IN PRAISE OF CYNICISM

The G20 summit has come and gone. Given the amount of time and space dedicated to the subject, some stocktaking seems advisable. Not only on what seemed to be the Argentine government’s main objective — the inclusion of the holdout/ “vulture” funds issue on the G20 agenda — but also in terms of foreign policy priorities.

The good news for ministers Kicillof and Timerman is that they can show written proof of their feats. Those who feel close to the government will agree with Kicillof that it is a landmark achievement. Those in the opposition will remark that a 17-word mention in point 12 of the final document (“We welcome the progress made to strengthen the orderliness and predictability of the sovereign debt restructuring process”) is not too impressive given it is part of a 21-point, 2,343-word document..

The same applies to the paragraph included in the “Issues for further action” annex. Supporters will see it as more proof of a job well done. Opponents will remark that the paragraph is only a recommendation to follow the advice issued by the International Capital Markets Association (ICMA) last August. Moreover, those who prefer to base their analysis on cynicism rather than political preferences, will remark that the phrase “issues for further action” often become the worst-kept promises found in these kinds of international documents.

To be fair to the ministers, it is true that their achievements were not obstacle-free. Argentine bureaucrats are no different from their international colleagues. They all seem to enjoy a good negotiation or fight over a couple of lines in a rather lengthy international document that will only be read by a few people, to be then quickly summarized for senior politicians, and more often than not, forgotten during the return flight home from summits. In this particular case, rumour has it that the US was reluctant to allow even a short mention of the holdouts/ “vultures” issue. Hardly a surprise. But this time David overpowered Goliath. And — as usual in this dyad — David plays the role of the morally inspiring nice guy. But, is this good in terms of international politics?

The title of one of the classics on this matter, Hans Morgenthau’s Power Among Nations, seems to have the answer. Power and not the moral high ground is the key instrument of international politics. Argentina is not the US’s David by choice any more than Uruguay is happy about having its own Goliath in Argentina. Do not repeat this to the children, but the desirability of the role of David might be overrated.

However, one values its G20 achievements. The government has to be credited with the honesty of acknowledging that none of these achievements will have an impact on Argentina’s current confrontation with US judge Thomas Griesa and the holdout/ “vulture” funds. Nobody can complain of being misled on the fact that the benefits of this struggle are part of President Cristina’s legacy to the world. The problem is that the world is quite large and often quite alien.

The list of possible beneficiaries does not seem to include Argentina’s Latin American neighbours and partners. Fortunately, for them there is no sovereign debt restructuring on their horizons. Which begs the question: what are the other priorities in Argentina’s foreign policy agenda for, say, the next three years?

One of the biggest challenges is the country’s most important partner: Brazil. Despite winning the elections, President Dilma Rousseff has lost power to the sectors that have better chances of broadening the horizons of Brazil’s international partnerships. And Rousseff — being the able politician she is — will not ignore those signals. The impact on Argentina’s economy, and thus the local political scenario, is likely to be significant.

Still close to home, there is the long list of unresolved issues with Uruguay and Paraguay. They range from trade to energy and once again there are plenty of sectors with grievances against Argentina. True, they are Goliath Argentina’s “Davids.” But in the next few years this Goliath’s power will be hindered by its economy. So some serious thinking and subsequent negotiation seems quite advisable. And, in all three cases, there are bilateral and multilateral factors to be taken into consideration. While it does seem dormant, Mercosur is still there. And sooner or later its founding members will have to decide where they want it to go with it.

Still in Latin America, there are other issues which seem to deserve some foresight. Some argue that Venezuela is at the top of that list. That country’s quite-unstable political situation might trigger surprise changes at very short notice. Given Argentina’s “special relationship” with that country, it is likely that there are a number of loose ends to sort out in terms of both politics and economics. Some of them have more political implications abroad, which transcend Latin America.

First there is the Middle East factor, in which Venezuela seems to play a role associated, in some cases, to the more complicated players in that area. In turn, this bring into focus the relationship with the US, especially the “new” US with a Republican majority in Congress.

And in an interdependent world, this poses some questions about Argentina’s newest “special relationship” — Russia, which is at odds with what members of the opposition will denominate “traditional partners.” The US is, obviously, at the top of that list. In such a complicated scenario, realism (cynicism?) might prove to be the best option for planning Argentina’s future foreign policy.

@andresfederman

CREDITS: BUENOS AIRES HERALD

THOSE WERE THE DAYS

Countries once knew where they stood — and CFK is making her position known too

Yesterday marked the 25th anniversary of the fall of the Berlin Wall. The date is thought to be the symbolic end of the Soviet Union. Or — to put it in Vladimir Putin’s words — the moment when the US became the victor of the Cold War. For some, those were better times. And among the nostalgic are staunch anti-Communists with memories of a more stable, predictable world in which two organized nation-states with quite clear institutional arrangements and decision-making processes managed the big picture.

There was clear communication and established mechanisms for predictable demands which were — at least partially — negotiable. And such demands did not involve the establishment of caliphates or massive religious conversions.

This had nothing to do with kind souls. It so happened that both sides had the military resources to trigger their mutually-assured destruction. And the sheer madness of the idea made them careful. No airplanes crashing against the World Trade Centre or suicide bombers killing innocent citizens in the town markets of the former Soviet Union. Even volatile places like the Middle East had predictable alignments. But make no mistakes — that world was far from perfect.

Behind the peaceful façade both sides would fight “proxy wars” through third countries which would pay the toll of death and destruction. Add Vietnam into the equation and it becomes quite clear that there is not much room for nostalgia. Which — in any case — is a rather useless sentiment, at least in terms of politics. That said, it is also true that in many ways it was a simpler world. A country like Argentina knew that it was aligned with the United States. Even if such alignment allowed for some departures... like the sale of wheat to the USSR back in 1980, in open defiance of the embargo imposed by the US to sanction the invasion of Afghanistan.

History repeating itself

Now, 34 years later, history seems to be repeating itself. And Argentina is — once again — defying a US trade embargo on Russia. This time on account of Ukraine. But, nowadays, the context seems to be quite different.

Argentina did not support the Soviet invasion of Afghanistan, But it is backing Russia’s policy regarding Ukraine. This does not seem to be an isolated decision. The country’s foreign policy seems to be in the process of a major shift. And the government seems determined to make this as clear as possible.

In terms of new alliances, China and Russia seem to be at the top of the Cristina Fernández de Kirchner administration’s agenda. This is not necessarily right or wrong on itself.

Even at the risk of incurring in a simplistic analysis, it should be noted that the Republicans obtained a landslide victory in last Tuesday’s US midterm elections. And that their views in favour of Argentina’s holdout/vulture creditors are noticeably stronger than those of the Democrats, which might make the search for renewed partnerships even more necessary.

But prudence calls for some further examination. Especially, because in bilateral relations it takes two to tango. In the case of Russia, the country is facing serious economic troubles. Some of which are not dissimilar to those Argentina faces, like intense capital flight and a weakened currency. Add to that Putin’s plans to spend a lot on Russia’s military and the final result could be a troublesome partnership. A situation in which the Russian president attempts to rally patriotic fervour to distract his people from an economic crisis is not totally unthinkable. Some even argue that something like that is behind the current situation with Ukraine. Not exactly an ideal partner for a country which, like Argentina, needs some time to recover its breath while it sorts out its own economic affairs.

The development of relations with China seems to require less caution. However, some would argue that Argentina’s policy-makers are overvaluing the strength of that relationship. True, there have been positive noises, perhaps slightly more moderate than those coming from Russia. And the recent currency swap has been presented to the Argentine public as a friendly and generous move by a good friend. Unfortunately, there seems to be no such thing in international politics.

Some critics urge everybody to look at the small print of the — apparently life-saving — swap agreement with China. Rumour has it that the main objective of the swap is to facilitate Argentine imports of Chinese goods. Useful, but a far cry from the epic narrative of certain government-friendly voices which presented the last swap as a quick Chinese move to help out a friend in need. In a perfect world, what seems to be a major policy shift should have strong cross-party consensus. This does not seem to be the case.

Given the fact that foreign policy issues normally do not win or lose votes, there seems to be a serious advantage in getting government and opposition foreign policy-makers to try to reach some sort of consensus on the nitty-gritty of Argentina’s foreign policy approach for — say — the next three years. If all those involved could agree on to a quiet consensus-seeking analysis, committing themselves to not making an electoral issue out of these discussions, they would do a big service to the country, which will make everybody’s life easier beyond 2015.

@andresfederman

CREDITS: BUENOS AIRES HERALD

OPTIONS AND PRUDENCE

All politics are domestic. This includes a country’s international policies. However, governments are or should be expected to base their foreign policy-making on reasons which go beyond short-term local political considerations.

Over the last 30 days, the government seems to have made a significant shift in Argentina’s international alliances and partnerships. This has gone down well with the president’s staunchest supporters.

It seems legitimate, however, to ask some questions about the implementation of these changes as well as the strategic vision behind them.

At the end of last week, the president made public the — very — strongly-worded letter she had sent to Obama to complain about the fact that Nancy E. Soderberg is both chair of the US government’s Public Interest Declassification Board (PIDB) and co-chair of American Task Force Argentina (ATFA). The latter is the aggressive lobbying group that operates on behalf of Argentina’s holdout/vulture creditors.

The president’s point seems quite valid. There is a clear conflict of interest between Soderberg’s PIDB position and her moonlighting as a lobbyist against Argentina. What does not seem an adequate strategy is turning this into an issue at a presidential level. The same point could have been made — for the record — through diplomatic channels. Unfortunately, with equally slim chances of success.

Speeches like the one Fernández de Kirchner delivered at the last UN General Assembly might be important in terms of stating principles. And might earn some political points in Argentina. But not in the US. The same can be said about bravado letters to the US president.

So much for strategy. But there is another (equally worrying) point. ATFA has been around for some time. In fact our controversial moonlighter made a bizarre lobbying visit to Argentina on July 10 which, obviously did not go unnoticed by the government.

According to the PIDB’s website, Soderberg’s appointment dates back to November 16, 2012. But Argentine diplomats were apparently unaware of this conflict of interest.

Thanks to Google, finding out about somebody holding a government and a lobbying job at the same time does not take more than 20 minutes. And googling a player in the confrontation with the holdouts/vultures would be — one expects — a routine job for the diplomats involved.

So either the Argentine Embassy in Washington was looking the other way or the information was sent back to Buenos Aires and nobody acted on it before last week. Or, there might — just might — be another explanation. The government has been aware of the situation the whole time but made the tactical decision to only bring it up now.

This would be very good news. Especially because Argentina seems to be making a major foreign policy shift. At a time when tensions between Russia and the EU-US partnership are on the increase over issues like Ukraine, the Argentine government is getting significantly closer to Russia. It could be argued that business is business.

Consequently, selling foodstuffs despite the EU-US sanctions on Russia is simply a commercial decision. But the Argentine government’s narrative, which might delight its supporters and even go down well with part of the Argentine electorate, is not going down well with Western Europeans or the US. Which is not necessarily bad news.

It is not written in stone that a South American country cannot change its alignments and alliances. In fact it could be a very good strategy. Many of the president’s closest supporters are convinced that the traditional Western powers are falling apart and that the time has come for a change. But such a shift needs not only a well-thought, long-term strategy but also fine-tuned and professional implementation. It also requires a strong domestic consensus. One wonders which of these conditions — if any — have been met.

Argentine diplomacy does not demonstrate such a fine record. In fact, things with our brotherly neighbours are not exactly brilliant. Mercosur is frozen. The Uruguayans are not happy with Argentina. And the person most likely to become the next president of Uruguay, Tabaré Vázquez, is not precisely in love with Argentina’s current administration. In Paraguay, many say Argentina has a “vulture” policy regarding Yacyretá. And before thinking that powerful Brazil’s Dilma Rousseff will stand by us, perhaps we should think twice.

The Brazilian business sector keeps complaining about Argentine protectionism. True, their candidate lost the election. But Roussef’s advantage is narrow and she has already signalled her willingness to have a dialogue with all sectors.

Perhaps Argentine politicians should remember that Russia is far away, so keeping foreign policy options open might be wise. And that prudence is the best element of courage.

@andresfederman

CREDITS: BUENOS AIRES HERALD