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

THE MERCOSUR ROUTINE

Situation can force despair or trigger creativity

It is Mercosur Summit time again. This time in Paraguay. The presence of the new Argentine president Mauricio Macri is likely to be one of the most attractive items for the media. After all, he represents a significant change after 12 years in which Argentina espoused a totally different political regime under the Kirchner presidencies.

And there is an additional side-line: the current confrontation between Macri and Venezuela’s Maduro might provide some interesting headlines and reports from the accredited journalists. Apparently the Argentine president will raise the issue of human rights and political freedom in Venezuela. And as already reported in this column, the Venezuelan reply is unlikely to be friendly.

The skirmish is bound to trigger a debate in Argentina. Kirchner supporters will immediately accuse Macri of being part of a conspiracy to destabilize a democratic and popular (populist?) leader. The other side will reply that Human Rights do not have an ideology and that the same standards should apply to everybody,

Moreover, such a debate will rekindle a discussion which is discreetly taking place among some political analysts. They are wondering if Macri’s PRO means that a new kind of modern — and democratic — model of centre right political party is being born in Latin America. They are thinking in terms of a political format which can make social and human rights objectives, coexist with market oriented economic policies which — in addition — include some market regulation aimed at expanding democracy to aspects which — up to now — were a monopoly of the progressive side of the political spectrum.

In any case, should the controversy between the two presidents erupt, it would be simply one more obstacle in the way of this particular summit achieving much. There are others. First, there is the fact that the main partner, Brazil, is in the midst of a deep political and economic crisis. Not the best position to enter new long term commitments. In the case of Argentina, a number of sources suggest that different local government departments from within and without the Ministry of Foreign Affairs still have to agree on who is going to do what, and that, currently, there seem to be other priorities for the country’s economic and diplomatic teams. Some more or less as important as Mercosur but definitely more urgent.

This whole scenario would change dramatically if there were a solid hope about the possibility of finally reaching a free trade agreement with the European Union. The issue has been around since the birth of Mercosur approximately two decades ago. Both sides blame each other for the failure. And they are both probably right: simply put, there are too many interests to harmonize. Many say that this single item is the most frustrating issue on the Mercosur menu.

The stagnant Mercosur does not affect the five member states in the same way. Possibly, in the case of Venezuela, the political crisis simply pushes Mercosur out of the agenda unless it has to do with politics. Brazil and Argentina have a problem but have other economic and trade conflicts which create a more urgent and focused agenda. which also offers more options to explore. The two smaller partners, Uruguay and Paraguay get the short end of the stick. Mercosur limits their options and does not offer much in terms of compensation.

This situation can force despair or trigger creativity. Luckily, in the case of this week’s summit it has been the latter.

The Paraguayan Deputy FM announced last week that a list of approximately eighty non-tariff barriers for products manufactured and traded within the bloc had been identified. The idea is to scrap the antidumping measure and countervailing duties. This would ease up Uruguay and Paraguay’s life in Mercosur, allowing for increase trade, and, perhaps, more foreign investment.

It would be a good way of starting 2016. Not a break away from routine, but an interesting step in the right direction.

@andresfederman

CREDITS: BUENOS AIRES HERALD

THE TURKISH BURDEN

Understanding the country’s denial of the Armenian Genocide is not so straightforward

Tomorrow is likely to be a difficult day for the Turkish Embassy’s diplomats. The Armenian community is organizing an event which will take place at the Luna Park stadium, in order to commemorate the centenary of the beginning of what we now know as the Armenian Genocide.

To make matters worse for the diplomats, many Argentine sectors seem to sympathize with such commemoration. These include Pope Francis, the Argentine Government and many members of the Argentine public

In fact, the Pope had a public confrontation with the Turkish Government. And Foreign Minister Timerman’s presence in Armenia attending the central celebration did not do much in terms of improving diplomatic relations between Ankara and Buenos Aires.

For many, including this writer who — being a Jew — is very sensitive about the issue, it is not difficult to sympathize with the Armenians. And to respect their struggle for recognition.

So much so, that it is easy to paint ourselves into a “black or white” corner which might be unfair to the Turks. So it might be worthwhile to look at the issue with a wider perspective. Not to join the Turkish denial but to try to understand it.

First and foremost, it should be noted that many Turks do not agree with their President Recep Erdogan’s seemingly callous denial of the genocide. On 24 August, many progressive Turkish organizations demonstrated in the streets, demanding that their country accepts responsibility for the genocide. Furthermore, it should also be noted that the government authorized the demonstrations and actually sent in the police to protect the demonstrators from hostile nationalists.

Interestingly enough, the demand seems to be fuelled by (young) age rather than ideology. Many demonstrators told press reporters that they do not discuss with their parents their views about the genocide. The latter — in many cases — simply choose not to speak about or discuss the issue.

Older generation Turks and their government are not the only ones who find it difficult to deal with the memory of the Armenian Genocide. Only 26 states officially acknowledge that it took place. They include Argentina, Uruguay and the Holy See. Curiously, Israel is not part of the list. The same can be said about the United States.

These — as well as other countries — studiously avoid using the term “genocide” referring instead to “the events which took place in 1915” or a “humanitarian tragedy”. Apparently, today’s political considerations prevail over the truth about yesterday.

Understandably, the Ankara government is very sensitive about the term “genocide.” Perhaps this has more to do with national pride than with not acknowledging the 1915 events. Moreover, many argue that the Turkish Government is not totally inflexible about the moral dilemma between pride and truth, and remark that — in the last few years — Turkish President Erdogan mentioned the events and acknowledged the Armenian’s feelings. They point out that, perhaps, the time has come for the truth to take priority. Furthermore, they point at the German President Joachim Gauck as one of the possible leading lights of this change.

Gauck was one of the foreign leaders who attended the 24 August event organized by the Armenian Government. He was brave enough to cite the example of Germany’s efforts to come to terms with its historical responsibilities, not only in the Second World War but also on the Armenian Genocide. The German president said that “we Germans collectively still have to come to terms with the past, namely when it comes to shared responsibility and perhaps even complicity in the genocide of the Armenians.”

@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

BRING IN THE CIA

Intelligence services are vital, but ours needs serious reform

A tip for students, journalists et al. If you need reliable and — normally updated — information on the “history, people, government, economy, geography, communications, transportation, military, and transnational issues” of any country in the world, visit https://www.cia.gov/library/publications/the-world-factbook/. It might not suffice for a thesis, but it covers a bit more than the basics, which is often enough.

And — if you have some spare time — you can navigate through other sections of the website.

It offers information that could prove useful at a time when the tragic death of prosecutor Alberto Nisman and the frightening experience of the now-exiled Damián Pachter are showing — in fact, confirming — the need of a much delayed profound and extensive overhaul of this country’s intelligence service. Starting, given the current state of affairs, with the control of its activities, governance and use of funds.

The CIA’s website explains that “the 1980 Intelligence Oversight Act charged the Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI) with authorizing the programmes of the intelligence agencies and overseeing their activities.”

In contrast, as reported yesterday in the Herald, “two serious organizations, the Association for Civil Rights (ADC) and the Centre for Legal and Social Studies (CELS), made their positions on the intelligence services known this week. Both agree on highlighting the relative autonomy that Argentine spies enjoy.”

Currently, the government, rather than controlling the Secretariat, seems limited to footing the political bill of the messy activities of its intelligence officers. Some of which seem to be performed on the government’s service and others seem to be “independent.” But in both cases, they are turning into a political liability — witness Damián Pachter’s case.

By the way, it should be noted that, while CELS can be considered close to Kirchnerite views, that is not the case with ADC. So it can be safely assumed that both the government and the opposition agree on the particular point of making the intelligence service answerable to somebody other than itself.

In a perfect world, reform should not be limited to controlling the country’s spooks. Once the political authorities secure effective control over the intelligence service, it would be vital to define precisely its mission.

It would be an extraordinary — and currently much needed — sign of political maturity if Congress could meet, sooner rather than later, and reach a consensus on the control and mission of the intelligence services. A law on this matter, voted for by a significant majority, including the main opposition parties, would send a positive internal and external message.

A number of foreign governments have, quite explicitly, voiced their concern about the Nisman affair. The fact that the list includes Uruguay and the United States, as well as France, shows that they might not be triggered (at least exclusively) by anti-Argentine or anti-Kirchnerite motives. The message seems to be “listen chaps, get your act together.” And before complaining about supposed meddling in our internal affairs, it should be noted that intelligence activities are a vital foreign policy issue.

One of the main reasons, and of great concern to Argentina’s partners, is that many of the threats to every country’s security are global and non-state. They range from terrorism to human and drug-trafficking and include other major crimes and money-laundering. International cooperation over these matters is the norm rather than the exception. Unfortunately, incidents like the killing of “Lauchón” Viale —an Intelligence Secretariat’s official — in 2013 suggests that the organization’s links with the criminal world are, to say the least, questionable. And consequently, the credibility of the country’s intelligence agnecy in the eyes of its counterparts becomes equally questionable.

Over and above fighting international crime, modern intelligence services provide other things to their countries. Looking again at the US case, it becomes clear that, contrary to popular perceptions, much of the CIA’s activity is far from the world of cloak and dagger and close to the world of academia, libraries and research. In fact, you will find CIA staffers on post-graduate courses and at annual meetings on foreign affairs.

In its own words, “CIA analysts monitor and assess foreign political developments, leadership, economic issues, military threats and science and technology.”

Quite clearly, no foreign policy can be effective without serious input from research. And there is nothing to indicate that Argentina’s Intelligence Secretariat is even close to providing any such thing. It seems that,at most, the Intelligence Secretariat is good at receiving — selected and selective — information from its US and Israeli colleagues.

@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

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

VACA MUERTA DIPLOMACY

4111This time it’s not wheat, or beef or soybeans. The name of the new Argentine dream is shale oil and gas. Its surname is Vaca Muerta. And, as in the past, many heralded triumphantly that — finally — the time of Argentina’s well-deserved grandeur has come. While even more sober local and foreign experts have a very optimistic view, cynical pessimists point out to the difficulties ahead. And one definition says that a pessimist is nothing more than a well informed (or experienced?) optimist.

Fracking — the technique used to obtain the hydrocarbons by injecting high pressure water mixed with other elements — makes it possible for gas and oil to be obtained from certain geological formations. Vaca Muerta is one of them and is quite huge, given that it covers an area of approximately 30,000 square kilometres. The average depth of this particular formation is 2,900 metres. A technically — and thus financially — challenging project. But by no means daunting, given the amount of expertise and financing to be found out there, in the world.

What the cynical pessimists find really daunting is the kind of local troubles likely to be triggered by such a project in view of past experiences. A short — and of necessity incomplete — list would start with the difficulty in finding willing foreign investors. The optimist will immediate argue that the recent contract with Chevron proves that they are out there, ready, willing and able to come in. The pessimist will remind everybody that something might be amiss, given the fact that the government has kept some clauses of the contract under a shroud of secrecy.

Then the pessimists will point to other conflicts waiting to happen. Fracking has environmental effects. For starters, the great amounts of water it uses and the amount of carbon dioxide it releases. Inevitably, the environmentalists will oppose. Some will — albeit grudgingly — accept mitigating measures for the sake of the greater good of jobs and wealth for Argentina. The fundamentalists will close ranks and take extreme positions. We have seen this happen. Just ask our Uruguayan neighbours about Botnia and blocked bridges. True, in that case, there was political manipulation totally unrelated to the issue. Something that could repeat itself in the case of Vaca Muerta, especially if you think that the project involves a list of “Argentine irritants” which includes foreign investment — a normal target of choice — as well as power and financial relations between the federal government and the provinces and, possibly, politicians from opposition parties who could well use the project to make their competitors’ lives difficult. Especially because — to make matters worse — developments on Vaca Muerta coincide with a presidential election period (that for all intents and purposes has already started) and with what looks as a non-Queensbury political fight.

Now for the good news. Vaca Muerta is in its early days. It is not yet a hot, politicized issue. Perhaps it is not a dream to think that politicians might find a way to agree to keep it out of the electoral agenda. And, in an excess of idealism, they might agree to offer the electorate proof of maturity and — in parallel with political campaigning — create a cross-party setting in which to agree on a series of rules and policies which maximize the benefits and minimize the damages of the project. After all, other countries — like Australia — seem to be managing the balance quite well. In all likelihood, Argentina could benefit from such experiences. And friendly advice from them is likely to be available, at very low cost or no cost at all. And much less controversial than, say, advice on financial matters from the IMF. A win-win situation because a clear show of willingness to improve local standards and transparency in terms of the environmental game, might be as attractive to some as is financial predictability. Thus, no need for shrouded clauses. There are many out there willing to cooperate and Argentina should grab the chance.

Moreover, one of the cross-party decisions could be to leave the whole regulatory operation in the hands of expert civil servants who would do their job in line with the policy of the government of the day. After all — and quoting a local oil engineer — to fight cancer you get a medical specialist, not a shareholder of the clinic. The latter might set the price of the treatment service, but the actual medical practice needs a specialist.

So, with some luck, the country could go into the depths of Vaca Muerta with international support and respect. The final objective should be — to use the words of the Australian Centre for Sustainable Mining Practices — to ensure “recognizing that environmental accountability, social responsibility and commercial success are now inseparable concepts.” Too dreamy? perhaps. But to quote Raymond Aron, we have the duty of hope.

@andresfederman

CREDITS: BUENOS AIRES HERALD