Secretary Luis Caputo often referred to the phrase “it’s different this time” regarding the novelty of the fiscal anchor with other stabilization programs tried in the past. Economists discuss this matter at length. We internationalists ask ourselves the same question regarding the returns/benefits obtained from the coupling strategy with Washington deployed by the Miley government.
The literature on Argentine foreign policy has extensively shown how similar strategies aimed at satisfying the interests of the hegemonic power (the cases of Menem and Macri) did not achieve the expected reward. Becente’s direct intervention in the Argentine exchange market surprised everyone, including foreigners. It was undoubtedly the most important reward of the pairing experience in Argentina in the 21st century. Is this time different?
Analysts consider as an explanatory variable the strong personal connection between Trump’s Miley and the Argentine president’s peripheral taxes on the global MAGA project. In parallel, it is necessary to look at the systemic variant based on three mutations.
Latin America as a sphere of influenceTrump II’s actions represent a redesign of Western hemisphere politics as a sphere of influence, something that has not existed since the end of the Cold War. To achieve this goal, the logic is binary: the “stick” (sanctions and threats) for the most deviant governments, and the important “carrot” (benefits and rewards) for the most allies, something that the United States has not put on the table in recent years. When officials from previous administrations asked to make commitments to China, the response from Latin America was, “Where’s the meat?” Trump has shown the region that carrots are available, you just have to adapt.
Geoeconomic segmentation: Globalization is fragmented along geopolitical lines. The United States seeks to ensure comprehensive control over strategic supply chains. It does not matter if there is a surplus supply of goods, as Washington seeks not to remain vulnerable and prey to unrest. Rare earths are the ultimate example. Investment funds such as JP Morgan realize that secession can be profitable and align with the US geopolitical goal. South America in general and Argentina in particular appear on the radar of foreign direct investment and the connection of so-called safe chains: vital minerals, pharmaceutical precursors and energy. This scenario was not in the context of the last vestiges of hyper-globalization that Macri suffered from.
State capitalism with American characteristics: Clinton had the idea that a globalized China would democratize and look more and more like the United States. Thirty years later, Trump wants to become more and more like China. Decisiveness, discretion, ambiguity, and speed take precedence over rigid, transparent, and slow bureaucracies and institutions. China helps any country in swap In a one-day meeting, the United States sent its partners to negotiate with IMF staff. Helping allies is direct and quick, otherwise it is useless. Argentina appears to be a test case.
The discussion about whether Argentina’s current pairing strategy serves the country’s interests deserves another column. There are sunk opportunity costs (for example, the lack of an Asia policy) that are greatly underestimated. Today there are important rewards for the Argentine government (it is hasty to say for the country) even higher than Casa Rosada had expected. This logic is explained by individual variable and global changes. The problem for the government is that it believes this dynamic can continue forever. In this world, 2027 is a long time coming.