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October 23, 2014

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Monday, July 21, 2014

Reality check

By Andrés Federman
For The Herald

Last week was abnormally intense in terms of Argentina’s foreign policy. Russia’s Putin arrived on July 12, then the president attended the BRICS-UNASUR summit and finally, last Friday, China’s President Xi Jinping landed in Buenos Aires. All this against the context of two other International Relations affairs: Judge Griesa’s sword over Argentina’s head in New York and — to be realistic — the World Cup final which — given the passions it triggered, played an (albeit marginal) role in International Relations as well.

Perceptions have much to do with foreign policy. And when all this occurs in the context of an acrimoniously divided political system, let alone an administration fighting the lame duck syndrome, the power of perceptions can overcome reality. So it might be useful, for both sides of the divide, to their check perceptions — sometimes overenthusiastic and others too pessimistic — against reality.

The BRICS summit is a good case in point. At the end of May, Foreign Minister Héctor Timerman announced that President Putin had invited Cristina to attend the BRICS meeting in Fortaleza. This triggered some immediate — wishful — conclusions about Argentina being invited to join the club. There was an immediate dismissal of such notion, directly from Putin. In Brazil, Dilma Rouseff followed suit. And then — perhaps at Dilma’s behest — came the reality check, when the seat at the exclusive top dinner table, was quickly downgraded to a place at the common table of a BRICS-UNASUR meeting which took place in Brasilia following the Summit in Fortaleza. In addition, CFK’s vehement speech against the vultures and Judge Griesa attracted laudatory words from the usual (UNASUR) suspects, but not a single mention in the BRICS’ final statement.

This might put some of the most centre-right wing opposition’s fears to rest. Argentina is not — for the time being — abandoning forever the Western world. In fact those fears can rest side by side with some Kirchnerites’ illusions of — finally — moving away from a world order where the US is, still, primus inter pares.

But the BRICS meeting hampered other expectations as well. The announced creation of a development and an emergency reserve fund rekindled hopes of a financial alternative to the World Bank and the IMF, the latter being the Kirchnerites’ demon of choice. The announcement that the Development Bank will be a “members only” club and the diplomatic vagueness about a possible financial help to Argentina’s dwindled reserves, should be useful to wake up to reality from that particular dream. And the other side can rest assured that, in spite of the narrative, and however grudgingly and — perhaps — ineffectively, the government will try arranging with its Griesa-related creditors, along lines similar to the deals with the Paris Club, the Wold Bank’s ICSID rulings and the Repsol arrangement. It would be ideal if this also encourages a reality check from some of the more rabid opposition commentators, so they can ease up on their daily gloom and doom predictions.

The Chinese president’s visit also triggered a barrage of contradictory reactions and perceptions.

Undoubtedly the jewel that crowned the visit was the US$11 billion yuan/peso swap agreement. In the views of the pro-government camp, this is proof of the confidence that a world power like China has in Argentina as well s its willingness to help the country with its problems. For the other side, the swap agreement is nothing more than a gimmick because the yuan is not an internationally traded currency. This is only partially true and — push come to shove — the yuans can be exchanged for US dollars. But, even if this is not the case, it should be noted that Argentina’s imports from China reached US$11.39 billion in 2013. And the trade deficit was of about US$5 billion. The truth is that, with the swap agreement, those funds do not necessarily have to come from reserves.

Periodically, the current confrontation in Judge Griesa’s New York Court brings up the issue of having resigned the sovereignty of Argentine courts at the time of negotiating or restructuring foreign debt. This brings a “more patriotic than thou” contest between both sides. It is quite ironic that the swap agreement established that any disagreements will be dealt with, in first instance, by the courts in London. And that, if this does not work, then Argentina and China will accept the authority of the Paris-based International Chamber of Commerce. A new reality check for both sides. The problem — even with the Chinese “strategically integrated partners” — seems to be one of international practice or — perhaps — the lack of credibility of Argentina’s judiciary. And not the subservient attitude form any side of the political divide.

Finally, soccer. The German team’s celebration in Berlin had some nasty references to Argentina. Some delicate people might have felt a touch of imbedded racism as well as the — eternal — temptation of self-victimization. It was the turn of the Argentine players (deservedly at a peak of their prestige) to offer the reality check. They reminded the public about the less than complimentary lyrics about Brazil sung in Argentina to the music of Clearance Clearwater Revival. And suggested that the aggressive creativity of Argentine soccer fans would have been at full steam, should the World Cup have ended in Buenos Aires.

@andresfederman

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