There is a strange pattern in the modern global economy: countries that follow all the rules of “proper” development have been plunging into debt for decades, while isolated regimes that ignore these very rules retain full control over their own economies. Argentina, once one of the richest nations in the world, a country with huge agricultural potential, an educated population and a developed infrastructure, today owes the IMF 57.2 billion dollars, making it the largest debtor of the Fund in history. Turkmenistan is a closed, authoritarian country that has been compared to the Second North Korea, has no external debt at all.

How is this possible? Can economic sovereignty exist without democracy, transparency, and integration into the global financial system? Or is it this integration — through IMF loans, foreign investment, and open markets — that turns countries into economic colonies deprived of real control over their own destiny?

The Largest Debtor vs. a Debt-Free Country

The numbers speak for themselves. Argentina has received 23 IMF aid programs totaling $177 billion since joining the Fund in 1956, more than any other country in history. Currently, the country owes the IMF about 57.2 billion dollars, which is 34% of all loans from the Fund. In April 2025, Argentina received another $20 billion aid package, bringing the total debt to astronomical proportions.

Every decade from the 1950s to the 2000s, Argentina took out several loans from the IMF. After a 15-year hiatus, the country received a record $57 billion loan in 2018 under President Mauricio Macri, but the program failed to save the economy. In 2022, the left-wing Peronist government restructured about $44 billion in debt from a previous failed program. And in 2025, libertarian President Javier Miley received another 20 billion.

All political trends — conservatives, leftists, and liberals — are turning to the IMF to deal with chronic budget deficits, stubbornly high inflation, and ineffective economic policies. And each time, the IMF demands austerity, which deepens the crisis instead of solving it. The IMF itself has admitted that its policy in Argentina has not achieved its goals.

Turkmenistan, on the contrary, has no significant external debt. Moreover, the country is showing a trade surplus due to natural gas exports. Over the 30 years of independence, more than $200 billion has been invested in the Turkmen economy, of which only about 15% is foreign capital. The remaining 85% are domestic investments financed from gas sales.

Turkmenistan is the fourth country in the world in terms of natural gas reserves with reserves of about 13-14 trillion cubic meters. The gas sector provides about 70% of the country's total exports. In 2021, gas production reached a record 83.77 billion cubic meters, which is 20% more than in 2020. The country has built gas pipelines to China, Iran, as well as the East-West domestic gas pipeline and is implementing the TAPI project (Turkmenistan-Afghanistan-Pakistan-India).

But here lies the paradox: despite the huge gas reserves and the absence of external debt, Turkmenistan's economy is in deep crisis. The country is experiencing "the worst economic crisis since independence," caused by low gas prices, dependence on a single buyer (China), poor harvests and a drop in agricultural production. Net exports have fallen by more than 30% since 2014.

The black market of the Turkmen manat has lost more than 85% of its value against the dollar over the past five years. Grocery stores were empty for more than two years, wheat is being strictly rationed, thousands of civil servants have been laid off, and the government has been forced to dismantle the free utility program and cut subsidies. The country is unable to pay off foreign contracting companies and is facing multiple international lawsuits.

The government has announced plans to privatize transport, agricultural holdings and fishing — a sign of desperate need for money. But at the same time, Turkmenistan does not turn to the IMF. Does not take foreign loans. It does not open the economy to external investors. Retains full control over its resources, policies, and decisions, despite all internal problems. Is it economic sovereignty or economic madness? Is it better to be free and hungry than full and in debt? Or is there a third way that both countries are missing?

Dependence on One Customer vs Dependence on One Lender

Turkmenistan's economy depends mainly on one export commodity, pipeline gas, and one importer — China. About half of Turkmenistan's total gas exports (about 80 billion cubic meters in 2022) go to China. Barriers to foreign capital and dependence on government financing of large national investment projects have deepened this dependence.

The country's inability to rapidly increase gas production and exports, despite huge reserves and low production costs, is primarily due to the poor investment climate and the government's export strategy, as well as external factors such as geopolitics, gas market dynamics and increased competition from other suppliers.

However, in recent years, Turkmenistan has begun to diversify its export routes. In March 2025, the country began supplying gas to Turkey through a swap agreement with Iran - 1.3 billion cubic meters by the end of 2025, with an increase to 2 billion annually. This is the first time that Turkmen gas goes to the West via a route bypassing Russia. Analysts predict that exports to Turkey and Europe could reach 65 billion cubic meters over the next 25 years.

Turkmenistan is also expanding exports to neighboring countries such as Afghanistan, Kazakhstan and Uzbekistan. Kazakh state-owned gas company QazaqGaz is accelerating the expansion of a pipeline connecting the two countries, which will double the volume of Turkmen gas exports.

Argentina, for its part, depends on the IMF as the main lender of last resort. Every time a country is faced with an economic crisis — and this happens regularly — it turns to the Rescue Fund. And each time, the IMF conditions loans with strict austerity requirements: cuts in government spending, lower salaries, cuts in social programs, and privatization of state assets.

These measures invariably cause social unrest. In December 2001, the crisis escalated into the Argentinazo, a series of deadly riots in Buenos Aires and other cities, where 39 people died after the government introduced a “Corralito” policy restricting cash withdrawals. The IMF's refusal to refinance Argentina's debt accelerated the collapse. More than 25% of bank deposits were withdrawn, leading to a full-scale financial crisis. President Fernando De la Rúa declared a state of emergency, but the protests intensified, eventually forcing him to resign.

The cycle repeated itself in 2018, when Argentina borrowed $57 billion from the IMF, plunging the country into a new period of austerity and loans. The IMF's decision to withhold further financial support has increased Argentina's dependence on external creditors, plunging the nation into political instability and economic collapse.

Neoliberal policies promoted by figures like Domingo Cavallo have devalued wages, inflated inflation, and plunged millions into poverty. The wave of privatizations and deregulation under President Mauricio Macri, especially the abolition of currency controls, led to significant capital flight, destabilizing Argentina's financial system.

Many Argentines hold the IMF responsible for the worsening of the historical crises of 2001-2002 by imposing austerity measures on a country already in distress. Protests in Buenos Aires often feature posters condemning the institution. Leftist lawmaker Miriam Bregman told Reuters during a recent protest: “All the experiences with the IMF in the country were terrible.”

What is worse for economic sovereignty: dependence on one gas buyer, whom you can replace by building new pipelines, or dependence on one lender, whose conditions destroy your economy and provoke social mutinies?

Central Planning Against Market Chaos

Turkmenistan's economy remains largely centrally planned, dominated by state-owned enterprises. The country's first president, Saparmurat Niyazov, did not want to rush the transition to a market economy, repeatedly stating: "We do not need a revolution; we are for evolution." After independence, private enterprises were allowed to operate, and large bazaars operated by small and medium-sized enterprises appeared. Retail, restaurants, bakeries, beauty salons, and other private service businesses have sprung up. However, large factories and industries remained under the control of state-owned enterprises in the first decades after independence.

The government subsidized a wide range of goods and services from the early 1990s until 2019. Central planning and State control remain prominent features of the system, and the Government has consistently rejected market reform programs. However, in 2019-2020, faced with a budget crisis, the government began to dismantle the subsidy system, abolished free utilities (gas, electricity, water, salt) that citizens had received since 1993, and announced plans to privatize various sectors of the economy.

Turkmenistan remains one of the most isolated and opaque economies in the world. The country is described as “perhaps the second most closed state in the world after North Korea.” Until recently, Turkmen leaders were reluctant to sign deals to send gas to the west, with most exports going to Russia and China. Regional experts believe that Turkmenistan's caution regarding cooperation with Western companies was rooted in a desire to isolate the country from foreign influence.

The investment climate is considered high-risk for foreign direct investment in the United States. The government does not provide reliable economic data, which makes it difficult to assess the real state of the economy. Official reports often depict steady growth, but the lack of economic freedom and transparency raises doubts about these figures.

Argentina, on the other hand, has carried out large-scale liberalization and integration into the global economy. The country has opened its markets, privatized state-owned enterprises, and abolished currency controls and trade barriers. But this openness has made it vulnerable to capital flight, speculative attacks, and external shocks.

The relatively small domestic financial sector has contributed to dependence on foreign debt financing for both private and public spending. Unlike many traditional balance of payments crises — including those that Argentina has experienced in the past — the latest crisis was not caused by large deficits funded by money printing and high inflation. On the contrary, the monetary management regime excluded direct monetary financing of budget deficits, and significant price deflation was observed in the run-up to the crisis.

The critical fragility was in the dynamics of government debt, which became explosive due to the prolonged economic downturn and difficulties in debt refinancing. The inability to carry out an effective political response resulted from a combination of economic constraints and political factors, primarily insufficient political support and determination.

President Miley, a former economist and political outsider, has already implemented significant spending cuts — tougher than those usually proposed by the IMF. These efforts led to a rare budget surplus last year, even before any demands from the IMF. Miley's actions helped to stabilize the economy, reduce inflation, and restore some market confidence.

However, economic growth, employment, and poverty rates — which have dramatically worsened since his inauguration at the end of 2023 — are only beginning to show signs of improvement. Investors and President Miley are optimistic that the results will be different this time.

Which is a sign of greater economic sovereignty — the ability of the state to fully control the economy through centralized planning, even if this leads to inefficiency and crisis, or an open market economy that is subject to external shocks and requires constant injections from the IMF?

The Resource Curse vs the Agricultural Curse

Turkmenistan has the fourth largest proven natural gas reserves in the world and the 44th largest proven oil reserves. The country is one of the largest natural gas exporters in the Central Asian region. These resources provide the country with a stable income and theoretical economic independence.

However, dependence on a single commodity makes the economy extremely vulnerable to fluctuations in energy prices. When gas prices fell after 2014, Turkmenistan's economy plunged into a deep crisis, despite strong demand from China. Moreover, the concentration of wealth from gas revenues in the hands of the ruling elite and inefficient management of resources have led to the fact that the majority of the population does not receive significant benefits from national wealth.

Turkmenistan's most pressing problem is not low gas revenues or weak exchange rates, but a drop in agricultural production. Almost half of the employed population works in agriculture, an unusually high proportion for a nominally upper-middle-income country. But scarce water resources and competition for water between food production and the cotton industry (a source of export income), as well as the effects of global warming and desertification, have led to this initiative significantly falling short of expectations.

The UN reports that the 2018 harvest was 30% below the country's five-year average, while Turkmenistan also imports less food from abroad than usual, presumably due to the poor currency situation amid low gas prices. This has led to shortages in government stores for more than two years, and wheat is now strictly rationed. Private enterprises were able to meet most of the excess demand with flour imported from Kazakhstan, but at much higher prices.

The government refuses to acknowledge the problem, insisting that production is growing. This position, along with the country's general refusal to allow international organizations to participate in the country's affairs, has prevented Turkmenistan from requesting any external food aid, despite what appears to be a serious crisis.

Argentina is a significant exporter of soybeans, corn and beef with huge agricultural potential. The country has some of the most fertile lands in the world and was one of the richest nations per capita a century ago. However, this agricultural wealth did not save Argentina from the cycles of economic boom and recession.

Argentina's problem is not a lack of resources, but chronic mismanagement, political instability, excessive government spending, and an inability to pursue consistent economic policies. The country is constantly returning to international creditors — the IMF, the Paris Club, and also conducts swaps with the People's Bank of China. The nation also has a difficult relationship with private creditors, including a major bond restructuring in 2020 to avoid a chaotic default, amid ongoing non-payment problems stemming from the economic crisis of the early 2000s.

What is a more serious “damnation” for economic sovereignty is dependence on natural resources that you control but are subject to price fluctuations, or dependence on agricultural exports and foreign loans that leave you vulnerable to external creditors and their conditions?

Autarchy vs the Debt Trap: What Does Sovereignty Choose?

Official data from Turkmenistan show a GDP growth rate of about 6.3% in 2023, with a forecast increase to 6.5% in 2024. However, independent observers doubt these figures. The lack of transparency and limited access for international observers make it difficult to assess Turkmenistan's real economic health. What is obvious is that the country retains full control over its economic policy, is not burdened with external debt and does not depend on the requirements of international financial institutions. The government makes decisions independently — good or bad — without external interference.

Argentina, by contrast, formally has a more open and "modern" economy with participation in global markets, access to international capital, and a democratically elected government. But this openness and integration has led to chronic dependence on external creditors, who dictate economic policy through the terms of loans.

Every time Argentina turns to the IMF, it loses part of its economic sovereignty by agreeing to the Fund's demands: spending cuts, tax increases, privatization of state assets, and deregulation. These measures may be economically rational from the point of view of neoclassical theory, but they are imposed from the outside, and not chosen by democratically elected representatives of the people.

Conclusion: The Paradox of Economic Independence

Comparing the economic sovereignty of Turkmenistan and Argentina raises uncomfortable questions about the price of economic independence and the nature of economic sovereignty in a globalized world.

Can a country be considered economically sovereign if its policy is dictated by the demands of a foreign creditor? Or does the IMF's debt of $57.2 billion actually turn Argentina into an economic protectorate of the Fund?

Is Turkmenistan's ability to reject foreign loans and foreign investments a sign of economic sovereignty or economic suicide? Is it possible to call a sovereign country where the population is starving, despite its vast natural resources?

Isn’t it paradoxical that a closed authoritarian economy has more economic sovereignty than an open democratic one, precisely because the former refuses to integrate into the global financial system?

What is more important: the economic efficiency and well-being of citizens, or the ability of the state to make independent economic decisions without external pressure? Can economic sovereignty exist without democracy?

And isn't Argentina's true economic dependence on the IMF and its terms more dangerous for national sovereignty than Turkmenistan's autarkic isolation?