How the Trump administration learned to love foreign aid

Nobody expected President Donald Trump to save a country from financial crisis. Yet on October 14th he will meet Javier Milei, Argentina's president and an ideological ally, to discuss the details of a rescue package.

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America has already promised Argentina a swap line worth $20bn an amount representing half the South American country's foreign reserves-in order to address investors' fears about the durability of Mr Milei's currency reforms, which had sent the peso tumbling.

Treasury officials are also considering a raid on the Exchange Stabilisation Fund, a stash of dollars that was last used to assist a foreign country in 2002.

Eight months into his second term, Mr Trump has overhauled America's financial diplomacy. For decades, policymakers had sought to alleviate poverty and win friends doing so. Cash was doled out via aid agencies, as well as the IMF and World Bank, in which America is the biggest shareholder. Now Mr Trump has shut off half the money America sent abroad, panicked multilateral institutions and is extending the most generous American bail-out in 30 years. When Mr Trump began to wield the axe, officials feared America would give up funding developing countries altogether. Instead, a new approach is emerging.

It represents a revolution.

American financial diplomacy is now nakedly self-interested. Money is on offer to ideological allies, leaders who control something Mr Trump wants and countries he hopes to lure away from China. In the long run, more could be spent on these goals than was once spent on poverty alleviation. The problem is that they are in tension.

Officials at the IMF and World Bank were reassured when, in April, Scott Bessent, America's treasury secretary, said that he would not withdraw support so long as both reformed. But they are now worried about what will happen when the White House realises its requests are impractical. Mr Bessent wants the IMF to cut overall lending, which would take decades, and help America reduce the trade surplus of China, another shareholder.

Meanwhile, the Trump administration has rejigged three organisations to pursue its new agenda. In July USAID,