A New Chapter for US Global Financing
Taking stakes in companies was only the beginning
A few months ago, when the US took a 10% stake in Intel and then invested in two Canadian critical minerals companies, the door had swung open to America driving finance in a new way. Instead of being an observer, the US government had suddenly become an investor steering strategic enterprises.
Now, however, it is becoming clear there is far more at play than simply investing in companies. A revolution is occurring in how America conducts financing across the global economy.
UNILATERAL CAPITAL
Last month, the US approved a $40 billion package for Argentina - $20 billion in credit swaps, and a further $20 billion in loans supplied by US banks and sovereign wealth funds. The latter portion has been redrawn, as US institutions eye a smaller $5 billion package. However, the former carries the real significance. It took place during the US government shutdown. Instead of going through Congress, the White House tapped the Exchange Stabilization Fund (ESF), a seldom-used account at the US Treasury. The US government gave Argentina access to almost 3% of its GDP ($20 billion) without exhaustive bureaucracy. It was immediate and direct. Could America mimic this elsewhere?
FINANCIAL SHIELD
Then there is the curious case of Hungary, whose prime minister, Viktor Orban, met with Trump, and after returning to Budapest, started to discuss a US “financial shield” that would protect the Hungarian economy in case of a future crisis. The proof is in the pudding wording. To stabilize its economy, Hungary is not turning to the IMF or even the European Stability Mechanism (ESM). Instead, the Hungarian government is leaning on America’s financing muscle. Adding to this, there may be a repositioning by the current government in Budapest, to shift closer to America (and indirectly away from China). However, moving away from China has limits, considering the mammoth investments of BYD and CATL in the Hungarian economy.
INSTITUTIONAL REVIVAL
Now, the US Export-Import Bank (EXIM) has announced a $100 billion plan to invest in energy and critical minerals projects across the world and bolster America’s economic security in the face of China. Geopolitics is playing heavily, not just in the objective (i.e., take on China), but in the actual location of the investments. The first funding will be in Egypt, Pakistan, and Europe - the same Egypt that hosted the ceasefire deal between Israel and Hamas, the same Pakistan that the White House has grown cozy with, and the same Europe that has also been jolted by China’s weaponization of rare earth supplies.
FINANCING = GEOPOLITICS
When each of these events occurred - Argentina, Hungary, and EXIM - there was no clear pattern. Now that all three are in plain sight, a picture has begun to form.
The US is quietly reinventing how it uses financing to continue calling the shots in the world.
The path to US financing no longer hinges purely on the IMF or World Bank, but also on unilateral investments, loans, and pledges that shift the geopolitical ground. The US is pulling nations into its corner through new capital injections.
Through the new financing, America is strengthening its orbit. This is tried-and-tested geopolitics in a new world. The three big questions now are: who else will turn to American financing? How will US competitors like China or Russia deal with what is happening? And, what other “cards” will America activate to drive its financing push?
There are no clear answers to the above questions. But, just as America has quickly expanded its investments from Intel to also include firms like MP Materials, and potentially Westinghouse and even US Steel, so too, the next round of American financing in the world is close, not far.
And as America doles out billions, it is not just a question of who else is lining up, but who feels threatened, and responds with their own capital and currency, leading to a new financial collision that further darkens the global horizon.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
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