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Obama’s economic omens in Argentina
Author: Francisco J Cantamutto, 29-3-16
Translated by Anoosha Boralessa (30 March 2016). Not reviewed by bilaterals.org or any other organization or person.
Obama’s visit to our country has left behind a host of controversies. Set out below, are the omens he made on economic affairs.
Obama ends his mandate with an updated agenda for Latin America, which the US has historically conceived as its “backyard”. The historical milestone of restoring the US’s relationship with Cuba was “offset” by Obama’s subsequent visit to Argentina to congratulate the new Leader of the Nation. In his closing speeches, Obama did not shirk from saying that he had supported this change. Mauricio Macri recognized this as a key support. Adjusting a discourse that boils down to using banality to avoid definitions, some pertinent announcements were made.
The last grand imperialist offensive was the continental plan launched at the beginning of the nineties, known as the “Initiative for the Americas” which later became the Free Trade Area of the Americas (FTAAs). This plan was derailed in Mar del Plata in 2005, thanks to coordinated organization at the continental level by a range of social movements. Bush Junior had to cede without conquering. This process took place as several governments of populist shades were rising. During this period, Chinese capital increasingly penetrated the region. China was also established as a trade partner of the region and a source of capital, thereby crystallizing a relationship of dependency. The competition between Chinese and US capital has turned the Caribbean into one of its key spaces, with the Chinese project of opening a canal in Nicaragua competing with the Panama Canal for the epicentre.
Of course, the United States has not abandoned its interests in the region, but has delayed in reorganizing its plans. One of its central strategies was to encourage the Pacific Alliance agenda as an alternative to “populist” governments. This was an alliance between those countries with free trade agreements with the Northern power, that were avoiding “populist” redistributions of income. The agenda, taken up in multiple local media, now has reached a new stage with the fall in commodities prices (which reduced the available resources in the region) and the slowing down of regional integration processes as the expert, Leandro Morgenfield explains.
Precisely,, the main agreements on economic matters focussed on trade liberalization. As Verbitsky reported in a note published in Página/12, these were agreements for guaranteeing intellectual property (or rather, royalty payments), simplifying trade agreements, technical assistance on telecommunications and nuclear cooperation issues. From the hand of the agreement between the YPF and Chevron (which remains shrouded in secrecy despite a court order to publish it) was the basis for agreements on non-conventional energy, the exploitation of which, as Julio Gambina has explained, has allowed the United States to achieve production in Saudi Arabia. Malcorra, the Chancellor, declared without mincing her words, that a free trade agreement, albeit through MERCOSUR, was on the horizon. This means, the agenda that we buried a decade ago, is back on the table. Releasing retentions for agriculture and mining exports is a step in the same direction.
Year after year, bilateral trade between Argentina and the US had fallen. The US is now our third trade partner, very far behind Brazil and hot on the heels of China. For years, the balance has been increasingly in the deficit for our country, reaching 4,272 million dollars in 2015. The result of these agreements for greater deregulation will then be a higher deficit, and therefore, greater foreign currency exits.
In contrast, the US Chamber of Commerce in Argentina announced investments of 13,800 million dollars in Rural property during Macri’s mandate. The sum does not manage to compensate the flight anticipated following the settlement agreement with the vulture funds, the legislative approval of which has already been obtained. Thus the US is not showing too much emphasis on recovering investment positions in the country, waiting for better announcements from the Macri Government. The Northern country is losing positions of investments year after year in the whole region, in addition to validating the trajectory for business in the country: the production of primary goods and services.
It is worth mentioning that in 2014, Argentina experienced a drop in foreign investment due to paying off REPSOL for YPF. Contrary to what Macri indicated by lifting regulations on remitting profits abroad, the country has not stopped being attractive to foreign capital, or at least, this is not detected in the statistics of the most recent CEPAL study that is available. Furthermore, this study indicates that the net balance of foreign investment in the region is negative, since the exits for payments of royalties and profits exceed the entry of new investments.
This means the agreements promote bigger trade deficits, further exits of royalties and payments of profits. In an economy that suffers from a shortage of dollars, this path does not appear to be the solution. Similarly, the settlement agreement with the vulture funds is neither it; the government reaffirms the dependent character of our country without any concession. The ideological component of free trade appears to obscure the most basic analyses.
Photo by Veinticuatro/Tres