Argentina’s $16 Billion YPF Crisis Threatens Milei’s Economic Reforms

By Stephen Moore | Tuesday, December 9, 2025

U.S. President Donald Trump and Argentine President Javier Milei have cultivated a special relationship. Each is spearheading a crusade to make their respective nations’ economies great again.

Trump was instrumental in helping Milei win his election earlier this year and has extended the Argentines a $20 billion “lifeline” as they navigate the challenging path toward necessary free-market reforms.

The stakes are monumental, as the world watches Milei’s embrace of free-market “shock capitalism,” which has so far shown promise.

Milei has restored sound money by linking it to the dollar and streamlined government bureaucracy through privatization rather than nationalization.

Argentina’s tragic descent into socialism decades ago plunged the nation into a half-century economic crisis, with poverty rates soaring.

For Milei’s capitalist revival plan to succeed, he must uphold the rule of law and fairly compensate those who lost tens of billions when the Peronista government seized their assets.

Without securing fair compensation, international investment needed to rebuild Argentina’s economy is likely to be deterred.

A case in point is the contentious dispute over the 2012 nationalization of YPF, Argentina’s 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 became president in 2007, her government took control of YPF and dismantled its contractual bylaws requiring buyouts for minority shareholders.

This nationalization scheme mirrored Fidel Castro’s tactics in Cuba.

Investors won a $16 billion legal judgment in Petersen v. Argentina, ruling that Argentina violated U.S. securities law. However, YPF and the Buenos Aires government are now threatening to ignore this court order.

Walking away from financial obligations will severely hinder Argentina’s ability to attract new capital. Recent reports indicate that investment banks are hesitant to pour new money into Buenos Aires due to unresolved disputes like this one.

If investors perceive their legal rights as insecure, capital flows will remain stalled.

This outcome would be a lose-lose scenario: Argentines seeking jobs, American investors cheated, and all of South America and the global south watching whether Milei’s free-market experiment can deliver prosperity.

On the other hand, most U.S. banks and investors placed risky multibillion-dollar bets on YPF during political turmoil in Argentina.

The clear path forward for all parties is that investors must agree to take a haircut on their compensation, and either the Trump administration or a neutral arbitrator should negotiate a fair settlement to restore confidence in Argentina’s rule of law.

The greatest beneficiaries would be the Argentine people, the Trump administration, and the future of free-market economics worldwide.

Stephen Moore is a former Trump senior economic adviser and co-founder of Unleash Prosperity, an organization advocating for education freedom for all children.