Argentina's foreign policy to focus on multilateralism and trade

Under President Mauricio Macri, Argentina’s foreign policy has undergone a fundamental turnaround. Following years of left-populist politics under Néstor Kirchner and Cristina Fernández de Kirchner, who allied with other regional populist governments and often clashed with global powers such as the US and the UK, President Macri has since shifted the country’s foreign policy focus. With economic reform on the top of his agenda, Macri reset relations with the US and the UK upon taking office, and reinstated trade with China, as Argentina re-entered the global economy after being shut out of international credit markets in 2001.

Regionally, President Macri’s 2015 election victory ushered in a dramatic political shift from socialist to centre-right governments in South America, with Peru, Brazil and Chile following suit. Argentina has also been more proactive within Mercosur, the regional trade bloc, with the president leading trade talks with the EU.

Kirchner Years

During the Kirchner years, between 2003 and 2015, Argentina’s foreign policy became far more focused on regional influence and trade. Increasing Mercosur cooperation and an ideological alignment with the socialist governments of Bolivia, Venezuela, Ecuador and Brazil formed the backbone of the Kirchners’ foreign policy agenda. Meanwhile, Argentine relations with the US and the UK deteriorated as Washington’s alleged imperialism and the dispute over the Falkland, or Malvinas, Islands dispute became major points of contention. Moving away from the US and the UK, the Kirchners instead focused on global strategic partnerships with China, Russia and Iran, with Beijing providing a financial lifeline to the Argentine government, providing loans of billions of dollars for infrastructure projects.

Macri Transition

Upon taking office, President Macri was quick to overhaul Argentina’s foreign policy agenda as his government sought to distance itself from the strained bilateral relations of the past. Reinvigorating relations with Washington was at the forefront of President Macri’s early foreign policy agenda, and a February 2016 deal to end a long-running and acrimonious standoff with US bondholders effectively ushered in a new era of US-Argentine relations. In June 2016 Argentina also joined the Pacific Alliance as an observer state, thereby further expanding and diversifying potential trade opportunities. While relations with the US, Europe and regional powers were fundamentally overhauled, the Macri administration maintained a consistent policy line with China, which remains one of the country’s key economic partners. Closer to home, President Macri led the charge against Venezuelan President Nicolás Maduro within weeks of taking office, calling for Caracas to be suspended from Mercosur on charges of flouting democratic norms.

Cooperation

In a bid to revitalise the Argentine economy, the current administration’s foreign policy now centres around cementing existing bilateral economic ties with China, Brazil and the US, as well as expanding Mercosur-EU cooperation. Almost three years into his presidency, President Macri has built a strong relationship with China, and trade between the countries reached $13.8bn in 2017, making China the country’s second-largest trading partner behind Brazil. Beijing has financed several major Argentine infrastructure projects, including two nuclear plants and a $2.5bn upgrade of a cargo rail network.

Meanwhile, despite a growing trade deficit with the US and the prospect of tariff increases on Argentine exports, there have been promising signs of increased economic cooperation with the US. For instance, in January 2018 Argentina was reinstated to the Generalised System of Preferences programme, enabling access to total or partial reductions in US trade tariffs.

A potential Mercosur-EU trade deal, which President Macri’s administration has been leading negotiations on since 2016, could also prove a potential game changer for the sluggish Argentine economy.

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The Report: Argentina 2018

Country Profile chapter from The Report: Argentina 2018

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