View / Can Treasury keep playing the short game and winning?

Last October, Treasury Secretary Scott Bessent ignored complaints from Congress and economists to rush through a $20 billion currency swap with the Central Bank of Argentina, aimed at propping up both the peso and Javier Milei’s wobbling presidency.

It was the biggest US intervention in emerging markets since Bill Clinton’s 1995 Mexican bailout, but was accompanied by none of the deliberation, public discussion of conditions, or political theater. Bessent simply acted swiftly and tactically, with little regard for precedent and a high tolerance for political risk.

The bet paid off: The pro-US (and pro-Trump) Milei cruised through the election, the peso stabilized, and the US taxpayer turned a tidy profit.

The Argentina move was largely drowned out by the constant political noise of 2020s Washington, but it offered a peacetime glimpse into a very new way of operating at the US Treasury, which has long occupied a deep groove of continuity in a hyperpartisan town. Bessent spent his own hedge fund career growing familiar with the tools available to central bankers from Tokyo to Frankfurt to Washington. His Treasury is, in the Trumpian spirit of the time, always asking a financial version of Madeleine Albright’s old question about the US military: “What’s the point of having this superb Treasury you’re always talking about, if we can’t use it?”

It’s not just Argentina. The Treasury Department is standing up personal “Trump Accounts” for American children after congressional negotiations blew through the tricky politics that derailed the Bush administration 20 years earlier. Implementing the policy is complex and messy; it’ll deal with that on the back end.

These were peacetime moves, but they help explain something broader about the way this administration operates, including the controversial steps Bessent took in recent weeks to lift sanctions on Russian and Iranian oil. Critics note that these moves take the heat off American adversaries in the long term. But Treasury’s assignment has been to play for the short term in a war the White House says will be over this spring. A Bessent ally described this all to me as “4D chess” — but this is something a little more like speed chess, sweaty and tactical, more muscle memory than strategy and precedent.

And in that context, the sanctions relief solved immediate problems, speeding the delivery of energy supplies to Asia — which, because oil is a global market, may help explain why prices haven’t shot to $150 a barrel. Miad Maleki, a former Treasury sanctions specialist now at Foundation for Defense of Democracies (which has supported the Iran war), has made the point that the Iranian sanctions relief hasn’t actually given most buyers comfort about buying Iranian oil, but is aimed at reassuring intermediaries that previously declined to provide things like port services, ship-to-ship transfer support, and some forms of trade financing. “In that narrow sense,” the new license to buy Iranian oil “functions less as a demand-side measure and more as a supply-chain one,” he said. (By at least dealing with the supply problem, it’s a better solution than the idea floated and quickly abandoned inside Treasury to start trading oil futures.)

Treasury has also argued that temporary Russian sanctions relief won’t feed Russian government budgets because the country taxes oil at extraction, not sale.

Many former Treasury officials worry about the long-term effects of these moves. In particular, one said, they will make it difficult to bring India and China back around to complying voluntarily with sanctions.

“They’ll say, ‘Hey, you guys just said we can buy the oil. You guys were transactional — why wouldn’t we be transactional?’” the official worried.

Others, though, quietly admire the speed at which Treasury is acting. By contrast, the Biden administration frustrated supporters of Ukraine with endless negotiations with India over the price cap on Russian oil. One former Treasury official recalled agonizing discussions about precedent in an earlier administration, and said he’s developed a grudging respect for Bessent’s approach. “They don’t care — they don’t think that way,” he said.

And while it will take years to understand which of the ways Trump changed American government are temporary and which are permanent, it’s difficult to imagine a broad return to the stately old Washington response to pressing national questions: “We will debate this for five years and get back to you.”