Tuesday, February 20, 2024

OPINION AND ANALYSIS | 12-02-2022 09:27

Playing with fire

Despite claims of an historical “Peronist third position,” the reality is Argentina has an impossible debt with the International Monetary Fund and it needs all the support it can get to restructure it.


It’s easy to criticise the Alberto Fernández administration for appearing amateurish, particularly at political communication. It cannot be easy to deal with such an eclectic coalition as the Frente de Todos, especially when the fulcrum of power lies not with the president but with his second-in-command, Cristina Fernández de Kirchner. Yet, Alberto’s informal style has landed him in trouble before, and such tendencies may be exacerbated on the international stage, particularly at a moment of extreme tension between global superpowers. Argentina has found itself in the middle of an escalation of a geopolitical conflict between the United States and Russia, whilst China is looking to consolidate its global influence. With the war drums beating louder every passing day at the Russian-Ukrainian border, Fernández took his official delegation to Moscow and Beijing, where he held meetings with Vladimir Putin and Xi Jinping. Weeks before, his Foreign Minister, Santiago Cafiero, made his way to Washington for a tête-à-tête with US Secretary of State Anthony Blinken. And throughout his presidency, Alberto and his Cabinet have made the case of courting European and South American leaders.

Despite claims of an historical “Peronist third position,” the reality is Argentina has an impossible debt with the International Monetary Fund and it needs all the support it can get to restructure it. For better or for worse, Economy Minister Martín Guzmán has reached an agreement with the IMF about the general terms of the deal, yet it requires formal approval by the board and then it must pass Argentina’s Congress. All of this takes time and the clock is ticking as a debt payment in March would find the Central Bank without reserves. While the IMF is a multilateral institution led by Kristalina Georgieva, it is well-known that the US Treasury holds the keys to the board, which ultimately calls the shots. As revealed by Mauricio Claver-Carone, president of the Inter-American Development Bank, the record bailout given to the Mauricio Macri administration in 2018 was pushed by the Trump administration for political reasons. They didn’t want to see the Kirchnerites back in power.

Argentina’s recent decision to join the Belt and Road Initiative and extend its currency swap with China, coupled with investment and collaboration with Russia, appear a reasonable objective for the Foreign Ministry in a multilateral and complicated world. Deepening diplomatic and economic ties with the United States to become a sort of regional partner, particularly as several key allies have seen leftist leaders take the presidency, is also a valid and not mutually exclusive goal for the ministry now run by Santiago Cafiero. Ultimately, Argentina needs foreign direct investment and the opening of new markets for its agricultural products and growing knowledge economy and digital services sector. It needs to put its currency and balance of payments crises in its past and become a credible player in international markets. It needs technology and infrastructure. And it has a host of other objectives that include the continued territorial claim over the Malvinas and the Southern Atlantic Islands and even the push to get regional problems solved by regional actors without foreign intervention, including from the United States. The support of powerful geopolitical players is key for Argentina’s agenda.

It is difficult to justify, then, President Fernández’s comments during his Eastern tour lashing out at the US and the IMF. “I’m certain Argentina has to stop being so dependent on the Fund and the US and has to open up other places, and that is where it seems to me that Russia has a very important place,” he said during his meeting with Russian Premier Putin. “I’ve read that I’ve bitten the hand of who’s helped me, but, who helped me? [In our negotiations] With the Fund I was helped by the European nations, I was helped by China, by Russia, the American countries, and stop counting. I know who did a lot for that bailout to be given, that I know, the previous US administration. I’m not saying it, the Fund said it,” Fernández told reports on a video call from Barbados, the final leg of his overseas trip.

When reporter Cecilia Devanna asked presidential spokesperson Gabriela Cerutti this week whether the Fernández-Fernández administration had any intention to put out a statement regarding the president’s comments about the United States, she was met with a fierce response and told to go study journalism. Devanna was referencing reporting by journalists Jorge Liotti and Roman Lejtman in their respective outlets that indicated US State Department officials weren’t happy with Alberto Fernández and his utterances. Washington, according to off-the-record sources in the State Department, had worked hard for the IMF agreement (which still needs to be approved), the US had donated vaccines and is concerned that as head of the United Nations Human Rights Council, Argentina made no mention of the massive build-up of troops at the Ukrainian border. Indeed, it is well-known that several Argentine officials apart from Guzmán worked with contacts in the US — from Sergio Massa to Jorge Argüello and Gustavo Béliz — and that ultimately the US State Department and Treasury gave their blessing for a deal. As Alberto later admitted, they were forced to announce some sort of progress to avert a run on the peso.

Alberto has been pitching for a face-to-face meeting with US President Joe Biden ever since he took office. He felt they shared a spirit of social democracy, along with an affinity with Pope Francis. Yet, the only thing he managed to secure was a quick talk on the sidelines of the G20 meeting in Rome. “The Democrat distrusts his Peronist colleague and decided to postpone a meeting until further notice,” notes Lejtman.

It is unlikely that these sloppy comments by Alberto Fernández will derail the IMF agreement, but his Cabinet is already working backchannels in order to fix the situation, despite Cerutti denying the government will react in any way at all to off-the-record quotes. As in previous situations though, the Fernández-Fernández administration is making things more difficult for itself.

Agustino Fontevecchia

Agustino Fontevecchia


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