In April 2020, China had become Argentina’s largest trading partner even though temporarily. The United States occupies the third place as a trading partner with Argentina after Brazil and China.
New Delhi: The recent decision taken by Argentina to become a part of China’s Belt and Road Initiative (BRI) officially, on 6 February 2022, should not come as a big surprise. Argentina’s President Alberto Fernandez finalised the agreement during his visit to Beijing to attend the opening of the Winter Olympic Games. A Memorandum of Understanding on BRI cooperation was signed. This further strengthens the bilateral relationship of the two countries as well as promotes cooperation in other areas such as digital economy and connectivity, aerospace, satellite system, innovation in technology, agriculture, energy and environment. China is already an important trade partner for Argentina. During the Covid-19 pandemic (first six months of 2020), Chinese imports of primary goods such as soybean and beef helped Argentina maintain a positive trade balance, even when most economies were experiencing recession. While Argentine exports of manufactured goods, fuel and processed agricultural goods fell during this time of the pandemic, exports of primary goods to China actually grew in the first half of 2020.
The decision may be seen in the light of the strategic partnership that Argentina had signed with China in 2014 under then President Cristina Kirchner, belonging to the left-leaning Justicialist Party. The Kirchner administration had also signed an agreement with China in 2014 to base a deep space station in the Patagonia region. While many may view Argentina’s partnership with China as a political decision, the economic significance of this partnership cannot be sidelined. The term “strategic partnership” has been used in international affairs to describe diverse bilateral relationships that may be very complex or simple trade-based ones like that between Argentina and China. While the signing of a strategic partnership posits a special relationship between two countries, the content and purpose may vary with no fixed criteria that define and give it shape. The point being made here is that each such partnership has its own meaning and intent that is distinctive. Thus, while India too has signed a strategic partnership with Argentina in 2019, this relationship cannot really be compared with that of China and Argentina, whose main focus so far had been economic and trade-based.
When Mauricio Macri, a businessman and a Conservative, took over as Argentina’s President in 2015, many scholars viewed Argentina’s foreign policy as being re-oriented towards the United States. It should however be noted that Macri also took pragmatic steps to bring Argentina closer to countries such as China and Russia. He promoted the strategic partnership signed with China in 2014 and reconfirmed the strategic partnership with Russia in 2016. While he restructured Argentina’s engagement with the United States extensively, he had also reached out to conventional international institutions, and to countries such as Australia and South Korea. The same logic may be applied in the case of Alberto Fernandez and his relationship with China. After winning the presidential elections in 2019, President Alberto Fernandez faced with economic crisis, attempted a more pragmatic approach to address Argentina’s high poverty and unemployment, rising inflation and diminishing foreign reserves. Added to that has been the Covid-19 pandemic, which further complicated Argentina’s situation. While Argentina’s trade has been largely dependent on Brazil and Mercosur, China cannot be ignored. In April 2020, China had become Argentina’s largest trading partner even though temporarily. The United States occupies the third place as a trading partner with Argentina after Brazil and China.
Fernandez is also faced with domestic problems. In the mid-term Congressional elections held on 14 November 2021, his ruling party, Frente de Todos (Everybody’s Front) lost majority, while the opposition Juntos por el Cambio (Together for Change) led by Macri, gained support. Another problem is the split within the ruling coalition over the debt restructuring deal with the International Monetary Fund (IMF). Argentina struck a deal with the IMF in late January to restructure US$44.5 billion outstanding debt and the agreement to join the BRI has been seen in this light by many commentators. China has offered $23.7 billion in investments and infrastructure projects. While $14 billion is earmarked for infrastructure projects, $9.7 billion will be used for joining the BRI. Moreover, in his meeting with the Russian President Vladimir Putin, just before his Beijing visit, Alberto Fernandez offered to be the “gateway” for Russia to enter Latin America. He also reiterated Argentina’s interest in joining the BRICS forum. This is not something new. Discussions on Argentina and Mexico from Latin America becoming members of BRICS have been on for the last few years. The previous two governments of Cristina Fernández de Kirchner and Mauricio Macri have been encouraging Argentina’s membership of BRICS and this has not changed.
With Argentina taking over as the head of the Community of Latin American and Caribbean States (CELAC) in 2022, China can use this as an opportunity to extend this cooperation to other Latin American countries. Many countries in the region such as Mexico, Brazil and Colombia are still holding out against becoming an official member of the BRI, but a large number of Latin American and Caribbean countries have already joined, the most recent being Cuba in December 2021 and Nicaragua in January of this year. It should be noted that Brazil, despite having not officially joined the BRI, is one of the largest recipients of Chinese infrastructure investments. The United States has evinced great concern about the Chinese space station in Argentina and its ability to monitor US satellites from within the Western Hemisphere and China’s expansion into Latin America. The nuclear deal signed by China National Nuclear Corp to build Argentina’s nuclear power plant Atucha III, just before the Argentine President’s visit to China, has added to these concerns. The key challenge for President Fernandez is the increasing competition between US and China in the region and its ramifications for Argentina.
Dr Priti Singh is Associate Professor at the Centre for Canadian, US and Latin American Studies, School of International Studies, Jawaharlal Nehru University, New Delhi.