BUENOS AIRES, Argentina — Argentina had hoped to show off its newly market-friendly economy to the world when the G-20 group of the world’s top economies begins its first South American summit this week. Instead it’s looking for help to avoid an all-out crisis.
The two-day meeting that starts Friday is meant to focus on development, infrastructure and food security, but most of the talk on the sidelines is expected to centre on trade disputes between the U.S. and China and the signing of the new North American free trade deal.
Argentina, a darling of Wall Street just a year ago, finds itself hosting the summit while scrambling for international aid to fend off a collapse.
“The original vision for Argentina was to use the G-20 to showcase that it had transformed the economy, and instead it welcomes world leaders to the economic wreckage. So, the timing is inconvenient, to say the least,” said Benjamin Gedan, an Argentina expert at the Woodrow Wilson International Center for Scholars.
Argentina was forced to obtain a record $56 billion credit line from the International Monetary Fund recently following a currency crisis and spiraling inflation. The peso has depreciated by more than half this year and consumer prices are estimated to have risen by about 45 per cent. Growing frustration over massive layoffs and poverty has also stoked protests that are expected to re-ignite during the summit.
Still, President Mauricio Macri will want to show improvements in international relations during his three years in office after more than a decade of protectionist policies under the populist governments of President Cristina Fernandez and her late husband and predecessor, Nestor Kirchner.
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Even with the economy in turmoil, Macri has resolved a longstanding legal dispute with creditors that gave Argentina renewed access to global credit markets for the first time a default in 2001-2002. He has also improved relations with the U.S. after years of animosity under his predecessors, keeping friendly ties both with U.S. President Donald Trump and Chinese leader Xi Jinping.
“Argentina is in a critical moment when it comes to international debt and it will seize on this moment to confirm international support from other G-20 countries” that are leading creditors of the IMF, said Julio Burdman, a Buenos Aires-based political analyst and pollster.
Macri is also expected to make a renewed push for Argentina’s membership into the Organization for Economic Cooperation and Development.
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Meanwhile, neighbouring Brazil and the other Latin American member, Mexico, are both in political flux, with one veering to further right and the other left.
Brazilian President Michel Temer will be replaced on Jan. 1 by rightist Jair Bolsonaro, who has often expressed admiration for Trump, criticized multilateralism and vowed to renegotiate or scrap trade deals. Like Trump, he has also been skeptical of Chinese investment, saying “the Chinese are not buying in Brazil. They are buying Brazil itself.”
Monica de Bolle, senior fellow at the Peterson Institute for International Economics, said Brazil will be focused more on relations with the U.S. and less on regional integration with Mexico or the South American trade bloc Mercosur.
“I think that agenda is now out the window, at least it’s dropped from the Brazilian perspective,” she said.
For Mexico, there are questions about whether “there really is any interest in engaging with the region or if the interest lies elsewhere given that Brazil is going to have an antagonistic, I think, administration with respect to Mexico given the ultra-conservative right-wing politics that Bolsonaro espouses.”
Mexico and Canada recently reached agreement with the Trump administration on a revamped version of the North American Free Trade Agreement between the two nations, and the deal may be signed during the G-20 summit, though it won’t take effect until approval by the countries’ legislatures.
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There’s also uncertainty about the potential policies of Mexican President-elect Andres Manuel Lopez Obrador, who will skip the summit because he’s being sworn in on Saturday.
The left-leaning leader has tried to ease concerns among the business community, but he upset many when he recently cancelled a partly built, $13 billion new airport on the outskirts of Mexico City. He has vowed, however, to avoid tax hikes and to adopt tight budget austerity.
Argentina’s Pedro Villagra Delgado, the lead organizer for the G-20 acknowledged last week that it might not be possible to reach a consensus on a final statement.
“Everything might fall through if there is no agreement on the trade issue,” he said. “It would be a shame because there is a huge amount of issues where we do have an agreement.”
While the U.S.-China trade conflict is far from being the only issue at the G-20, analysts said it is likely to cast a cloud over the summit.
“The U.S.-China dynamic has poisoned all multilateral forums. There’s basically nothing you can do but you know hope for a miracle and even a miracle looks modest,” said Gedan of the Wilson Center.
“What is unthinkable is any progress at the G-20 itself. As I said recently on Twitter, quoting an Argentine official I spoke to, they would be satisfied with a communique that did nothing but compliment the weather in Buenos Aires.”