Monday, June 24, 2024

OPINION AND ANALYSIS | 28-01-2022 17:07

President’s trip to Russia, China puts Argentina’s ‘círculo rojo’ on orange alert

Concerns among the group of influential decision-makers dubbed the “círculo rojo” are increasing, with unrest over the president’s tour destinations and doubts over a new IMF deal.

Rather than unblocking talks with the International Monetary fund at a crucial time, last week’s meeting in Washington between Foreign Minister Santiago Cafiero and US Secretary of State Antony Blinken only added to the tensions.

The foreigm minister’s agenda had prioritised speeding up the agreement with the IMF. A lofty goal considering that March is approaching and Argentina will have to face maturities of around US$4 billion and does not have the money to pay. It therefore needs to close an agreement, though it has been negotiating already for the last two years without sealing a deal.

Without such an agreement, the country would be heading towards a kind of consensual default – i.e. the turning of a blind eye to the possible non-payment of any maturity in exchange for a return to the discussion table. But that would not spare the already weakened national economy from an extremely delicate situation.

Returning to Tuesday's meeting, as the head of Argentina's foreign policy, Cafiero was asked about many other issues. For example, Buenos Aires’ ties with other Latin American countries that the United States does not consider democratic, the president's imminent trip to China and Russia, and the pace of some corruption cases in the courts.

The press releases afterwards from both sides did not coincide. They even seemed to refer to quite different meetings. Added to this national embarrassment was a completely unexpected fact for the national delegation: there in Washington, they would’ve also liked to know what many Argentines here in Buenos Aires are still wondering: what happened with Alberto Nisman’s murder?

And so the meeting, which was aimed at obtaining a favourable nod from Joe Biden's government, which has a majority seat on the IMF board to approve the agreement with Argentina, collapsed. And it has taken the discussions to a critical point.

In the so-called ‘círculo rojo,’ business leaders (CEOs and, fundamentally, the few remaining owners) feel that there is a critical point for companies in Argentina and their possibilities of financing themselves. The further away an agreement with the Fund is, the more distant the horizon for the private sector.

As if that were not enough noise, the government has also confirmed President Alberto Fernández's trip to Russia and China early next month.

The president’s decision to take part in the inauguration ceremony of the Winter Olympics in Beijing does not spark alarm, despite some nations boycotting the event. What really puts the red circle on orange alert is the economic agenda for the trips.

President Fernández has chosen countries where the boundaries between the state and the private sector are very blurred. And this is a mirror local businessmen are afraid to look into. If there is one thing that the business leaders have been focusing on, it is what they consider to be signs of a government onslaught against the private sector, as well as the attempts within sectors of the ruling coalition to favour what the establishment calls "pseudo-businessmen who are friends of power" with new business deals.

If there is a core problem that the government has not managed to untangle, it is inflation. The lack of a macroeconomic plan, as demanded by the IMF, could tempt some officials to look for culprits among companies that commit abuses. The "hunt” for “culprits” is a check on everyone, and in the meantime, Argentines' incomes are in intensive care.

by Alejandra Gallo, Perfil


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