Argentina had hoped to show off its newly market-friendly economy to the world when the G20 begins its first South American summit this week. Instead it is looking for help to avoid an all-out crisis.
The two-day meeting to begin on Friday is meant to focus on development, infrastructure and food security, but most of the talk on the sidelines is expected to center on trade disputes between the US and China, and the signing of the new North American free-trade deal.
Argentina, a darling of Wall Street just a year ago, finds itself hosting the summit while scrambling for international aid to fend off a collapse.
Photo: EPA
“The original vision for Argentina was to use the G20 to showcase that it had transformed the economy and instead it welcomes world leaders to the economic wreckage. So, the timing is inconvenient, to say the least,” said Benjamin Gedan, an Argentina expert at the Woodrow Wilson International Center for Scholars. “Instead of a showcase, the G20 is an opportunity to plead for international support.”
Argentina was forced to obtain a record US$56 billion credit line from the IMF recently, following a currency crisis and spiraling inflation. The peso has depreciated by more than half this year and consumer prices are estimated to have risen by about 45 percent. Growing frustration over massive layoffs and poverty has also stoked protests that are expected to reignite during the summit.
Still, Argentine President Mauricio Macri will want to show improvements in international relations during his three years in office after more than a decade of protectionist policies under the governments of former Argentine presidents Cristina Fernandez and Nestor Kirchner, her late husband.
Photo: AP
Even with the economy in turmoil, Macri has resolved a longstanding legal dispute with creditors that gave Argentina renewed access to global credit markets for the first time a default in 2001-2002. He has also improved relations with the US after years of animosity under his predecessors, keeping friendly ties with US President Donald Trump, as well as Chinese President Xi Jinping (習近平).
“Argentina is in a critical moment when it comes to international debt and it will seize on this moment to confirm international support from other G20 countries” that are leading creditors of the IMF, said Julio Burdman, a Buenos Aires-based political analyst and pollster.
Macri is also expected to make a renewed push for Argentina’s membership into the Organisation for Economic Co-operation and Development.
Meanwhile, Brazil and the other Latin American member, Mexico, are both in political flux.
Brazilian President Michel Temer is to be replaced on Jan. 1 by Jair Bolsonaro, who has often expressed admiration for Trump, criticized multilateralism and vowed to renegotiate or scrap trade deals.
Like Trump, Bolsonaro has also been skeptical of Chinese investment, saying “the Chinese are not buying in Brazil. They are buying Brazil itself.”
Monica de Bolle, senior fellow at the Peterson Institute for International Economics, said Brazil will be focused more on relations with the US and less on regional integration with Mexico or South American trade bloc Mercosur.
“I think that agenda is now out the window, at least it’s dropped from the Brazilian perspective,” De Bolle said.
For Mexico, there are questions about whether “there really is any interest in engaging with the region or if the interest lies elsewhere, given that Brazil is going to have an antagonistic, I think, administration with respect to Mexico given the ultra-conservative right-wing politics that Bolsonaro espouses,” she said.
Mexico and Canada recently reached agreement with the Trump administration on a revamped version of the North American Free Trade Agreement between the two nations and the deal might be signed at the G20 summit, although it would not take effect until approval by the countries’ legislatures.
There is also uncertainty about the potential policies of Mexican president-elect Andres Manuel Lopez Obrador, who will skip the summit because he is to be sworn in on Saturday.
The leader has tried to ease concerns among the business community, but he upset many when he recently canceled a partly built, US$13 billion new airport on the outskirts of Mexico City.
However, he has vowed to avoid tax hikes and to adopt tight budget austerity.
Argentina’s Pedro Villagra Delgado, the lead organizer for the G20, last week said that it might not be possible to reach a consensus on a final statement.
“Everything might fall through if there is no agreement on the trade issue,” he said. “It would be a shame because there is a huge amount of issues where we do have an agreement.”
While the US-China trade conflict is far from being the only issue at the G20, analysts said it is likely to cast a cloud over the summit.
“The US-China dynamic has poisoned all multilateral forums. There’s basically nothing you can do but you know hope for a miracle and even a miracle looks modest,” Gedan said. “What is unthinkable is any progress at the G20 itself. As I said recently on Twitter, quoting an Argentine official I spoke to, they would be satisfied with a communique that did nothing but compliment the weather in Buenos Aires.”
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