Risks and opportunities on the international stage

Buenos Aires Herald. 28 de abril de 2017.

Although Trumpism disrupts certaintes, Macri shouldn't give up the need to put the country in order.

It does seem that Argentina´s timing is off. It elected a president with the vision of opening up the country, rejoining the world, and celebrating institutional democracy and international cooperation less than a year before the global sands shifted in the direction of nationalism, protectionism and populism. There is no denying that in many ways the current government´s strategy was aiming at a victory for Hillary Clinton in the US elections. Given Donald Trump´s presidency and the global trends it embodies, the new global environment is more uncertain and presents more risks than the one Argentina´s leaders had believed they would face. At the same time, recent changes do not render all aspects of the country´s internationalisation strategy impossible. And, they may also prove to be a catalyst for closer regional cooperation.

There are a few undeniable risks for Argentina. One is that Trumpism will likely result in greater protectionism in the world as a whole. Among other effects, this means that protectionist countries in agriculture (a key sector for Argentina) will feel emboldened to maintain those policies. In the US, the agricultural sector also stands to lose from the turn-away from free trade agreements and increased protections for manufacturing. It is possible US agriculture will demand large farm subsidies to make up for these losses, also not a positive scenario for a competitor like Argentina.

Although trade protectionism in the US is not good news, Argentina´s trade has been growing more with other regions. There may even be more opportunities (such as Mexico´s consideration of buying corn duty-free) thrown Argentina´s way as the US and Mexico renegotiate aspects of the North American Free Trade Agreement (NAFTA).

Investment climate

One of Argentina´s major goals is to attract international investment. This goal is less likely to be affected negatively, at least not in a direct way, by changes in the US. In addition to implementing policies to make investment more appealing, the government can take advantage of the meeting of the World Economic Forum on Latin America in Buenos Aires this month and hosting the G20 presidential summit in 2018 to market its investment climate. However, positions of prominence like these also bring risks in the current climate. What if Mr. Trump, who is anything but predictable, doesn´t show up to the G20 meeting?

Because Argentina is not the only country seeking foreign investment, there may be opportunities to negotiate regionally for investment in cooperative infrastructure projects. The void in global trade and investment leadership could prove to be a good incentive for regional cooperation. At the same time, it is possible that any sign of regional solidarity—for example, sympathising with Mexico about the wall—could result in a nasty tweet and out of Trump´s good graces for a while.

Finally, trends in the US economy will affect the whole world. Some big economic sectors are hopeful that Trump´s decisions to reduce regulations and cut taxes will stimulate growth. If they are correct, Argentina could benefit from the rising tide. However, if the expected economic boosts in the US do not happen, and Trump´s popularity sinks (he is already polling badly for a president so early in his term), there is potential for a severe crisis.

What about democracy and human rights? There is an ongoing crisis situation in Venezuela. It is not clear what the US will do, beyond express concern. On the one hand President Trump is clearly not interested in democracy promotion. On the other hand some of his advisors may wish to be more assertive toward Venezuela. In any case, this is an opportunity for the hemisphere and for South America to lead.

Sadly, Trumpism may present a risk to Argentina´s hard-won consensus in favor of institutional democracy, including its recent efforts to fight corruption. Liberal democracy seems to be less-favoured by the new US president than by any in the recent past, and anti-corruption is certainly not a priority for him.

When we turn to geo-political matters, tense relations between the US and China or Russia and potential conflicts in Iran or Korea pose risks to Argentina as they do for the rest of the world. The uncertainty is real. Recently, when North Korea fired another ballistic missile, tweets from the White House suggested that ¨”The clock has now run out and all options are on the table”

In the end the best thing Argentina can do is what is always best: above all to try to get its own house in order and trust that the world will right itself.