On May 8, Argentine President Alberto Fernández embarked on a European international trip that will include bilateral meetings with his counterparts from Portugal, Spain, France and Italy. He will also meet with the Head of State of the Vatican City, Pope Francis. The Official Committee also includes the first lady Fabiola Yañez, Foreign Affair Minister Felipe Sola, the Minister of Economy Martin Guzman, and the Secretary of Strategic Affairs Gustavo Beliz.
The main topic on Alberto Fernandez’s agenda for his third international presidential trip in 2021 (he visited Chile in January and in February and then Mexico) is the renegotiation of the debt that Argentina contracted during the government of Mauricio Macri (2015-2019), an amount greater than $55 billion. Hence, his entourage includes the two people mainly responsible for the economic affairs of the southern nation: Guzmán and Beliz.
Another issue on the agenda has to do with one of the greatest concerns of the Argentine president: the fight against the ongoing global pandemic. The countries of the counter-hegemonic South are negotiating with the powers of the North to release patents to produce vaccines against Sars-Cov2. In this sense, the meeting with the President of Portugal, Marcelo Rebelo de Sousa and Portuguese Prime Minister António Costa, who currently holds the rotating Presidency of the European Union (EU), is of strategic importance. He will likely request a statement in favor of the release of the mentioned patents. In relation to this matter, this Saturday, May 8, EU leaders promised to reactivate “a social agenda” that aims to avoid worsening the crisis. “We are here to renew the European social contract,” said Costa.
After these meetings in Lisbon, Fernández will travel to Madrid, where he will have a more formal style meeting with the Head of State of the Kingdom of Spain, King Felipe VI. Later, at the Palacio de la Moncloa, the Argentine president and his entourage will hold working meetings with the Head of the Spanish Government, President Pedro Sánchez. The main points here will be linked – in addition to support in the negotiation with the IMF, as well as with other international creditors of Argentina’s foreign debt – to bilateral relations, especially trade and foreign direct investment. It is worth mentioning that Spain is the second foreign investor in Argentina with more than 300 Spanish companies installed in sectors such as: finance, telecommunications, metallurgy, energy and gas (Santander, BBVA, Telefónica / Movistar, Gas Natural / Naturgy, Mapfre, Day…)
On Wednesday, May 12, the Argentine president is scheduled to lead a meeting with businessmen, which will take place at the Embassy of the Argentine Republic in Paris. At the end of this activity, Alberto Fernández will be received at the Élysée Palace by Emmanuel Macron. In this context, the most important issue will be to once again have the public support of the French president in the renegotiation of the debt with the IMF and, especially, with the creditors of the Paris Club. It is worth saying that the Presidency of the Paris Club, as well as the Co-Presidency and Vice-Presidency of this financial organization, are in charge of Senior Officials of the French National Treasury. Argentina’s debt with the Club is around $2.4 billion, and the next payment due date is May 31, 2021. As of this date, an extension of up to 60 days comes into force (July 31, 2021). If Argentina does not renegotiate by this date or, failing that, does not pay the debt, it will default.
On the morning of Thursday, May 13, the Argentine Official Committee will visit the Apostolic Palace, where Fernández will hold a private audience with Pope Francis. In the afternoon, the Argentine national president will hold a meeting with the Italian Head of State, Sergio Mattarella, and, later, he will do the same with the President of the Italian Council of Ministers (Head of Government), Mario Draghi, who currently holds the Presidency of the G20, the group of the 20 largest world economies, which Argentina integrates as a full member and as an emerging economy. The agenda items are similar to those mentioned above.
On the other hand, the Minister of Economy, Martín Guzmán, has confirmed his participation in the International Seminar “Dreaming of a Better Restart”. This event, organized by the Pontifical Academy of Sciences and the Vatican academy, will deal with issues related to foreign debt in general terms. It is an excellent forum for Guzmán to defend Argentine interests in relation to the sovereign economic development of the southern nation. So far, in addition to the Italian authorities and those of the Vatican, the head of the IMF, Kristalina Georgieva, the Nobel Prize in Economics Joseph Stiglitz, and the United States Special Envoy for Climate, John Kerry have confirmed their participation in this seminar. This space includes preparations for the G20 meeting, to be held in Rome next July.
The context and some expectations
The international and European context, roughly speaking, is relatively positive and favorable to Argentina’s interests: getting the correct and necessary accessions to the government proposal to renegotiate the debt with the IMF and the Paris Club as two of the largest creditors of the southern nation. The debt with the IMF amounts to $45 billion, while the payment commitments with the Paris Club, as we discussed, represent a total of $2.4 billion.
The context is favorable for Argentina, since the request of Buenos Aires to extend the maturities of the debt occurs at a time when the democratic legislators of the United States launched an initiative so that those countries affected by the pandemic may be exempted for a defined period from certain obligations with multilateral organizations (IMF, World Bank, Paris Club, IDB, CAF …). In this regard, the congressmen were not only referring to the poorest countries, but also to the middle-income ones.
This request from the Biden Administration has been understood as an unprecedented gesture from a political point of view. However, also in economic matters, the US has strong influence within the IMF. Let us remember that, unlike what happens in other international organizations where the decision of a country is equivalent to one vote, the decision-making process in the International Monetary Fund is the concrete expression of the economic representation of a country in the global economy. In other words, the United States has more than 16% of the voting power in all the decisions made by the IMF.
On the other hand, contrary to what happens in an important part of the coalition in power Frente de Todos and, in particular, in the opposition to the government of Alberto Fernandez, the image of Minister Martin Guzman, among different references of international financing organizations, has been consistently high or positive. This has allowed Guzman to have concrete victories in the debt renegotiation, for example, in 2020. This does not mean that in 2021 he will have the same support again, since he is not going in carte blanche. His serene and apolitical character, which has been criticized so much by the opposing Kirchnerist camp, and even by the opposition national press, is well received in deeply technical negotiation spaces like the IMF and World Bank.
Curiously, although on another level and order, President Alberto Fernandez has also been received by European leaders in a positive way, for example, during an international tour that he made last year, together with Guzman (quite similar to the one he has just completed) where, in addition to several of the meetings embodied in that presidential visit, there were also meetings with the FAO, which has its headquarters in Rome, and a very positive meeting with the German Chancellor, Angela Merkel.
In other words, Fernandez also has the image of a “pragmatic politician”, with a more socially oriented profile, defending the rule of law and human rights. In that sense, there should be no big surprises on this new tour of Europe, beyond the achievements around vaccines and debt. Although, the Argentine president is currently the Pro Tempore President of Mercosur, the Argentine position in relation to the negotiations of the partners of the bloc is that it is not negotiated unilaterally, therefore, there may be conversations in relation to the Mercosur-European Union Agreement, but these would not be conclusive.
Other issues could draw the attention of European leaders in light of the visit of a Latin American President, such as the situation in Brazil, the Colombian crisis, or Venezuela, it is unlikely that Alberto Fernandez will make any statement which is “out of tune” in regard to the situations these countries are going through. However, anything is possible. In principle, the objective is clear and the efforts are directed to reach the final goal: debt renegotiation and projections to keep the Argentine economy stable in an very unfavorable global context.