The holiday period is coming to an end in Washington DC and the streets are returning to their usual rhythm of intense traffic, as is the constant lobbying in the political and international centres of the US Capitol.
However, Argentina did not take heed of the stop-and-go summer agenda and has remained active throughout the summer at the negotiating tables of the main international organisations and Joe Biden's own government. Argentina could provide a paradigm shift in the Latin American region, one which will revive or bury Western strategy in world geopolitics. While the Russian invasion of Ukraine has taken centre stage, Argentina's "uncertain" electoral future has generated special interest from the North American giant in the form of the policies of well-known Sergio Massa, the complete strategy of Patricia Bullrich as she seeks to gain a foothold, and the plan of the unknown Javier Milei.
"After months of negotiation, we thought we had a holiday from the Argentina case. But we still can't switch it off in the face of the continuous developments in the country," sources in Washington confessed after the approval of the fifth and sixth reviews of Argentina’s debt programme with International Monetary Fund. It was not only technical staff that were involved, the interests of different countries were also on display, although the US government was the one that gave the final go-ahead. The aim was to release the latest disbursements, based on turning a blind eye to the economy's figures, in order to exit the electoral scene – but the subsequent surprise, the victorious figure of Milei and his dollarisation plan, has forced the United States to keep a close eye on the local ups and downs. "Campaigning is one thing, governing is quite another," they repeat in diplomatic circles.
There is a coincidence that cuts across the public sector, as well as the private sector: the country's future lies in benefits that can be generated by the exploitation of natural resources. "There are many companies that have invested in energy and mining and others that want to be there. We are very interested," admits one US official. At a time of rising demand in these sectors, the core nations are hoping for a stable business environment. To this end, US companies are calling for "clear rules" and "predictability" for investment in Argentina. Biden's government repeats the same axiom. And, despite the uncertainty generated by the three-thirds outcome of the PASO elections, the owners of global finance – including the powerful New York investment fund Blackrock – are celebrating the fact that "80 percent of the electorate voted market friendly.”
"It is more difficult to imagine what Javier Milei's administration will be like than in the cases of Sergio Massa or Patricia Bullrich," they maintain from the White House, where they see "too many unknowns in the vote" arising from the results of the primary elections.
It is clear that Massa has the advantage in the links he maintains with some sectors of US power: "We know him from the relevant positions he has held in his public life and the fact that he is a minister is a positive thing, because he takes responsibility for what is coming ahead." But sources in Washington do not close the door on Patricia Bullrich, the opposition representative for Juntos por el Cambio: "We understand Bullrich's proposals very well, but the plan needs more details," said another source closely linked to economic areas. All voices, however, agree that "neither Massa, nor Bullrich, nor Milei have presented a concrete plan for the future.”
To the point of exhaustion, in Washington they make it clear that neither the United States nor international organisations "will get involved in Argentina's sovereign decisions," which is why they avoided supporting or reversing the eventual dollarisation plan put forward by Milei. "He told us that it would not be done immediately," sources in the US said. However, almost as a kind of warning, they recall that the creator of convertibility, Domingo Cavallo, tried to resort to a basket of currencies in his plan to escape from the parity of the peso with the dollar that he was able to implement in the 1990s, and which imploded in 2001. "Milei presented advisors related to that process," said one source – in Washington they aso want to avoid a repeat of the last great Argentine crisis of 22 years ago.
Carlos Melconian, who would be economy minister if Bullrich reaches the Casa Rosada, also visited the IMF’s offices recently. Before that, Minister Massa had been there to close an agreement on the revision of targets. With Milei, meetings were virtual. "The opposition spaces are putting together their plans and their teams, while the government is concentrating on getting through the crisis, but has not revealed whether it has a plan for after December 10," they observe in Washington. For the time being, there is a central concern for the Fund: "The necessary recommendations were made, but the government is free to make its decisions. It will then have to argue for its measures in the November review. What is not clear is the plan, because after the devaluation the gap fell, but then rose rapidly. And the pass through [ transfer to prices] was high. If there are no accompanying measures, what is the point of the devaluation?" a spokesperson for the multilateral lender asked.
The Macri effect
"Saying that the market solves everything is a mistake," says Alejandro Werner, a former IMF director for the Western Hemisphere, during a talk with journalists during the 14th edition of the Key Opinion Leaders programme organised by the American Chamber of Commerce in Argentina, AMCHAM. With the same thoughts of the dollarisation plan and the shock opening of capital accounts, he assures that Massa's agreement with the Fund was "symbolic.”
"The Fund is going to distance itself from Argentina as far as possible, and Massa from the IMF," says the current analyst at the Georgetown Americas Institute, while acknowledging that the main problem that IMF Managing Director Kristalina Georgieva had to face at the beginning of her term was the solution to the conflict that had generated the record US$57-billion loan to Mauricio Macri's government. The arrival of the pandemic solved part of that problem, or at least postponed it.
In the White House, they believe that the former president's presence on the scene has two meanings. On the one hand, they believe that he could be the key to providing governability for Milei, in the event that the libertarian reaches the Casa Rosada but does not have the legislative structure to implement the promised measures. "He could also be the one to put limits on the crazy things" that the libertarian wants to do, they say. But, on the other hand, the figure of Macri also represents the "frustration" generated by the lack of answers to the hope for a change of era that voters had chosen in 2015. "Everyone was convinced of the change, but the fundamental reforms never came. That is part of the scepticism that went into the vote for Mile – if he is beaten, there could be a loss of prestige," said an analyst linked to the Democratic Party in the United States.