OLD AND NEW FRIENDS

New approaches to Uruguay and the US, but signs of a continuation of policy with Russia

This week, President Mauricio Macri is scheduled to visit his Uruguayan counterpart, Tabaré Vázquez, which is mostly seen as a new start for the bilateral relationship. During the Kirchners’ governments, the link had soured. This was due to a number of reasons ranging from the Botnia pulp mills to the way in which Argentine trade and monetary policies had a negative collateral impact on Uruguay. Many argue that — in spite of ideological affinities — the lack of a good interpersonal chemistry at presidential level added to the problem.

By contrast, Macri’s visit to Montevideo is a friendly gesture, which takes place at a time when Uruguay becomes a beneficiary of the reversal of Argentina’s monetary and trade policies, while the Argentine president seems to be in favour of Mercosur exploring trade options in the Pacific. Which was a long standing demand of Uruguay, one that was frowned upon by the bigger partners in the bloc.

This is not the only change in the country’s foreign policy. At last month’s Mercosur summit, Macri voiced harsh words about the human rights record of Venezuela’s Maduro. Once again, that meant a far cry from the previous presidents’ policy and a friendly gesture to Maduro’s critics both in the US and the EU.

None of this should come as a surprise. Both the president and his foreign minister made it abundantly clear that the US and Europe are now topping the list of friendly partnerships to be cultivated. Critics and supporters of the Kirchner governments agreed in defining this as a return to Argentina’s traditional foreign policies. On both sides, some went as far as announcing a return to Guido Di Tella’s times of “carnal relations” with the US.

It might be the case that both sides are failing to see the full picture.

While it is true that, for better or worse, Argentina’s foreign policy is in a process of change, it is also true that the “old times” are not there anymore, because the world has changed. In addition, Argentina now has long term agreements with China and Russia which are not easy to ignore, regardless of the changes in the choice of foreign partners.

In fact, Foreign Minister Malcorra acknowledged this quite clearly. True, she stressed that the Argentine government’s interest is a rapprochement with the EU and the US as she also dismissed ideology as the main factor at the time of making foreign policy decisions.

There are those who might argue that, in some cases — China being the best example — the foreign minister is making virtue out of necessity. Argentina has entered long-term agreements with Beijing. Some would like to walk away from them. Even if — I repeat, if — they are right and such a move is desirable, it would not be so easy. While it could be possible to walk away from financial arrangements by returning the money borrowed from China’s Central Bank, the same cannot be said of agreements related to long-term infrastructure projects. Besides, of course, of the fact that it would be difficult to justify discontinuing projects of this kind without very solid reasons. Moreover, it is unlikely that the new partners in the game would demand such a thing.

There is, however, what may be considered an unfortunate exception, namely the agreement that allowed China to install an aerospace base in Neuquén. The terms of this deal appear to include access restriction for Argentine authorities. And the fact is that all of China’s aerospace activities are under military control. It is difficult to imagine the EU, let alone the US, happy with a military controlled Chinese aerospace base in South America, even if it is, at least officially, solely a “scientific” project.

The Cold War may be over forever but geopolitical tensions between the big powers persist. A current example is the fact that China is insisting on asserting its rights over the South China Sea, which is likely to increase tensions with the US and its allies in the region. Last November, US B-52 bombers flew over the area, triggering Chinese anger as the US insisted on its right to make such flights over international waters. So, on this one, the foreign minister might have an unwelcome source of concern, especially if one of the two sides — the existing China partner or the new US one — demands explicit political support. Fortunately such demand is, at this time, purely hypothetical.

That is not the case with Russia. The EU and the US imposed an embargo on food exports to Moscow as a sanction for its policy on Crimea. On the other side, Argentina specifically rejected the sanctions and continued — or perhaps increased — its food exports to Russia. This was very clearly Cristina Fernández de Kirchner’s political decision, and Macri seems ready to pursue a similar strategy.

On December 16, the Argentine president and Malcorra had a phone conversation with Putin. According to the information provided by the president’s office, they agreed that Argentina would continue to be “a reliable supplier of food products” for Russia, which implies that Argentina will continue with the policy of not joining the EU and US in their sanctions policy. This, in turn, diminishes the desired impact of the sanctions. Not an insurmountable confrontation for Argentina, but clearly not an ideal signal of good will towards a new (or renewed) partner.

In all likelihood, the process of changing Argentina’s foreign policy is going to have easy moments like this week’s meeting with Uruguay. But Malcorra is also likely to have some more cumbersome moments which, as she well knows, come with the territory.

@andresfederman

CREDITS: BUENOS AIRES HERALD

LAST CHANCE FOR THE MERCOSUR?

The reasoning behind Uruguay’s breach of protocol

It all happened last week. On Monday, Walter Cancela, Uruguay’s Ambassador to the European Union (EU) belied reports suggesting his government was in favour of the Mercosur entering free trade agreements with the European bloc, without waiting for the conformity of all member countries. Brazil’s Dilma Rouseff seems to be choosing this road as well.

Although not specifically mentioned in public statements, the dissident member states are Argentina and Venezuela.

On Thursday, 4 June, Uruguay’s Foreign Minister Rodolfo Nin Novoa told the press that Cancela was wrong, that he had spoken out of turn and that foreign policy decisions are made by the president, Tabaré Vázquez. Consequently, Nin Novoa said, Cancela would be removed from the job. Later, the foreign minister then toned down Cancela’s “punishment,” explaining that rogue ambassador had been slapped on the wrist but not sacked.

Believe it or not, this succession of events was quite extraordinary. But surely they weren’t the end of the world. Having said that, it is not the done thing for a government to publicly sack or even tell off an ambassador posted abroad. Surely all governments reprimand or sack their diplomats, and possibly quite frequently. But they do it silently and not in the public eye. In other words: much more diplomatically. (Pun intended.)

The politics behind the affair are relatively easy to explain. Although President Vázquez belongs to the same party as his predecessor José “Pepe” Mujica, it is public knowledge that they belong to different factions within the Frente Amplio, and do not see eye-to-eye on many issues.

Moreover, Vazquez is known to be even less enamoured than his predecessor with the current Argentine government. And politicians from Uruguay — as well as those from Paraguay — have been lobbying against what they have seen as Argentina’s feet-dragging on an agreement with the EU. As in the case of Uruguay, there is no love lost for the Mercosur in Paraguay.

But — being the smaller members — both Uruguay and Paraguay were lonely voices in the Mercosur desert. Until quite recently, that is, when — perhaps pushed by her country’s current economic difficulties — Rousseff altered Brazil’s traditional position. She is now in favour of a “two-speed” agreement. In other words, member states should have the liberty of speeding up or delaying free trade negotiations with the EU, according to the Brazilian president.

Good news for Montevideo

The change in Brazil’s policy was good news in Uruguay. In addition to the president’s position, the opposition shares the negative perceptions of Mercosur. There are, obviously, some relevant exceptions. Walter Cancela is one of them. But he is a legacy of Mujica’s time. In fact, the latter was quick to join the political fray within the Broad Front, and, on June 4, he went public voicing his disagreement with Vázquez’s position. Which explains his follower, Cancela’s, rather undisciplined ways.

There is some speculation that the disagreement about the Mercosur’s direction, between incumbent president and predecessor has also occurred in Brazil, between Rousseff and former president Luiz Inácio Lula da Silva. Who — by the way — met President Cristina Fernández de Kirchner last Saturday to discuss unspecified “regional issues.”

If they chatted abut Mercosur, and were sincere with each other, they might have agreed that, unfortunately, the Mercosur bloc is at present far from a shining success story. The list of mutual complaints is quite long. The current disagreement between Argentina and Brazil about automobile trade is just one case in point. But, if the two big partners find it difficult to compromise with each other, there is obviously very little hope for the smaller and weaker partners. They simply lack the necessary leverage

Likewise, Mercosur does not seem to be very apt as a negotiating tool with third parties. The discussions about a trade agreement with the EU started exactly 20 years ago. And it seems quite clear that nothing, or almost nothing, has been achieved. True, the blame should be placed both sides of the Atlantic Ocean. But it is also true that other regions have managed to overcome difficulties and agreements with the EU are now in place.

The Washington effect

But what is even more worrying for the “two-speed” advocates is the fact that the EU seems likely to conclude a free trade agreement with the US quite soon. Does this matter? Yes. Other trade partners could suffer serious damages. And it seems that many decision makers in Brazil, Uruguay and Paraguay are beginning to feel that the Mercosur is more of a liability than an asset. And that it is not delivering.

Some even say that the dream of the 1980s needs a complete overhaul or that it should be replaced by something different and more up to date.

So much so, that they are prepared to risk serious damage to the bloc and its future, or the wrath of reluctant partners like Argentina and Venezuela, in order to move forward over an agreement with the EU, which potentially seems to be more beneficial.

Possibly, this explains the Uruguay breach of protocol this week with their ambassador in Brussels, in order to avoid sending the wrong signals to the possible EU partners.

@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

CFK, AS SEEN FROM MONTEVIDEO

On why the president should be elected to Parlasur

On a weekend trip to Montevideo, this reporter was surprised to find an unlikely supporter for President Cristina Kirchner’s bid to claim a seat in the Mercosur Parliament. It was in the form of a friend with close ties to Uruguay’s new President-elect Tabaré Vázquez, who is no fan of his boss’ Argentine counterpart, but would like to see her taking the helm of South America’s regional bloc nonetheless.

Political gossip exchange is a two way street, and with the aid of a generous amount of Uruguay’s wonderful Tannat red wine, I asked my friend, a member of the Broad Front, to put the argument to me, in exchange for enduring a grilling on 2015 from his side of the table.

My interlocutor listened carefully as I first explained the mounting controversy here over the president’s possible Mercosur candidacy. He immediately made his opinion clear: the clamourous Argentine opposition has got it wrong. Contrary to what they say, it would be ideal to see Cristina in that institution.

Let it be known, this softly-spoken Uruguayan is an expert on European Union theory and practice. So he knows how regional bodies work. Although he is no pro-Washington fanatic, he is convinced that Uruguay would be much better off closer to the US, even if that means being further from Mercosur. But he knows the inevitable political tensions that would arise between Uruguay and its two most powerful neighbours, Argentina and Brazil, would be untenable for Montevideo. Thus Mercosur remains the only available option.

But the regional body is in desperate need of a revival — and the current Argentine president could be the person to make this happen, he says.

There are many items on the agenda of a potential renewal. First, there is the fact that Mercosur lacks a full-time leader with strong political clout. The three different agencies which are supposed to lead Mercosur are headed by ministers, or deputy ministers, from the member countries. They are not full-time officers and the Mercosur does not seem to be their main priority, with individual domestic concerns more pressing. By contrast, the first manifestation of what is today known as the European Union — the European Coal and Steel Community — was by led by the French political operator Jean Monnet. True, he was not an elected politician in the traditional sense. But Monnet had cooperated with French, British and US leaders during the two World Wars, as well as the interwar period, to forge the basic elements of a long-term regional integration project. In 1919, France’s Georges Clemenceau and Great Britain’s Arthur Balfour appointed him deputy secretary-general of the League of Nations.

My friend remarks that Monnet had a lifelong commitment to the economics of peace, as well as a forceful and principled personality. So forceful that he ultimately resigned his position in the League of Nations in 1923, frustrated by the organization’s lack of effectiveness. He adds that credit for getting the European unity process in motion also goes to committed politicians such as Italian statesman Alcide De Gasperi, West Germany’s Konrad Adenauer and France’s Robert Schuman. He reminds me that each time the EU has appeared to be sinking to the doldrums of paralysis, it has been under the unfortunate stewardship of less capable European officials who lacked the clout to make things work.

Possibly the strongest complaint that the Uruguayans have against Argentina these days is protectionism. My interlocutor agrees with Vásquez that although “legitimate,” trade protectionism does his country no favours. He also points out that what may be negligible losses for Argentina translate into big deals for Uruguay. So, Argentina could perhaps be more selective over its protectionism. But to make that happen, some permanent and efficient mechanisms should be in place first. He is not alone in this view: only yesterday, this newspaper made the same point in its editorial.

It is always interesting to challenge an expert. So I pointed out that it took 27 years to get from that original European Coal and Steel Community to the first direct elections for a European Parliament. Even back in 1952, the original organization was better structured than today’s Mercosur. Not to mention the fact that, to this day, the European Parliament is not as powerful as the European Council and Commission. The Parlasur is unlikely to be operational any time in the near future, and its powers will be more than limited once it is finally here.

With a cheeky smile, my friend explains that the beauty of Cristina Kirchner being elected to Parlasur is not the additional status that she will accrue — even though this is something she will no doubt enjoy wholeheartedly. It’s that the position will truly afford her the necessary credentials to push things forward.

In his view, she has several things working in her favour. First, there is her current high-profile which, by the way, she obviously enjoys. Then there is her strong political ambition and equally strong will to make her own mark on history. She seems to have a strong commitment to South American unity, I’m told, coupled with (or perhaps triggered by) a certain rejection of the “powers that be” — by which he means the EU and the US. And then there is her personality, which can rub people the wrong way, but can get things done.

She is authoritative (possibly authoritarian?) and wants things done without too much regard for any institutional intricacies that may arise. She would be able to use both her credentials and her personality to shake Mercosur out of its inertia and cut through regional red tape. Some of the institution’s mechanisms are quite basic, but they could be used to breathe new life into Mercosur. And to do this, says the expert, you have to kick some ass. This does not necessarily require a seat in the still non-existent Parlasur, but rather access to a platform from which to do a bit of targeted screaming and look irate every now and then. And judging by her TV performances, she is still very good at that.

@andresfederman

CRADITS: BUENOS AIRES HERALD

WARNING: 2015 AHEAD

Foreign affairs take back seat — and that’s a good thing

The Presidential elections are likely to be — by far — the most relevant political event of next year. And most local political issues, from crime rates to inflation or unemployment get linked to — and influenced by — an electoral campaign that seems to have started quite early.

Normally, foreign policy matters do not enter into that debate. The pressing issues seem to be closer to home. So candidates seem more interested in explaining to their voters how they plan to improve day-to-day life than to expand on their vision about how Argentina links and relates to the world. Horrible as it may sound, this might not be such a bad thing.

The truth is that messages that may go down well with the domestic voters, do not necessarily help to solve problems and find solutions with foreign counterparts. This is especially true in the case of high-profile issues. The paper pulp mill dispute with Uruguay seems to be a good example of this.

Many argue that the late Néstor Kirchner’s support of the Gualeguaychú environmentalists, which made Uruguayan’s life miserable over the Botnia pulp mill, is a good example of how decisions aimed at local political gains,trigger complicated foreign policy situations. In fact, the bilateral wounds from those episodes have not closed totally. Not to mention the fact that Uruguay’s next president Tabaré Vázquez was who, when in office, had to endure the pressures of “the big neighbour.”

Unfortunately, 2015 seems to bring another high profile issue in tow. Starting on January 1 — and once the RUFO clause expires — discussions will (or should) start, on the matter of what to do with the holdout/“vulture” funds. The latter are far from popular in Argentina. So the temptation to take a hard line against them is high. It would be easy for the government to rally support for a confrontation with the “vultures” and the US. Burning US flags is a popular hobby in many sectors of Argentine politics.

There is another possible scenario: the Government might prioritize gaining access to the international financial markets and decide to — grudgingly — reach an agreement with the creditors. In that case, some opposition candidates might choose to wrap themselves in an Argentine flag and denounce the government’s negotiations as damaging to the country’s best interests. To make matters worse, the new US Congress is not likely to be friendly to Argentina. And might not dismiss anti-American tirades as a mere ingredient of electioneering narrative. They could take them seriously.

The issue of the holdouts/“vultures” is possibly the most serious, given the risk of it becoming a campaign issue and getting out of hand. But is by no means the only one confronting Argentina’s foreign policy in 2015. Although they are unlikely to be in the campaign agenda, they will (hopefully) be in the Foreign Ministry’s radar. And the opposition candidates would be well advised to follow developments in those fronts closely, just in case they get into office.

Close to home is the above-mentioned case of Uruguay. President Mujica tended to have a quite patient attitude toward Argentina in spite of a few sparkles every now and then. It remains to be seen if his successor will follow suit, or if — based on his previous experiences — he has already dismissed the possibility of Argentina being a friendly partner. After all, there are a number of conflictive issues which range from the use of port facilities to Uruguayan complaints about Argentine protectionism.

Then there is Brazil. Dilma Rousseff seems ready to endorse an adjustment policy which might mean a slowdown in her country’s economic activity. Argentina’s exports to Brazil would be hit. And given Argentina’s own foreign trade needs, the government might need to put its best negotiators to work in order to keep the Brazilian door for Argentine exports as widely open as possible.

Further north, there is the case of Argentina’s friendly (some say too friendly) relations with Venezuela. President Nicolás Maduro’s government seems to be in serious trouble and making big efforts to blame its predicament outside its borders. The US is the obvious candidate. And in that process, Venezuela seems inclined to make alliances with governments that are not too palatable to Europe nor the US. There is the danger that — given the Chavista sympathies of a few politicians close to the government — some of his foreign policies could try to involve Argentina. Something that this country does not seem to need at all.

And then there is the case of Russia, Argentina’s latest “strategic partner.”

Over and above its policy on Crimea, Russia seems determined to anger the EU further by financing far-right European politicians, with the sole intention of making life more difficult for Europe’s traditional political parties. This is not seen positively within the EU. Being too closely associated with Putin could be read as an endorsement of such policies.

Again, something that Argentina does not need at all.

@andresfederman

CREDITS: BUENOS AIRES HERALD