October 15, 2024
In a world at war, libertarian Argentina and the global context
Jorge Marchini* – Latin American Center for Strategic Analysis (CLAE)
In the context of the enormous growth of conflicts observed in the world, there is a strong alteration in international economic and financial ties, the evolution of which is also uncertain for Argentina.
Immediately, uncertainty about commodity prices in a world at war has become one of the main concerns for economies dependent on the export of raw materials, such as Argentina. In this global scenario, where armed confrontations, geopolitical tensions and trade disputes increase, the volatility of commodity prices poses complex challenges. From green, blue & purple washing to the economics of war and adjustment – South Wind
The effects of wars and international tensions affect both the supply and demand of resources, altering the dynamics of global markets and causing fluctuations that are difficult to predict.
The wars in Ukraine and the Middle East and the dangerous tensions in the China Sea already have an immediate correlation in the conditions of international production and supply of key products. The unknowns are also verified in the alterations of capital flows, the conditions of public and private debt and exchange instability, due to the superposition of greater interventionism by central banks, competitive devaluations and flight from capital risk.
The consensus in favor of open markets and globalization that prevailed over the past few decades has largely disappeared. Instead, international divergences are increasing, highlighting not only the non-existence of capitalist benevolence, but also the growing sterility and/or marginalization of multilateral organizations or bodies for the resolution of disputes.
In times of conflict, countries not only determine restrictions on contenders (blockades), but prioritize their own strategic interests with greater public intervention measures, reinforcing self-sufficiency and aspiring to reduce external dependence. It is a process that generates ruptures of value chains, protectionism and public policies that favor the production and accumulation of key resources, prioritizing war requirements.
Instability results in growing differences and tensions between countries and within each one and the resurgence of dangerous tendencies of disintegration and social exclusion. How is the libertarian government of Argentina, called to “save the West” located?
First servility
Enunciatively, the foreign policy of the Milei government has been presented as a compendium of fanatical ideological dogmatism, claiming to prioritize ties with the United States and Israel and allies against “statist countries.” He has made this explicit by highlighting “insurmountable differences” in relation to countries that he characterizes as “communist” or “progressive”, and presenting himself in every international forum as a champion of market freedom against state interventionism.
Milei positions himself as a watchdog of the West—as demonstrated in his recent speech at the UN General Assembly—but his contradictions are evident. This is not only for shamelessly plagiarizing phrases from the American series The West Wind about definitions and conflicts in the White House, which is perhaps on the same level as those that take place in the Casa Rosada.
Paradoxically, while criticizing communist or progressive regimes, much of Argentine foreign trade is linked to countries like China and Brazil that, by their own definition, should be outside the orbit of state relations. Meanwhile, while it assumes that providing priority attention and regressive adjustment policies to meet its expectations, credits and private investments will rain, given the feared impossibility of facing growing financial commitments, it expects benevolence from multilateral organizations (IMF) and “friendly” governments. for a statist rescue.
The world is not what Milei supposes nor what Milei claims in his vituperative and self-laudatory speeches. He himself has had to make incongruous explanatory turns in the air: “I was very pleasantly surprised with China. It is a very interesting business partner, because it does not demand anything; The only thing they ask is that they not be bothered,” also anticipating that he will soon travel there.
Without even being able to recognize it, and hence also the recurring blunders and turns of Chancellor Mondino, the presidency of Javier Milei faces an international scenario in full war and geopolitical effervescence. The dogmatic vision, based on extreme liberalism and a rigid defense of the free market, collides with reality.
Mileist economic and financial policies are based on logic held with sticks, without a solid structure to support it. The government is confident that fiscal adjustment measures, reduction in public spending and market liberalization will attract the confidence of international investors. However, the reality is that markets do not act as a matter of faith or ideological affinity. These do not reward provocative speeches or abstract ideas; They are governed by specific interests, that is, by the calculation of profits and the perception of stability and security in the medium and long term.
Milei’s promises of radical economic transformation have not generated the immediate enthusiasm he expected from large investments rushing the approval of an excessive incentives regime, the RIGI. On the contrary, what has been seen from the hand of an Economy Minister like Luis “Toto” Caputo, specialized in volatile financial games already in the government of Mauricio Macri (2015-2019), has been a rebound in speculative investments. short-term that seek to take advantage of the immediate advantages of monetary and exchange policies without any commitment to the real economic development of the country.
The carry trade, taking advantage of high local interest rates to obtain quick profits with short-term speculative capital, has been one of the financial tools that Caputo has handled with great skill, but also with potentially disastrous consequences socially and with a record growth of public debt that is hidden with maneuvers and misrepresentations (transfer of debts from the Central Bank to the national Treasury).
Faced with real definitions
The tension between rhetoric and reality is not new for Argentina. What happens is that now the scenario inevitably calls for taking a position and taking concrete actions in a context of growing global instability with an uncertain prognosis.
An unknown is how Argentina, under a provocative, fanatical, libertarian management, will be able to deal with a world that seems to be heading towards war economies.
Faced with growing conflicts, governments tend to intervene more in their economies, including financial controls and strategic commodity prices. The main world powers, such as the United States, China and the European Union, have adopted intervention policies in key sectors such as energy, food and technology, in order to guarantee their national security. This generates new distortions in the The European Union, between the United States and China | Politics | The Old TopoInternational markets, as the largest economies impose trade barriers, subsidies and price controls, in parallel with financial restrictions.
In the midst of this uncertain panorama, there is a pattern of behavior that seems clear: Milei has shown that he has no problem looking for scapegoats to justify the failures of his administration, instead of assuming responsibility for the consequences of his policies and blunders. It is likely that he will continue to blame the previous government, unions, retirees, public universities and social programs. But without a doubt he would not be afraid to do it with “external enemies”, including neighboring countries.
Contrary to the conspiratorial-chauvinist verbiage of the fanatical right, the central question to be defined is whether Argentina and Latin America should actively participate in the international scene assuming a defined position in the midst of conflicting blocs or if they should opt for a position of neutrality. strategic (debate that was central in relation to the two great world wars for Latin America in the 20th century). This last option would avoid getting involved in external conflicts that could compromise both national and regional interests. There is a path to struggle and travel together and not to fuel dangerous tensions that could multiply in the face of greater global imbalances.
The blaming strategy might have some success in the short term, but it will not solve society’s structural problems. The challenges facing the country require fundamental solutions, not inflammatory speeches or the search for internal or external scapegoats. Milei’s policy, based on a mixture of dogmatism and opportunism, lacks a comprehensive vision to face the great challenges of the present and the future.
Argentina continues to face an uncertain future, with a leadership that, far from offering solutions, seems more interested in finding who to blame for its accumulation of provocations and decline. Very dangerous.
* Full Professor of Economics at the University of Buenos Aires. Coordinator for Latin America of the International Debt Observatory, researcher at the Latin American Council of Social Sciences (Clacso). Vice President of the Foundation for Latin American Integration (FILA) and collaborator of the Latin American Center for Strategic Analysis (CLAE, www.estrategia.la)
2024-10-15 17:12:00