Tue, 25 Feb 2020

Perspectives on the Newly Elected Fernandez's Foreign Policy

E-International Relations
26 Jan 2020, 16:56 GMT+10

Latin America has been observed by electoral specialists for a long time. It has been an interesting case study from the electoral point of view with many twists between left and right-oriented governments. These represented significative changes in the foreign policy agenda between multilateral negotiations, and articulation and agreements with developing countries. This article aims to discuss the changes that may happen in Argentina with the election of a new government regarding its relationship with other countries. Special attention will be given to its regional behavior focusing on Brazil, Argentina's long-term partner with whom it has several signed agreements, especially now that the partners have governments of different ideological orientations.

In the October 2019 general elections, Argentina went to the polls for the main test of Mauricio Macri's liberal economic program and one of the most polarized presidential races of recent decades in Argentina. Seeking re-election, Macri attained 40.3 percent of the votes and yet was beaten by the 48.2 attained by his main opponent, Alberto Fernandez, elected in the first round among other four candidates that did not reach 10 percent of the votes together. More than the defeat of a mandate marked by pressure from its creditors and the unpopularity resulting from deteriorated economic indexes, Fernandez's victory represents, with the former president Cristina Kirchner as his vice-president, a return of Peronist forces ahead of the country and of a left leadership in Latin America's current conjecture. From the Justicialist Party, the new president has preciously integrated Raúl Alfonsin's Economy Ministry (1983-1989), approached Peronist liberal-wings under the Carlos Menem government (1989-1999), and advised Nestor Kirchner's candidacy when he became the Chief of Cabinet for his entire tenure (2003-2007). In Cristina Kirchner's government (2007-2015) he maintained the same post but left on her first year of mandate remaining politically distant since then. In this sense, Cristina's recent waiver to run for president even though she led the polls, and his choice of her as plate partner in the Frente de Todos coalition, reflected an effort to broaden its compositions among heterogeneous and fragmented political sectors, as Alberto's own political trajectory.

In mid-2018, Argentina came to terms with the International Monetary Fund (IMF) on a loan of US$44 billion, that became IMF's largest volume of money ever granted by the Fund in its history, which was expanded to US$57 billion a few months later. Intended only as a stand-by agreement to increase liquidity and strengthen confidence amid the country's cambial crisis, 83 percent of the loan that Macri's administration received, around US$44 billion, ended up being allocated to repay other debts, that undefined restructure attempts of debt with private creditors soon pointed to the same path for IMF's terms. This resulted in extremely high levels of debt that may express the major challenge that the new government internally inherits, and suggests where Argentinian foreign policy priorities should be placed. However, Fernandez seems to have other priorities in foreign policy which he has sought to address in the programmatic terms of its political platform and by pronouncements and meetings he has held since its campaign.

Regarding the country's IMF bailout requests and the imminent debt restructuring, the political program of Frente de Todos (2019) phrases an ‘irresponsible foreign indebtedness' that ‘will place the next government's foreign policy in front of a system of concentrated powers and interests'. A reactive stance that Fernandez confirmed by pointing to the impossibility of applying further adjustments in conversation with IMF representatives and later indicating his refusal of receiving the remaining US$11 billion that were in standby from the total agreed by Macri with the Fund.

Further, through a diagnosis that unipolar structures are giving place to a ‘gradual emergence of a multipolar system', the program denounces the central role that relations with the United States would have gained in the previous government. Proposing, in addition, to lead broader economic relations with China in accordance with the multipolar trend and attract Chinese foreign investment in the region, a matter addressed by Fernandez's balancing post-election meetings with the Chinese ambassador about a range of new and ongoing Chinese-built infrastructure projects. He also met with the American ambassador in the same month, who reinforced American support to 'overcoming Argentinian economic challenges'.

Concerning regional issues, the platform points to a ‘loss of centrality of the integration project‘, defends the strategic nature of relations with neighbours and the possibility of restore initiatives that were blocked, such as Unasur. In effect, Fernandez has already affirmed having no intention to leave the Lima Group, which supports Juan Guaido's leadership and considers the possibility of interventions in Venezuela's crisis. However, his position is probably in accordance with the position of the Puebla Group, that met for the second time with Fernandez's reception in Buenos Aires, that opposes any use of force that breaks a peaceful settlement of disputes in the region.

Finally, the regional fragmentation among political and economic models, along with different interests of regionalism and global insertion, expose the most probable tensions in relations with the Brazilian government. Fernandez's requests for the release from prison of the former Brazilian President Lula da Silva (2003-2010), whom he visited in prison, led to openly hostile mentions by the incumbent President, Jair Bolsonaro, who put under threat Brazil's permanence in Mercosur if Fernandez and Kirchner won the elections. The case of the former Brazilian president, that Fernandez accused of being an 'unforgivable arbitrary situation', closely resembles Cristina Kirchner's situation when she had an arrest warrant issued for 'treason against the homeland' because of a 1994 terrorist attack, after giving signs she would run for the presidential elections. Certainly, while the context imperatives of these frictions cannot be ruled out, Fernandez's first visit to Lopez Obrador in Mexico could mean a rearrangement of proximity among leaders of the region's largest economies.

At first glance, it is often pointed out that given an internal scenario of marked concessions, the government could use external interactions to offer fewer moderate responses to the electorate or to remind supporters of its orientation. However, this logic tends to suggest that foreign strategies could be formed unconnected from domestic audiences and commitments, or that the international environment could sustain direct connections to the ballot box's will. Both possibilities are questionable. Yet, among Argentinian domestic and structural constrains, different conjunctures could prevail and a troubled relationship with Brazil is the case in many of them. The unfolding of these stances puts the spot on the interdependent relation with Argentina's second largest trade partner. While Brazilian diplomats declared they expected another approach from Fernandez once in office, Argentinian Chancellor Felipe Sola, one of the first confirmed names of the new cabinet, immediately declared that relations will be developed ‘not only with the presidents who are friends, but with countries we have obligations and interests'.

In Mercosur, outward-oriented relations have taken the central stage. The agreement with the European Union, whose negotiations were closed on June 2019, meant a concert of broad trade issues between blocks that represent 25% of the world economy. This also implies that the legislators' preferences of each party have been mapped out since their approval is required for the agreement's implementation final process.

In Argentina, however, the new government will have to conclude the course of an agreement that it did not negotiate and obstacles could be posed during the technical revisions or the ratification itself. The timetable for these final steps has yet to be defined. Considering that foreign policy matters tend to follow legislative support for presidential initiatives (Ribeiro, Urdinez, 2017), delays or renegotiations still could be articulated. Even though sectored interests within Mercosur economies are likely to outline these options (Malamud, 2019). Additionally, old Brazilian pressures to Argentina's phytosanitary barriers, especially the list of non-automatic licenses, adds a reduction in Mercosur's common external tariff which could be a threat to the import-substitution policies set as key pledges during Fernandez's campaign. Lacalle Pou's victory in Uruguay coordinates Brazil, Paraguay and Uruguay for economic openness and the integration of local producers into global value chains, even though the expansion of mostly primary competitive sectors may deepen the bloc's trade asymmetries with its partners. With Venezuela's indefinite suspension, Argentina's sole resistance to this agenda will still be defined.

The restructuring of Argentina's debt with private creditors and, concomitantly, with the IMF, will ultimately be the closest challenge of the new president. In addition to legal strings attached to the national debt the attempt to extend the terms of maturities was defined since the previous period as the only alternative. The debt repayments suspensions, however, should be conditioned to fiscal adjustments that are unlikely to be agreed without the support of the United States, the fund's largest shareholder. US eventual incentives to approach Fernandez may be American companies' investments in the country and long-term intentions to reduce China's economic influence in the region. However, the trade war between China and the United States may cool down this dynamic. Rather than reconfiguring trade flows, as Argentina occupying US's place of soybeans exports for China, it could overflow to the escalation of protectionist effects between them.

By the beginning of the decade, the interaction of emerging and traditional powers on reforming the international financial system of global governance, as the expansion of China's foreign investments, suggested that bilateral solutions and regional money funds were starting to become a reasonable forecast for financing and prevention of global southern crises (Chin, 2010). In fact, Argentinian relations with China is underpinned by a range of investment packages for infrastructure projects, including nuclear power plants, two major dams and a US$ 2.5 billion upgrade of a rail network, that were also carried on by Macri's government, despite his strategy in the international finance architecture.

At the regional level, on the other hand, Fernandez's announcements of US$ 1.6 billion in loans from Fonplata (Plata Basin Financial Development Fund, a multilateral financial organization formed by Argentina, Bolivia, Brazil, Paraguay and Uruguay) to fund future development plans in Argentina, and the US$ 4 billion pledge from the Development Bank of Latin America (CAF) to finance infrastructure ongoing projects in the country, may reactivate important sectors of the economy, but it still remains to be seen whether regional development banks or arrangements could play bigger roles as Argentina seeks alternatives for the financial crisis. Thus, the relations of Argentina with the centers of international financial and political power, as in previous periods, will largely govern the maneuvers of the country's foreign policy for the beginning of the next decade.

Common foreign policy issues of South American countries will be prominent themes in the coming years. Their relationship with the United States and China, as well as the future of Mercosur, depend on the relationship between the two major powers. Changes of government would likely have a major impact and, since some of them have new governments starting in 2020, scholars should be vigilant regarding the relationships between governments with distinct ideological profiles and preferences. Considering there is a strong interdependence between them, individual action cannot be an option.

References

Chin, G.T., 2010. Remaking the architecture: The emerging powers, self-insuring and regional insulation. International Affairs, 86(3), pp.693-715.

Frente de Todos. 2019. Political Program of 'Frente de Todos' coalition. Retrieved from https://frentedetodos.org/plataforma

Malamud, A., 2019. Overlapping regionalism, no integration: conceptual issues and the Latin American experiences. Politica Internacional, pp.46-59.

Feliu Ribeiro, P. and Urdinez, F. 2017. ¿Hay fo presidentes en Argentina?: Un analisis comparativo del apoyo legislativo en las politicas exterior y domestica (2001-2014). Revista de Ciencia Politica (Santiago), 37(1), pp.95-119.

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