By neutralizing local resistance through new laws, police action, and prosecution, the state ensures “strategic” mines stay online, fusing the rhetoric of sovereignty with foreign-directed extraction.

The Mask Falls

Until this year, the IMF presented itself as a champion of climate action, with Managing Director Kristalina Georgieva declaring that climate was “at the heart of the IMF’s work.” That rhetoric has now vanished. In 2025, the Fund quietly walked back its climate agenda, narrowing its focus to carbon pricing and fiscal consolidation while side-lining issues like adaptation, equity and transition finance. The reversal has coincided with a surge in US influence inside the Fund, notably the appointment of a top adviser to US Treasury Secretary Scott Bessent to a key IMF leadership post. 

When IMF staff praise Milei’s “credible reforms” as Argentina withdraws from climate commitments, dismantles universities and rules by decree, the contradiction is not technical but political. The Fund serves creditor interests, not development goals. As economist Lara Merling argues, the Fund’s mandate prioritizes debt repayment over climate goals, systematically pushing countries toward commodity exports for debt service. Argentina’s Extended Fund Facility exemplifies this: extraction infrastructure is protected while green investment is absent.

The IMF has long had a fragmented approach to climate, but since 2021, the Fund had at least rhetorically positioned climate as “core” to its work, integrating climate considerations into its Comprehensive Surveillance Review and creating the Resilience and Sustainability Trust. This fell far short of what climate science demands, but created minimal institutional space—a vocabulary through which debt sustainability assessments could acknowledge climate shocks and debtor nations could negotiate on climate grounds. Yet even this inadequate engagement is now under assault. In his April 2025 speech at the IMF Spring Meetings, Scott Bessent opined that “the IMF now devotes disproportionate time and resources to work on climate change, gender, and social issues,” which he deemed “not the IMF’s mission.”

Neither the IMF nor the US has expressed concern that Milei’s programme operates through an executive overreach that Argentina’s judiciary has declared unconstitutional, or that corruption scandals have engulfed his administration. What matters is compliance with extraction mandates and debt service. The system demands policies that make governance impossible, then requires external intervention to suppress the democratic backlash. This is not stabilization—it is the active production of instability that justifies permanent external control. The IMF’s $44 billion loan doesn’t rescue Argentina from crisis. Instead, it finances the deepening of the crisis, creating conditions under which asset seizure becomes not only possible but necessary.

Even this massive geopolitical backing cannot, however, prevent Milei’s political unravelling. In October 2025 alone, the Argentine Senate overrode three presidential vetoes—the first time since 2003 any Argentine president faced such repudiation – while more than 80 per cent of senators voted to restore funding for universities and paediatric care that Milei had slashed. Days before the crucial October 26 midterms, his star candidate José Luis Espert withdrew following allegations that he had received $200,000 from a businessman accused of drug trafficking, compounding a legitimacy crisis that saw the Supreme Court prohibit Milei’s signature tactic of governing by decree.Facing electoral disaster, Milei scrambled to rebuild alliances with former president Mauricio Macri—the same politician he had months earlier called “corrupt” and part of the “swamp.” Having alienated allies, Milei now needed Macri’s party to salvage its congressional presence. 

The Choice Ahead

Perhaps no one better embodies the fears of Argentina’s creditors than Buenos Aires governor, Axel Kicillof: a progressive and Peronist who might challenge the constitutional changes, resist YPF’s selloff, or attempt to renegotiate the IMF programme on terms that prioritize social investment over debt service. If a Kicillof government were to take office before the YPF seizure is finalized, or before constitutional amendments are fully implemented, the entire architecture could unravel.

If Burford Capital’s seizure of YPF does succeed, it will create template replicable across the debt-distressed Global South: any state asset generating foreign exchange becomes fair game for capture, transforming debt crises into opportunities for outright expropriation. The militarization of extraction zones, criminalization of protest, and seizure of state assets through foreign courts are logical outcomes of a system designed to enforce creditor claims over sovereign development rights.

Argentina’s experience demonstrates this logic with particular clarity, but the same dynamics threaten every debtor nation navigating climate transition while servicing unpayable debt. Seventy-nine countries are currently at risk of, or already in debt distress—sixty of them also highly vulnerable to climate change. In 2024, ninety-two low- and middle-income countries will spend more on external debt service than on non-climate-related Sustainable Development Goal investments. These aren’t policy failures but design features: when 3.3 billion people live in countries spending more on debt interest than on education or health, when African nations face borrowing costs 8.5 percentage points above risk-free rates while official development assistance declines, the architecture itself generates the crises it claims to resolve.

As a UN Independent Expert on Debt and Human Rights noted, “policies of international financial institutions can worsen inequality, misallocate resources and fuel political unrest. This is not policy failure but policy design: when “help” takes the form of loans conditional on austerity, when debt restructuring prioritizes creditor recovery over public welfare, and when the IMF penalizes its most indebted borrowers with surcharges that can push effective lending rates above 8 per cent, the system is functioning precisely as intended.

The Trump-Milei political alliance reveals why IMF reform is so urgent. With bilateral meetings scheduled around the IMF’s October Annual Meetings, where member countries negotiate lending policies, governance reforms, and strategic priorities, a more brazen and polarized division between the Global North and Global South is likely to reveal itself. The institutions built to stabilize the world economy have instead become instruments of its managed decline. 

A fairer multilateral system could replace creditor dominance with transparent debt resolution, curb predatory finance and give developing countries the fiscal space to invest in resilience and social needs. It would mean rebalancing power away from markets and toward multilateral rules that serve development, climate goals and democratic sovereignty. A reformed IMF would serve all its members—not just the wealthiest creditors or the biggest polluters. It would end punitive surcharges, rewrite debt rules that trap countries in crisis until they have no choice but to accept exploitative terms and support decarbonization rather than fossil fuel expansion. It would champion fair labour protections, progressive tax systems that compel corporations to fund robust public health and education, and environmental standards that lift the global economy rather than drag it downward: policies that help countries build on their strengths and flourish, not force them into a race to the bottom. Instead, the IMF is being reshaped by a US administration shrouded in climate denial, turning the Fund into an enabler of extraction at the precise moment when the survival of our species—and millions of others—hangs in the balance.

In the absence of such a multilateral space we are left with a world where sovereignty is hollowed out through law, where debt becomes a mechanism for permanent extraction and where climate and development considerations disappear entirely from global economic governance is catastrophically worse. Yet defending these spaces requires confronting an uncomfortable truth: they currently trap countries in a vicious cycle where “investments in resilience are postponed in favour of debt service, which in turn makes them more vulnerable to climate impacts and delays development efforts, rendering these countries unprepared to respond to future disasters and perpetuating indebtedness.” When the architecture itself generates the crises it claims to resolve, reform becomes not a technocratic adjustment but an existential necessity. And it is precisely this debt justice that can put the brakes on Burford- and plenty of other Finance Litigation firms—rubbing their hands at the opportunities presented by an imminent global debt meltdown. 

Lola Allen is a senior researcher and an independent consultant with the Climate and Energy Justice Network.