Originally published by Internationalist 360.
Germán Gorraiz López
The Pacific Alliance was born in 2011 with Mexico, Peru, Chile and Colombia as founding States, the USA and China as observers and Australia and Canada as future associated States and currently represents 41% of Latin America’s GDP and 57% of its foreign trade with a potential market of about 230 million people.
The celebration in Santiago de Chile of the XV Summit of the Pacific Alliance already laid the foundations for incorporating Mercosur (Brazil, Argentina, Paraguay and Uruguay) following the Kentian theory of the “carrot and stick” expounded by Sherman Kent in his book “Strategic Intelligence for American World Policy” (1949).
Macri’s acceptance of the IMF’s postulates meant mortgaging Argentina’s economic sovereignty, since after the IMF’s disbursement of about US$ 52 billion, the current government would be left with the burden of debt maturities for 2021 estimated at about US$ 15 billion, an incalculable amount. This amount would be unaffordable for the Central Bank of Argentina, which would have liquid reserves of about US$ 2,500 million, so Argentina and the IMF would have started negotiations to restructure the total amount of the debt with the IMF, estimated at US$ 45 billion.
Furthermore, according to BBVA Research, inflation in Argentina will reach ionospheric levels in 2021 (above 50%), which will cause the loss of competitiveness of Argentine products with the consequent constriction of exports and an increase in the trade deficit that will lead to a devastating unemployment rate of 20% in 2021. Likewise, uncontrolled inflation entails the loss of purchasing power for workers and pensioners, the contraction of domestic consumption and the discouragement of savings and the search for income outside productive activities, which could lead to a productive desertification that would be unable to meet the demand for basic products.
According to the former Managing Director of the IMF, Lagarde, “the strength of the dollar together with the weakness of commodity prices creates risks for the balance sheets and financing of debtor countries in dollars”, from which it follows that the economies of Latin America and the Caribbean will be more exposed to a possible appreciation of the dollar and the reversion of the associated capital flows, This could reenact the “Lost Decade of Latin America” (1980s), aggravated by a marked increase in social instability, rising poverty rates and a severe setback in democratic freedoms.
On the geopolitical level, the Biden Administration would be seriously concerned about the growing presence of China and Russia in the country as a result of the supply of medical supplies in the context of the current health pandemic (more than 3 million infected) and especially about the possibility of China installing a joint military base with Argentina in Usuhaia in exchange for Chinese financial support to install a gigantic logistic center in the province of Tierra del Fuego. In spite of the fact that the Argentine President himself has promised Joe Biden’s special envoy, Juan Gonzalez that “there will be no foreign bases in Argentina”, the US will use the Kentish strategy of “carrot and stick” to pressure the Argentine Government to install a joint base in Ushuaia and thus control the traffic of mega-containers through the Drake Passage, an alternative to the Panama Canal.
In the event that the Government of Alberto Fernández is not sensitive to Washington’s dictates, a “soft civilian-military coup” could not be ruled out, which would have the blessings of the Biden Administration and whose first draft would be the statements made by the spokesman of Grupo Clarín, Marcelo Longobardi in Radio Mitre who stated that “someday we will have a surprise because we will have to format Argentina in a more authoritarian way to handle such a disaster”.
Germán Gorraiz López writes analysis on economic and geopolitical issues. He collaborates, in addition to Diario SIGLO XXI, in other Spanish and Latin American digital media such as Bottup, España Liberal, Libre Pensador, Socialdemocracia.org, Alainet, CubaNuestra, Plano-Sur.org, Entorno-empresarial.com or El Mercurio Digital.
Originally published by Internationalist 360.
Author: Internationalist 360
Internationalist 360 provides a forum for authors to publish posts regarding current events in nations around the world, especially in South American, Middle Eastern and African nations.
