Tuesday, June 6

Without definition with the IMF, analysts already doubt that Argentina will sign the debt agreement

“The difference we have with the IMF is the speed of fiscal consolidation and the combinations between expenses and income. We do not want to penalize demand when the economy is recovering”Guzmán said in an interview with the French newspaper Le Figaro.

Regarding the progress of the negotiations, Guillermo Oglietti, Doctor in Economics from the University of Barcelona and director of the Latin American Strategic Center for Geopolitics, analyzed the results of the meeting between the Argentine Foreign Minister, Santiago Cafiero, and the US Secretary of State, Antony Blink, and evaluated that the same message from the United States can be interpreted differently if it comes from the Treasury or the State Department.

On the one hand, he considered that the “similarity between the declarations of the Treasury Department and the State Department reflects a synchronized swimming of a seamless policy towards Argentina; with this, we can infer that Blinken and Yellen coincide, but we cannot risk if it is to reject or accept the Argentine proposal”.

Oglietti compared the Cafiero-Blinken meeting with the one that took place in Venice, six months earlier, at the G20 summit, between Guzmán and the head of the Treasury, Yanet Yellen, the first where the Argentine government officially discussed the IMF negotiation with the USA.

The statement that gave rise to the Government interpreting a favorable result of Cafiero’s visit to the US reads as follows: “The secretary discussed Argentina’s negotiation with the IMF and encouraged Argentina to present a solid economic policy framework that returns growth to the country” .

This statement, Oglietti continued, is identical to the one Yellen’s number two, Wally Adeyem, gave to Guzmán in the middle of last year, saying that “a solid economic policy framework for Argentina that provides a vision for the growth of the employment in the private sector would have the support of the US”.

But Oglietti warns that the Venice meeting was also attended by David Lipton, who was the top US representative to the IMF when the government of Donald Trump facilitated the arrangements for the loan to the government of Mauricio Macri, and currently works as an advisor on Latin American affairs to Yellen.

“We suspect that Lipton does not like the Argentine proposal because it would imply recognizing his malpractice, and we also take into account that the North American representative on the IMF board of governors has been one of the few who did not positively value the ex post performance evaluation of the Stand By agreement signed by Macri. This allows us to anticipate a negative predisposition on the part of the Treasury to accept the Argentine proposal, which implies an exceptional and unorthodox treatment for IMF standards”, he expanded.

However, he clarified that, on the side of the State Department, “we see that the US Foreign Ministry is very distracted pointing to the Chinese and Russian fronts, which represent greater geopolitical challenges than those implied by the weak Argentine economic situation that they were able to achieve.”

In that sense, he continued: “One of the probable scenarios is that in the midst of so many relevant geopolitical distractions and a Latin America in convulsion and dissatisfied, which has changed signs in Peru, Bolivia, Chile, Argentina and Mexico and which would exchange in Brazil and Colombia, is that the United States accept the Argentine proposal, not so much to avoid the isolation and suffering of Argentines, but rather to avoid further agitation of their backyard or push us into the hands of one of their great geopolitical adversaries, such as China,” he said.

Meanwhile, from a more economic perspective, the former Vice Minister of Economy under Cristina Kirchner’s administration, Emmanuel Alvarez Agis, stated: “If six months ago they asked me if there would be an agreement, I was inclined because there was; today the probability that there will not be an agreement is not zero,” he justified in light of recent events.

For Agis, “the only ones who know if the meeting was good or bad for Argentina are Cafiero and Blinken. More information is still needed to be able to decide whether there will finally be an agreement,” he said in radio statements.

According to this economist, the merely technical discussion, if it is through the fiscal path, is not so difficult to close, from the point of view that the Treasury would ask Argentina for a 1% reduction in the fiscal deficit per year, while that Argentina would do it in 0.7%.

For IMF trading standards, this difference is smaller; “The economic plan of the agreement, the least conflictive,” he asserted.

But he warned of complications at the political level. “Traditionally, the position of a country and the IMF is discussed; instead, three more discussions are opened here: a discussion within the Front of All, another discussion of the agreement with the opposition, and another between the doves and hawks” of the United States. United, he ironized.

With this panorama, adds a legal vision of the subject with foundations from international public law that is taking flight, and that maintains that the agreement with the IMF should be considered null, because “it failed in all its central objectives, it violates the principles of the IMF according to its Articles of Agreement and, therefore, constitutes an ‘ultra vire’ act”.

That’s how they hold it Karina Patricio Ferreira Lima, lawyer and researcher at the University of Leeds, together with Chris Marsh, a consultant and former IMF official.

That nullity implies that a new instance would be opened. “It would not be a new agreement with the IMF like the one that is being negotiated now, because the Stand By would fall; the origin of the restitution obligation would no longer be the Memorandum of Understanding or any mechanism provided for by the law of the Monetary Fund, but another type of obligation that Public International Law can provide,” said Patricio Ferreira Lima during a recent interview.

“The negotiation is removed from the scope of the IMF and moved to the general field of Public International Law, which has different rules,” he said.