Argentina Politics Update - 29 November 2023
First indications of Milei's foreign policy priorities, Luis Caputo named Economy Minister, reopening of money laundering case against CFK
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Politics
Milei Is Planning to Shake Up Argentina’s Foreign Policy, Too (World Politics Review)
Since winning the election, president elect Javier Milei has toned down some of his more fiery rhetoric, including his rejection of “communist” countries like Brazil and China, both important trade partners for Argentina
“If China’s and Brazil’s influence in Argentina decreases under Milei, it is possible that U.S. influence— historically low in Argentina—will benefit,” writes James Bosworth
Milei’s foreign policy agenda will be limited by the state of Argentina’s economy
Argentina's Milei seeks foreign policy, IMF reset in Washington trip (Reuters)
Yesterday, Milei met with high-level US officials in Washington, DC, including national security adviser Jake Sullivan and Senior Director for the Western Hemisphere of the National Security Council Juan Gonzalez
Topics of discussion included the strengthening of the bilateral relationship, especially economically, and the commitment to clean energy and technology investments
Milei had been set to meet IMF Managing Director Kristalina Georgieva, but the meeting never occurred; it is unclear why the two did not meet
Milei to send ‘shock’ package to Argentina’s Congress on day one (Buenos Aires Times)
Once inaugurated, Milei plans to call extraordinary sessions of Congress instead of waiting until March, the usual start of congressional sessions
The large reform package he plans to send to Congress on December 11 includes policies and measures to avoid hyperinflation
Argentina in the Emerging World Order (Carnegie Endowment for International Peace)
Argentina under current president Alberto Fernández has been a supporter of Ukraine in international fora since Russia’s invasion, taking a more pronounced stance than its left-wing counterparts Mexico and Colombia, for example
However, Fernández is against imposing sanctions on Moscow, a stance reflected by its “long-standing opposition to sanctions unapproved by the UN Security Council, a common position among Latin American governments.”
The incoming Milei administration is expected to strengthen its position vis-a-vis Ukraine, though it is unlikely to significantly alter current policies
China has proved a viable source of alternative financing for Argentina, and has even formally invited Argentina to form part of the BRICS trade group, though Milei has already announced his government would not be joining the bloc
“After Brazil, China is Argentina’s second-largest trading partner, and also the second-largest destination for Argentine exports, such as soybeans and beef.”
China is also a key player in Argentina’s lithium development plans
Argentina asks for more time to pay in YPF court case (Buenos Aires Times)
Argentina requested that the deadline to pay $16.1 billion as part of the ruling regarding the 2012 nationalization of energy firm YPF be extended until after Milei’s inauguration, scheduled to take place on December 10
The original deadline for a deposit had been set for December 5; Argentina’s attorney Robert J. Giuffra requested the date be moved to “no sooner than January 10,” giving the new Milei administration time to review the country’s current conditions
Milei announced he would re-privatize YPF; it is unclear how this would affect the ongoing case
Federal appeals court revokes dismissal of Cristina Fernández de Kirchner money-laundering case (Buenos Aires Times)
The Court of Appeals accepted an appeal against a previous decision to dismiss charges against current vice president Cristina Fernández de Kirchner (CFK) in the “K money route” money laundering case
Two judges voted in favor of reopening the case, while a third voted against
Bases Republicanas, an NGO linked to former president Mauricio Macri’s PRO party, submitted an appeal for the case to be reopened
In June, the court had ruled that there was no evidence that CFK was involved in the case, after a decade of CFK maintaining her innocence and declaring she was a victim of political persecution
Hamas frees 12 hostages, including four Argentine-Israeli women (Buenos Aires Herald)
At least 20 Argentines had been captured by Hamas since October 7; six were released on Monday, with another 4 released yesterday
Economics
Milei Announces Luis Caputo as Argentina’s Economy Minister (Bloomberg)
Luis Caputo, former finance chief and head of the central bank under Mauricio Macri’s (2015-2019) administration will become Argentina’s Economy Minister on December 10
Caputo, along with cabinet chief Nicolas Posse, remained in Washington to continue discussions with Treasury and the IMF
How Argentina Could Still Convert to the Dollar (Bloomberg)
Dollarization is a messy process, regardless of how it is carried out
There are various ways for Argentina to gain the dollars it needs in order to dollarize, but most of those plans will turn a significant portion of the electorate against Milei and could end up hurting wallets in the short run
Argentina’s Big Dollarization Risk (Wall Street Journal)
Milei’s pick for Economy Minister - anti-dollarization economist Luis Caputo - and his reversal on naming on pro-dollarization economist Emilio Ocampo as head of the central bank indicate that dollarization has become a medium-long term priority - if a priority at all - for the incoming Milei administration
Exclusive: IMF keen to support Argentina, possibly through resilience trust - Georgieva (Reuters)
Milei met with IMF representatives virtually last Friday, which IMF Managing Director Kristalina Georgieva described as a “very constructive engagement, very serious discussion”
The IMF is also interested in helping Argentina become less vulnerable to climate-related events, such as droughts
Lithium + Energy
Biden Administration: we are looking for ways to encourage investment in Argentina’s lithium (Lithium Triangle South America)
Argentine lithium sales to the US represent almost 50% of the total purchased by the latter
Officials both in the US and Argentina request that the Biden administration make an exception for Argentina under the Inflation Reduction Act (IRA) in order to obtain more of Argentina’s lithium
The IRA offers fiscal credits for the purchase of cars made with lithium batteries made in the US or in countries with a free trade agreement with the US
Argentina does not currently have a free trade agreement with the US
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