Argentina’s bilateral ties and challenges for the new year

After his first dialogue with Jair Bolsonaro and Joe Biden, Alberto Fernandez seeks to define a strategy with its main business partners After a year of pandemic, and glimpsing a still uncertain international scenario, marked by strategic competition between China and the US. It is essential to analyze the three most important bilateral relations for Argentina today: Brazil, USA and China.

Recompose a crucial link

After a year in the Casa Rosada, the news of the communication between Fernández and Bolsonaro was welcomed like a breath of fresh air. But, as the saying goes, una hirundo non facti ver, we will have to see how the relationship progresses in the new international scenario. Bolsonaro faces the displacement of his great international ally, Donald Trump, and his link with China is not at its best.

For Fernández, on the other hand, the rise of Biden could generate new rules of the game in the region that would allow it a greater role. Thus, it becomes crucial to preserve its alliance with Brazil, promoting Mercosur. In addition, Argentina assumed the pro tempore presidency of the group and a relevant part of its agenda is not a consensus with Brazil.

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Trade data reinforce the growing trend of the bilateral relationship, as Brazil regained ground by consolidating as the main trading partner of Argentina, a place that had been in dispute with China. For this reason, the Argentine Foreign Ministry designed an ambitious 2020-2022 export plan to Brazil to reduce the gap in the trade balance and enhance the flow, demonstrating interest in its regional partner.

Change in political tone

Biden’s victory generated in the Argentine government the expectation of improving the relationship, given the change in tone and the greater ideological affinity. In Fernández’s words: « we see in you an alternative. » It is that Biden has a vision opposite to his predecessor Trump regarding international cooperation and multilateralism, with which a return of the United States to different forums is expected. Both Brazil and Argentina need to have a fluid dialogue with Washington. So there is an opportunity to combine a joint agenda between both countries.

Argentina faces a priority macro challenge: to resolve the negotiations with the IMF, in which the US plays a fundamental role. Reaching an understanding is extremely relevant, since it will not only clear the dollar maturities of the coming years, but also because it implies having an economic program, key to anchoring expectations and stabilizing the economy.

In the first bilateral talk with the US, Fernández stated that « defending security and democracies on the continent, I am sure that we are going to do many things together. » In this context, its position in the humanitarian crisis in Venezuela will be key.

Strategic partnership

China is one of Argentina’s main trading partners, with whom they have shared close ties for years. Fernández knows that it is an alternative to attract investment in infrastructure and for foreign exchange reserves to flow into the country. China has also deployed a diplomatic policy with Argentina of cooperative rapprochement that included an exchange of US $ 18,500 million to reinforce the BCRA’s reserves.

China is interested in Argentina be incorporated into the agreements to implement La Franja and BRI. This was one of the most important topics that Xi Jinping and Fernández touched on in their last conversation. And Fernández plans to travel to China next May.

Thus, for both Brazil and Argentina, any decision that involves tightening the rope with China or the US can have significant costs. Lhe two-way strategy became increasingly complex and difficult to sustain. Being able to generate an Argentina-Brazil alliance to take a stronger position and face the dispute for pre-eminence between Washington and Beijing in a more balanced way is crucial in this scenario.