Bessent steps in to protect profits of friendly investors in Argentina

US Treasury Secretary Scott Bessent’s intervention in Argentina seems aimed more at saving his friends than at helping the nation, at least one leading economist has alleged.

Several hedge funds with past professional ties to the Treasury Secretary hold major positions in Argentine bonds. Washington’s US$20-billion swap package seeks to shield their returns.

According to The New York Times, the financial assistance will benefit “investment firms such as BlackRock, Fidelity and Pimco, which are heavily invested in Argentina, as well as investors like Stanley Druckenmiller and Robert Citrone, who worked with Bessent when he was investing for George Soros.”

Specifically, Argentina faces debt payments in January and July next year amounting to roughly US$8.5 billion in bonares and globales bonds, with 85 percent believed to be in private hands.

Nobel Prize-winning economist Paul Krugman has written two articles about Bessent’s proposed rescue plan. In a recent blog post, he noted that “some US hedge-fund billionaires, personally close to Bessent, bet big on Milei and bought Argentine bonds.”

“The bailout package almost surely won’t succeed in turning Argentina’s economy around and probably won’t rescue Milei politically. But it may buy enough time for Bessent’s buddies to get much of their money out before the bottom falls out of the Argentine economy,” Krugman adds.

Bloomberg reported that Rob Citrone’s Discovery Capital Management “earned returns above 20 percent this year and increased its positions in Argentine bonds after market declines in early September.”

At the end of September, Bessent announced on social media that the US Treasury was negotiating a financial aid package with Argentina, including a US$20-billion currency swap. The post also mentioned bond purchases as part of the financial rescue.

“One of the people who urged Bessent to intervene on Milei’s behalf is Bessent’s old friend and former colleague Rob Citrone, a hedge-fund billionaire who bet big on Milei’s success and bought more Argentine assets just before Bessent’s announcement,” Krugman recalled.

There is another connection linking Bessent to Argentina through Tania Reif, founder of the Senda Digital Assets fund and partner of Argentina’s current Deputy Economy Minister, José Luis Daza. 

As journalist Juan Cruz Soqueira reported in Perfil, Reif was part of Soros Fund Management, where she worked under Bessent, then the firm’s Chief Investment Officer and one of its most influential figures.

During that period, Reif was part of the team of analysts and portfolio managers specialising in currency and sovereign bond strategies in emerging markets – a field in which Bessent had already built his reputation.

Two major episodes cemented Bessent’s standing in global finance. The first was “Black Wednesday” in 1992, when Soros’s fund bet against the pound sterling and defeated the Bank of England, earning around US$1 billion in profits. The second came in 2013, when he profited roughly US$1.2 billion by betting on the devaluation of the Japanese yen.

Bessent’s record shows he is a specialist in currency trading. It remains to be seen whether the US Treasury’s recent operation – buying pesos and selling dollars – will work. The Treasury secretary argued that the Argentine peso is “undervalued.”

For now, Argentines show more appetite for dollars than the US Treasury does for pesos, and many analysts are asking whether Bessent will manage to “tame” the Argentine market.

Bessent’s connection to Argentina dates back to the 1990s, when he worked for George Soros, who made a major investment in IRSA, the company that owns several of Buenos Aires’s leading shopping centres and landmark buildings. 

“IRSA grew under Soros’ umbrella, when in 1990 the magnate wrote a US$10-million cheque to two young Argentines, Elsztain and [Marcelo] Mindlin, who knocked on his Manhattan office door,” recalled a Clarín report from 2000, which noted that Soros later sold almost all his holdings in the country.

According to Perfil, it remains unclear how long Soros’s partnership with IRSA lasted or under what conditions. Sources close to the businessman – now a friend of President Javier Milei – said there is currently no contact with Bessent, “beyond having shared the same financial ecosystem in the 1990s.”

Soros’s investment was made possible under a deregulatory framework similar to today’s. Law 21,526 on the operation of financial institutions, enacted during Argentina’s 1976-1983 military dictatorship in its second year in power, was modified in the 1990s to reduce the state’s role in supervising the financial system.