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OPINION AND ANALYSIS | 24-07-2021 00:35

Taking sides in the new cold war

Joe Biden wants his country to lead a coalition of the willing to help him wage what, he hopes, will remain a cold war against China, Russia and other autocracies.

As well as telling North Americans that when travelling abroad it would be better for them to give certain crime-ridden places a wide berth, the US State Department regularly advises investors against putting their money in dodgy countries where the risk of losing it is high. Unfortunately for just about all of us, Argentina is one such country. In its latest report, which was made public a couple of days ago, the State Department warns businessmen interested in earning an honest penny here that they would run into a wide range of difficulties, among them corruption, untrustworthy courts, unpredictable interventionist policies, rigid labour laws, capital, export and price controls. As far as Joe Biden’s administration is concerned, Argentina is not for them.

For those Kirchnerites who thought that under the man they amused themselves by calling “Juan Domingo Biden” the United States would be on their side, all this must be extremely galling. They hoped that – thanks to the largely imaginary affinity they saw between their brand of Peronism and the left-leaning Democrat ethos pushed by Bernie Sanders and a like-minded “squad” of legislators – the new US government would be as kind to them as Donald Trump’s had been to Mauricio Macri and his team mates. Instead, they have just been reminded that there is little to choose between Biden’s approach and that of the Wall Street vultures who dared to confront Cristina Fernández de Kirchner when she occupied the Pink House.

The State Department’s willingness to treat the Kirchnerite government’s efforts with open contempt could have unpleasant consequences not just for Argentina but also for other countries in the region – at stake are some very important geopolitical issues. Cristina and the men and women surrounding her have already made it clear that they find it far easier to get along with Vladimir Putin, China’s Xi Jinping, the Iranian ayatollahs and the squalid dictators running Venezuela, Cuba and Nicaragua than with the North Americans and Europeans. 

There is a straightforward reason for this; autocrats take a pragmatic view of corruption. It depends on who steals from whom and what they propose to do with the loot. When malefactors take what they regard as an unhealthy interest in politics and start dreaming aloud of reaching the top, they have no qualms when it comes to putting them to death for their sins, as frequently happens in China, but if they play ball their behaviour is tolerated because it makes them vulnerable to officially-sanctioned blackmail.

Unlike Trump, who assumed the United States was powerful enough to go it alone and could therefore do without foreign allies, Biden wants his country to lead a coalition of the willing to help him wage what, he hopes, will remain a cold war against China, Russia and other autocracies. In his way, he is restoring the battle lines that crisscrossed the world when the Soviet Union was still a going concern and the US was determined to “contain” it and, if possible, roll it back, even if this entailed displacing by devious means legitimate foreign governments that showed signs of going over to the enemy. While it seems unlikely that Washington will revert to the blatantly interventionist policies of the past, it would be astonishing if it did not apply economic and other pressures to a similar end. Indeed, by distributing large amounts of surplus vaccines free to poorer countries, it is already doing so.

Seeing that the Kirchnerites have no choice but to interpret the latest State Department report on how the Argentine economy is doing in political terms, it is bound to prove counterproductive. After all, they can hardly be expected to adopt what they would call a “neoliberal” strategy akin to Macri’s in order to please a country most say they greatly dislike. When debating with the opposition, government spokespeople already insist that the kind of policies the US indirectly recommends have already been tried here by Macri and failed miserably. So instead of taking seriously the criticism of what they are up to and promising to do better, they will simply brush it off and carry on as before, which virtually guarantees that sooner rather than later the economy will go under, as Venezuela’s did several years ago.

Since the middle of the last century, when Juan Domingo Perón tried and failed to change course after the gold ingots the country had piled up during World War II and its aftermath ran out, all Argentine governments have faced a nasty dilemma. They could either undertake the much-feared structural reforms that would be needed to make the economy resemble those of countries which were rapidly getting richer, or they could leave things much as they were and pray that nothing really bad happened under their watch.

Time and time again, it was realised that the political costs of the root-and-branch reforms that would have to be carried out to bring the economy up to par with those of the developed countries would be far greater than any government could comfortably tolerate. As the years went by, they became more prohibitive. Perhaps some members of the Kirchnerite government, such as the Economy Minister Martín Guzmán and even President Alberto Fernández, when he is not play-acting, do believe that in the longish run “orthodox” structural reforms would benefit most people, but even so they know they cannot ram them through, so they take a back seat and let others defend their inaction by going on about national sovereignty and the harm all Kirchnerites agree was done by Macri’s half-hearted attempt to do what all serious economists said was necessary to put an end to Argentina’s long and increasingly painful decline. 

The US State Department’s comments on how the government is handling the economy play into the hands of hardliners who enjoy blaming the country’s desperate plight on the evil machinations of the “empire.” For them, China (in this game, Putin’s Russia is a bit player) is not a threat but a most welcome alternative – after all, the Chinese, who these days have plenty of money, have yet to acquire the habit of telling their prospective partners how best to manage their affairs, as the US habitually does, and have no interest at all in the ethical questions Westerners are prone to worry about. Their current indifference to such matters can be attributed to the lofty conviction that it would be foolish to expect foreigners to measure up to the exacting standards prevailing in the Middle Kingdom, but should they get the upper hand, as they well could in the not too distant future, they would surely become far more demanding.

James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).

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