A TIME FOR CONCERN

Uncertainty over Argentina’s future foreign policy

In any nation, presidential elections trigger doubts about future foreign policy prospects. That is fairly normal and to be expected. But the particular situation of Argentine politics, as well as the nature of the issues and threats that this country faces, not to mention somewhat limited national capabilities, seem to place it in a highly vulnerable situation.

Perhaps the original sin is the total absence of an explicit basic foreign policy consensus. This conspires against the country’s predictability, a key diplomatic asset. And there are question marks about a number of issues — and even threats — some of which are quite urgent and serious.

One of issues, trade relations with Brazil, is somewhat immediate and has a direct impact on business and employment. To make matters worse, Brazil is facing serious economic problems of its own, which will affect its trade policy. Diplomatic relations with our big neighbour are far from ideal. And any decision or negotiating position offered by Argentina between now and October 25, or November 24 if there is a second round in the Presidential elections, are — of necessity — short term. So it might be prudent to expect a stormy 2015 on this front.

Then there is the — more global — issue of international alignments. The current administration has made a serious shift in Argentina’s foreign policy which — it should be stressed — is quite legitimate, whatever the views that different sectors have about them. China and Russia seem to have replaced the US and the EU as significant partners. And as a result, Argentina has entered into a number of agreements.

The main opposition politicians have been quite critical. Moreover, and to put it candidly, even the FPV hopeful that today seems to be the best positioned, Daniel Scioli, is known to have more traditional preferences in terms of international links.

However, the agreements are there, and Argentina’s partners — both the new and the traditional — must feel intrigued about what will happen after December 10, 2015, if the opposition gets into Government. It should be noted that some of these agreements are quite tight as well as sensitive.

The Chinese aerospace base in Neuquén is a good case in point. It does not make Europe and the US happy. But it might be quite difficult to disengage from that particular situation without paying high costs diplomatic, political or of other kind.

So: will everything remain unchanged or will the new government try to disengage from those situations which would complicate a return to the traditional policies? The question is far from being merely academic. And it could link to another of Argentina’s current vulnerabilities.

Many observers agree that Argentina’s reserve position and financial liabilities (including Judge Griesa’s plaintiffs) is far from brilliant. In addition, financial support — or at least endorsement — from the EU and the US is at a standstill, which has contributed to the current situation. In this context, the Chinese swap/loan agreements have proved to be quite helpful to this government.

Could Beijing use the swaps as leverage to insure the stability of its Neuquén base if the opposition is seen as the next government? And, conversely, are the North Americans and the EU prepared to offer the financial support they would grant to a government of different sign even if the Neuquén base remains in place?

Then there are domestic situations with serious international implications. The Nisman case is the best example, not least because it has personal implications in terms of possible legal liabilities for the president and others in the government.

On March 20, an Israeli minister visited Argentina to participate in the event commemorating the anniversary of the terrorist attack on the Israeli Embassy. In his speech, he spoke highly of the deceased prosecutor. A number of the opposition politicians share the Israeli minister’s positive assessment of Nisman.

But also present was Cabinet chief Anibal Fernández, who badmouths Alberto Nisman on every possible occasion. Definitely a curious situation which does not help the current government’s — already strained — diplomatic relationship with Israel.

Although this in itself is not dangerous, it should be noted that the Nisman /AMIA — as well as the Israeli Embassy — cases are really about terrorism and terrorists. And the disagreements about intelligence and counter-terrorist policies between government and opposition are very evident. This is not safe.

Such divide could tempt a terrorist action so as to stage a provocation in order to benefit from the subsequent confusion. Especially at a time when Argentina’s intelligence services reach new lows every day.

Right now there are a number of non-professional new agents, which seem to have been recruited for their politics and not for their specific experience or professional training, both of which seem to be totally absent from their qualifications.

Clearly, Argentina is quite vulnerable on the intelligence front. And this is — or should be — a cause of serious concern for everybody.

@andresfederman

CREDITS: BUENOS AIRES HERALD

OBAMA’S MISTAKE

The US decree transcends Maduro and will affect regional politics

An executive order issued by the US President stated that Nicolás Maduro is a threat to the United States. He was right: Maduro is a threat. But — and here is the mistake — Maduro is a threat to Venezuela and its citizens, not to the US or the North Americans. He has managed to cripple his country’s economy and has several opposition demonstrators dead on his record, not to mention the recent suicide (?) of a jailed opposition politician.

As Santiago O’Donnell — one of Argentina’s most knowledgeable and honest specialists in world affairs — wrote in his (reading-worthy) blog, Obama’s executive order has provided Maduro with “a phoney certificate of heroic anti-imperialism.”

Unfortunately, Obama’s mistake transcends Maduro and will affect regional politics and, perhaps, even his own presidency. The US’s relationship with Latin America has never been easy and a certain level of anti-US sentiment has always been politically correct among many sectors in the region. In the last few years, there has been a certain thaw in these feelings. And the US’s recent negotiations with Cuba have contributed to this. But the executive order, which brings back bad memories of the worst aspects of the US policy toward the region, is like a bucket of cold water on such expectations. Even the politicians who are friendlier to the US were forced to voice their criticisms, however reluctantly.

UNASUR is also affected. Maduro, as well as his defunct predecessor and mentor, Hugo Chávez, imagined this regional organization as an anti-US bastion of sorts. However, the presence of US-friendly or more moderate countries has so far prevented this, and UNASUR is a more reasonable regional forum than what many expected. But the executive order might have changed this. The organization’s statement, released two days ago was — of necessity — quite harsh. And it defined Obama’s decree as “an interventionist threat to sovereignty and the principle of non-intervention in the internal affairs of other states.” Moreover, they called on Washington to revoke the decree. A tall order.

If Obama revokes the decree, he will face a barrage of criticism from the Republican opposition which will accuse him of going soft on US enemies. And some within his own party may share that view. In fact, as O’Donnell suggests in his blog (http://santiagoodonnell.blogspot.com.ar/2015_03_01_archive.html#2277113325089002693 ), the Obama administration might have issued the decree as a token gesture to compensate the opposition for the current negotiations with Cuba.

So Obama is in a difficult position from which it seems impossible to recant. And so is UNASUR. Consequently, the best that both sides can expect — and hope? — is for the whole incident to be forgotten as soon as possible. Which, given Maduro’s reaction and the possibility of the Republicans getting into office next year, does not seem a realistic scenario.

Another consequence of Obama’s decision is that it has provided Maduro with a God-given excuse to tighten his grip over Venezuela. Waving the threat of the powerful US enemy, it will be easy for the government to silence the dissenters’ criticisms and, perhaps, even throw into jail those which are uncomfortably vocal.

Some pro-Maduro commentators argue that, traditionally, this kind of executive order issued by Obama precedes an armed intervention in the targeted country. This writer does not believe this to be the case. But — with the excuse of the US threat — Maduro’s government is engaging in a big military exercise. Allegedly, the purpose is to scare off Obama. Given that the possibility of small Venezuela scaring off the US does not exist, it seems that the real objective is to scare the internal opposition and, perhaps, some of Venezuela’s neighbouring governments that do not share Maduro’s ideology and politics.

But it gets worse. Caracas is making a point of highlighting that the exercises will include Russian weaponry and that some Russian ships have been “invited” to visit for the occasion. Moreover, it seems there will be Russian troops cooperating in the exercises that involve the Russian-made BM-30 Smerch missile launchers. Given the current state of relations between Russia and the US as well as the EU — especially, but not only, because of Ukraine — Maduro’s move seems quite provocative. Mainly because several voices have already expressed concern about the increase of Russian military presence in the region.

In addition to criticizing the US decree, UNASUR has sent clear messages about the need for Venezuela to reach peaceful political agreements which will strengthen democracy and limit internal confrontation. And it also makes a special point of stressing the need for free elections to take place this year. Provided the current crisis can be deescalated, then there is the possibity for UNASUR to act in the promotion of democracy. This would prove the influence of the more moderate States in the organization. And save the region from facing a very painful process.

@andresfederman

CREDITS: BUENOS AIRES HERALD

IS IT TOO LATE?

 

In all likelihood, Brazil’s recent devaluation will have a negative impact on its bilateral trade with Argentina, not least because the Argentine authorities are sticking to a monetary policy which tends to have different exchange rate objectives. It is interesting to note that most commentators are referring to “bilateral trade” while, in theory, it would be more appropriate to discuss the impact on trade within Mercosur rather than on the more limited bilateral dimension. But this seems to be a new proof that Mercosur continues to lose significance in the region.

The number of voices which are claiming that it is “game over” for Mercosur, and that new alternatives should be examined, is on the increase. In Brazil and Argentina, these voices come from the business sector. By contrast, in the cases of Uruguay and Paraguay, the two smaller original partners, there are a number of politicians who speak out their criticisms. But their Argentine colleagues still seem to be tied up by a political correctness which bans questioning the existence of Mercosur in the name of the sanctity of Latin American brotherhood.

By contrast, UNASUR’s relevance seems to be on the increase. True, it has a larger membership. But perhaps the reason is that UNASUR is — essentially — a political mechanism. Even more importantly, UNASUR’s decisions depend exclusively on the political will of its member governments. And such decisions rarely have more than a very limited — if any — economic and social impact.

Mercosur’s case is exactly the opposite. The recent controversy over the automotive trade between Argentina and Brazil had an impact not only on businesses but also on employment and, consequently, on trade unions. Decisions on Mercosur require the governments to reach some sort of consensus from the private sector or, alternatively, to be able to impose such decisions on businesses and unions.

The question is what will happen with Mercosur. It is a far cry from the dreams of those who created the block. Twenty years have passed since the Ouro Preto Treaty and the hope of a vigorous block with an impact on the global economy remains a dream. So much so that, for whatever reason, the different players blame each other — even the agreement with the European Union is still a draft. Moreover, Argentina has recently reached a strategic agreement with China that has — apparently — overlooked Mercosur.

Whether you believe that Cristina Kirchner’s China deal is right or wrong, just imagine, by contrast, what would happen in the EU if one of the big members entered a similar agreement ignoring its European partners. The fact that there were no visible consequences in Mercosur seems to indicate that none of the partners care too much or, alternatively, that they have given up any expectations they had about the bloc.

The global context has changed dramatically since the birth of Mercosur. Trade patterns, business alignments and growth rates — not to mention technology — are very different from what they were back in 1994. And change continues at increasingly higher speed. Mercosur is clearly falling behind. And, if it is to survive and have anything more than a merely formal existence, it will have to change radically.

However, as things stand now, the governments of the two biggest partners seem to be so immersed in other problems that thinking they can focus on Mercosur seems an optimistic dream with little chances of success.

Sadly, one possible option is that Mercosur will silently fade away — as it has happened with similar Latin American mechanisms in the past. Its meetings will be attended only by junior officials. In terms of money, it will continue to use a few pennies from governments’ budgets to pay salaries and provide a comfortable job for not-too-ambitious political cronies of the different parties. But it will only have a formal existence.

There is, however, some room for twisted optimism. It so happens that both Uruguay and Paraguay have more need of Mercosur than their bigger partners. And there are — in both countries — a number of voices pointing out that Mercosur is not delivering, so other options should be examined.

Some kind of trade agreement with the US features first on the list of possible alternatives. True, it would require courage from the government of a smaller partner to unilaterally bid farewell to Mercosur. Even more so if it means entering a partnership with the US. But sometimes need breeds valour, and such a possibility should not be ruled out. If such a thing were to happen, it could — but not necessarily would — trigger a reaction from the rest of the governments in terms of seriously examining ways and means to make Mercosur work. Provided, of course, that it is not too late.

@andresfederman

CREDITS: BUENOS AIRES HERALD

MEANWHILE... BACK IN THE REGION

Yesterday was an important day on both sides of the River Plate. In Buenos Aires, President Cristina Fernández de Kirchner delivered her last “State of the Nation” speech of her presidential term. Across the river, in Montevideo, Tabaré Vazquez was inaugurated — for a second time — as President, replacing José “Pepe” Mujica who — five years ago — had replaced Vázquez.

CFK’s absence from Tabaré’s inauguration was unfortunate, but unavoidable. By contrast, the Argentine government’s management of this clash of dates across the River Plate was equally unfortunate but avoidable. True, formally, it is Vice-President Amado Boudou’s role to represent the president in a circumstance like this one. But — given Mr. Boudou, and his friend and partner Mr. Alejandro Vandenbroele’s problems with the law— sending such a representative was a serious mistake. After all, Vandenbroele is a fugitive of the Uruguayan courts.

Some imagination and creativity could have gone into sending somebody else. A major minister or the Lower House speaker were possible options. And words of good wishes from the president during her state-of-the-nation speech could have helped to make a point of friendship and good will.

Even more unfortunate, is the fact yesterday’s faux pass happens at a time when the bilateral relation is far from good. Many Argentines are unaware about the tensions with Uruguay. After all, it is a very small country and does not have a serious impact on Argentina’s trade and investment figures. But what is a mild bother for Argentina is an important headache for Uruguay.

Trade protectionism complicates Uruguayan exporters. And foreign exchange limits complicate the tourism industry, vital for Uruguay. And then there are other, less visible issues. One has to do with Argentina’s policies on ports which harm the Uruguayans. Then there is the bilateral management of the shared rivers, which also shows frequent confrontations.

Many could argue that Uruguay is far from innocent and will cite the issue of the pulp mills to support their case. These voices are right. But it is a fact of life that states — and especially neighbouring states that are so asymmetrical in terms of size, population and economy — have disagreements. But good practice demands that those “facts of life” are addressed, negotiated and solved. And this seems to be the missing part. Which triggers bad feelings across the river.

Recently, the now former President Mujica said that the region needs Brazil’s leadership and Argentina should accompany, but does not. (In fact his language was far more colourful.) In another interview he said that Argentina is immersed in a “very closed project”, and that this has consequences. With the implication that they are quite negative. Uruguayan opposition politicians are even harsher. And — to be realistic — with varying levels of aggravation many Uruguayans feel the same.

In theory, those in the Foreign Affairs Ministry that have the responsibility of dealing with Uruguay should start seriously focusing on Montevideo. After all, Argentina’s strongest confrontation with Uruguay, which was about the pulp mills, happened during Tabaré’s presidency. The new Uruguayan president has made it known that there are no hard feelings and that he wants to work on improving the bilateral relation. Assuming that this is not only diplomatic politeness, it should be clear to the Argentine side that it takes two to dance that tango. So Argentine diplomats could do worse than start getting ready.

It could be argued, in the name of political realism, that Uruguay is not a priority for Argentina which now has more important partners, like China, that play in the “big leagues.” And that Uruguay’s “nuisance power” to threat Argentina is negligible. However, rather than realistic, this view could prove short-sighted. And Mercosur is the weak point. The nearly lethargic state of Mercosur is acknowledged — albeit off the record — by many government officers from all member countries. And Uruguayans and Paraguayans are quite vocal about this. In addition, the recently arrived partner, Venezuela, cannot contribute much to a possible revitalization, due to its own dramatic economic woes. To make matters worse, the Mercosur-EU agreement seems to be a never-ending odyssey. Argentina and Brazil have other options. Argentina’s recent agreement with China is a good proof of this. But the smaller partners of Mercosur do not have that many options.

Uruguay and Paraguay suffer more damages from the state of affairs in Mercosur than their larger partners. And it is public knowledge that Uruguayans, as well as Paraguayans, are wondering out loud if their countries would not be better off reaching an agreement with the United States and forgetting about Mercosur. In parallel, it is also known that many current or future policy-makers in the United States would not be adverse to facilitating an erosion of Mercosur. It would allow them to strengthen their regional presence at a time when Argentina seems to be looking East.

Possibly the first inkling of such a move would make much noise. Especially within Uruguay’s Broad Front. But it should be noted that the Uruguayan leadership can be quite pragmatic. So, perhaps the time has come to start mending fences across the river.

@andresfederman

CREDITS: BUENOS AIRES HERALD