Argentina’s Foreign Policy: In the Path to Change?

By Dr. Ana Margheritis, Reader in International Relations at University of Southampton (Twitter, You can find more posts by Ana here.

Next 1st December, Argentina is going to take over the presidency of the G-20. In late 2018, it will host the summit of the International Trade Organization. The Macri administration argues that this role is an ‘acknowledgment to the change’ the country is undergoing. How much changed has happened since Mauricio Macri took office in December 2015? The recent mid-term elections (on 22 October 2017) offer an opportunity to assess the records.

cumbre-del-g-20-2263999w620.jpgIn an effort to highlight contrasts with the predecessor and expand its base of support, change has been the key slogan of the coalition in government called, indeed, Cambiemos (let’s change). In foreign policy, two ideas summarised this proposal: ‘re-joining the international community’ (volver al mundo) and adopting pragmatism (des-ideologizar). In other words, Argentina now attempts to resume its historical goals, principles and roles, open and integrate itself to the world, and pursue what officials call an ‘intelligent’ and ‘mature’ positioning in world affairs. The underlying goal is to re-establish other countries’ confidence, presumably lost in the past decade due to a confrontational rhetoric and conflictive actions mostly inspired by economic and political nationalism.

Two years down the road, there are some signs of changes, although these are still a work in progress. First, efforts to mend relations with the US led to establishing a good rapport at the presidential level during the Obama administration. This continues under Trump’s term as trade negotiations progressed and changes in Argentina’s policy orientation and discourse are welcome in Washington.

Second, expanding and diversifying partnerships follows from an aggressive trade and investment strategy. These include reviving MERCOSUR (the regional trade bloc of which Argentina is founding member), pursuing trade agreements with the European Union, and joining as observer the Alliance of the Pacific in June last year (another regional organization formed by Mexico, Peru, Colombia and Chile). This last move is consistent with increasing economic links with China and Asia more broadly –where four of the ten main destinations of Argentina’s exports are (i.e., China, Vietnam, India and Indonesia, in that order). In other regions of the world, redefining relations has proved to be more controversial at the domestic level: the agreement with Iran (signed during the previous administration) has been declared non-constitutional. The President accepted this judicial decision and did not use his veto power in this case. Iranians have been linked to the 1990s terrorist attacks to Israeli institutions in Buenos Aires. Former president Cristina de Kirchner and other high officials were to be prosecuted when a federal judge died the day before presenting the evidence. Both legal cases are still open in the context of increasing efforts of the Judicial power to re-gain autonomy and enhance transparency.

Third, relations with regional partners deserved special attention in the last two years because of the ongoing crisis in Venezuela. In clear contrast with the Kirchners’ alliance with Chavez and Maduro, Macri forcefully requested the liberation of political prisoners, denounced violations to human rights, and was in favour of not allowing Venezuela to take over the pro-tempore presidency in July 2016. He was keen on ‘passing from rhetoric to action’ and even applying the Organization of American States’ Democratic Clause. This position finally prevailed within the bloc: on 5th August 2017 MERCOSUR finally applied the 1998 Ushuaia’s Protocol, suspending rights and obligations of Venezuela as member state for indefinite time (i.e., ‘until the democratic order is restored’).

Fourth, the bilateral relationship with the UK also shows some signs of change. Aware of the constrains posed by the long-standing dispute over the Malvinas/Falklands Islands, Argentina argued that this item should not be the focus of the relationship as it represents, at most, a figurative 20% of the links with the UK; instead, Macri’s government proposed to concentrate efforts on the remaining 80% which promises mutual benefits. This new approach led to a joint declaration in early 2016 and some progress afterwards. One of the goals in that document was achieved: clarifying the identity of Argentine soldiers who died during the war and were buried in the islands. The other two are still pending: resuming flights to/from the islands and ending sanctions to economic activities by islanders. Political, diplomatic and cultural relations improved and intensified in the last two years, in the spirit of ‘construction of empathy,’ as the British Ambassador to Buenos Aires called it, that is, setting a positive, mutually beneficial and long-term bilateral agenda.

These incipient changes are not exempt of pitfalls and criticisms. The 20/80 figure used to represent relations with the UK is questioned by the opposition, which also charges the government with a lukewarm approach in the defense of sovereign claims at international forums and an ambiguous approach to the case of Venezuela. Trade partnerships also represent a source of concern because of Argentina’s trade deficit and specialization in commodities. This is more of a continuity than a change between the current and the past administrations, and a pending issue in the governmental agenda. Another sign of continuity is to be found in the management of this area of public policy: as usual, presidential diplomacy is at the driver’s seat of most initiatives in foreign policy. Signs of dissent within the Cabinet (as the ones recorded between Macri and his former minister of Foreign Affairs over the issue of Venezuela) are seen as detrimental to the overall strategy. The replacement of Susana Malcorra by Jorge Faurie in that post (last June) was presented, in the official discourse, as a sign of ‘continuity and trust,’ presumably meaning that, from now on, no fundamental changes and disagreements in foreign policymaking are to be expected.

In sum, foreign policy might not have been a top consideration for voters in the recent mid-term elections, but it certainly contributed to construct a narrative about the identity of the coalition in power and to suggest a path to the future, a projection of national interests in a certain direction that seeks social support. Macri won the recent elections, defeating the dominant political force (Peronism, in its multiple forms). However, a narrative based on contrasts with the predecessor inevitable has limits in the long-run. Interest groups and society at large are eager to see, for instance, if Argentina has the capacity to resume steady economic growth, capture foreign investments, or play a leadership role at the regional level. In other words, the challenge is now to show if slogans translate into concrete changes at both the domestic and international level.

Olymponomics: politics and the measurement of Olympic economic impacts

By Will Jennings, Politics & International Relations

Blog cross-posted at The Conversation.

Since the financial blowout experienced at the Montreal 1976 Olympics, economic impact assessment has been an increasingly popular tool for host governments and organizers to justify the vast expense of major events of this sort. These methodologies are not value-free, however, and are often reliant on problematic assumptions or are used to particular political and economic ends. The recent report into the legacy of London 2012 by the government and the Mayor of London exhibits some of the typical hallmarks of political use of economic impact assessments – and their tendency to put a positive spin on the economic benefits of major events despite the uncertainties involved. Indeed, some of the claims seem quite unnecessarily outlandish: for example that “so far £9.9 billion in international trade and inward investment has been won because of the Games and Games-time promotional activity.” There must be a small dose of caution about the causal relationship between the event and subsequent flows of investment – even if these were facilitated at Olympic-badged events. To put it in context, this figure is larger than any previous official/sponsored assessment of Olympic economic impacts — by a substantial margin – while the estimated £11.5 billion gross value added of the public sector funding package is also an outlier compared to other events (see Chapter 5 of Olympic Risks, Palgrave Macmillan, 2012).*

The key problems of evaluating the economic benefits of the Olympics is that it is difficult to provide counterfactuals about what would have transpired if the event had not taken place. Indeed, the background document to the report acknowledges that “…there is no counterfactual assumption related to spending the public money on anything else.” Nor is it possible to determine whether the trade and investment deals linked to Olympic-related promotions would have been secured through other channels if the Games had not taken place. London was already an iconic global city ahead of 2012, unlike many other hosts, who use the Olympics to promote themselves as a global destination – e.g. Barcelona, Sydney, Beijing. On top of this, the magnitude of the estimated gross value added to economic activity reflects the dire under-employment that existed in the aftermath of the global financial crisis – meaning that the economic modelling assumed a low level of displacement, as the Olympics absorbed spare economic capacity. The details of the report hardly makes good reading for the government, as it notes “a legacy of higher unemployment” despite the economic legacy left by the Olympics. Further, the headline figures only tell a partial story, as economic benefits – especially in terms of employment – are concentrated in London and the South East. In this respect, the impact of London 2012 has simply been to reinforce existing imbalances in the British economy – and in the economic experience of its citizens.

Even if we accept that the Olympics created long-term economic capacity, it is possible to question whether this was the optimal use of resources. Popular “input-output” methods of economic impact analysis do not differentiate between different types of economic activity, however, yet the long-term economic benefits of constructing a school or a hospital, or a train link, are quite different from those involved in building a car park or a sports venue (especially if assets are later transferred to private developers at discounted rates, removing any potential for long-term public amortization of the assets). Methods of economic impact assessment surprisingly make little meaningful distinction between gains or losses that accrue to the public and private sectors.

A final aspect of the economic impact that might be called into question is the degree to which the UK economy will see a return from its businesses positioning themselves in the market for major global event contracts as a result of their 2012 experience. Certainly since Sydney 2000 there has emerged an Olympic ‘consultocracy’ that wanders nomadically from Games to Games – selling their expertise to the highest bidder. However, most of the major firms involved in the mega-event industry are multinationals, while the individual consultocrats and trouble-shooters who are now positioned to reap the rewards of their London experience are by no means guaranteed to divert their private economic gains directly back into the UK economy (this is without venturing into the debate over global tax regimes!).

While there can be little doubt that London 2012 has had substantial economic benefits for the UK, and successful delivery of the event served to promote its reputation on the world stage, the methods of economic impact assessment are ill-equipped to deal with some of the ambiguities and uncertainties associated with mega-events and their consequences. These methodologies rarely challenge their underlying assumptions and tend to emphasise best case scenarios and headline figures, without digging deeper into the regional imbalances of the event, the flawed or exaggerated nature of some causal claims, and extraction of private economic gain from public investment – at the expense of taxpayers already battered by austerity.

*Note that there is no official estimate of the economic impact of Beijing 2008.