2023-04-23 05:41:02
The confirmation that President Alberto Fernández will not run for re-election this week laid the foundations for a rearming of Peronism in the face of the PASO, but political and economic stability does not depend only on that. In the offices of the Minister of Economy, Sergio Massa, they observe the very short-term scenario of the run that ignited the Blue dollar, but they assure that the general solution of this problem, of inflation and of a competitive front will be given via the reformulation of the mother of all conflicts: the agreement with the International Monetary Fund (IMF).
Several weeks ago and with some secrecy, its technical teams have been working on what they describe as “a rebalancing” of the entire pact signed by former minister Martín Guzmán on the millionaire and leonine loan that Mauricio Macri took. Massa believes, like the vice president, Cristina Kirchner, that the current agreement is harming the objectives of economic and social policy, especially after the war broke out in Ukraine and a drought that left the country without dollars. “There is no margin for anything”, they are sincere. The paradox is that, in the United States, the officials of the Biden administration with whom Massa is negotiating the political face and the guarantees of the changes, coincide in the reading that the program “is not working as an anchor of stability” economically, rather, it became a boomerang in the middle of an election year.
What is “rebalancing”?
On the fifth floor of the Treasury building, the brand new process with the IMF – which would be closed before the review in June – is described as a “rebalancing” of the agreement or, as US officials say, “nothing off the table” ( nothing off the table). This verbatim phrase, which was used in bilateral meetings, means -according to what he learned Page I12-that the signed pact will not be broken, but all the issues that make noise will be debated.
As happened with the reserve accumulation target, The menu to review will be extensive and will include future disbursements, installments, advances of dollars and even the famous reviews. In short, the idea of the Treasury is that without resolving this, it will be impossible to regulate the rate of inflation and mitigate opposition operations on market stability, something that has been happening in an obvious manner as the elections approach.
The plot of how and why this situation was reached mixes the vicissitudes of national politics with a game of mutual geopolitical needs, but above all of the United States. Although it is true that Massa supported the plan signed by Guzmán in Congress, details prior to that signature are being used in his environment that show that there were warnings from both Massa and Kirchnerism for a better negotiation than the one that occurred.
In the middle of the pandemic, the now minister spoke with his predecessor to recommend that he not fight lost due to the surcharge (a penalty paid by Argentina for having asked Macri for too high an amount from the IMF), and that the Extended Facilities program had quarterly reviews that to Argentina would be a headache. Close to Guzmán they give a different vision, but the rest clarifies that there were several recommendations to find the best moment to make the agreement and not on the razor’s edge. That ended up breaking the relationship between the President, Massa and the vice, and culminated in the departure of Guzmán.
The President, the vice and the bullfight
Those who know the cloth firsthand assure that Massa already had, at the time of meeting with Alberto Fernández in Olivos, an idea that a decision would come like the one formalized by the president in a 7-minute video last Friday. That morning they spoke, in the presence of the head of the Central Bank, about some points of the rebalancing of the agreement with the IMF. Miguel Pesce tried to go unnoticed in that meeting, but the President believed that the gestures of the photo between the two and the participation of Pesce would add to the idea of order. So much so that the relationship of the minister with the head of the BCRA, as confirmed by both poles, was recomposed by the positive one, beyond the already manifest differences prevailing.
Massa thinks today, as always in his life, that politics is the computer. This time he is no exception, which is why that same afternoon he went to the Senate to chat with Cecilia Moreau, Máximo Kirchner and CFK, with whom, despite some divergent views, he speaks almost daily. There she talked about politics, what is coming and how to get solid to the PASO. To tell the truth, Cristina was the first to warn that the agreement with the IMF would be a condition, but To this must be added the unexpected factor of the drought, which deprived the country of 20 billion dollars from one day to the next.. In one of those meetings, Massa was consulted, quite logically, about how to navigate the short term, where power factors and the lack of foreign currency put pressure on the government and the minister to force a devaluation.
To avoid that, The agro-exporters already guaranteed extremely trusted officials of Massa more than 200 million in export settlements this Monday and a rhythm, if possible, almost daily. What they are liquidating, in fact, is the production of soybean oil and meal from beans imported from Paraguay, because the national producers are in rebellion against the agricultural dollar of 300 pesos and are pushing to devalue it.
In parallel, and framed in the dialogue with the United States, the minister would already have guaranteed 5000 million dollars that, with the endorsement of the Biden administration, would be disbursed by the IDB, the Andean Development Corporation (CAF) and the World Bank (WB). This week, the Treasury released a video of Juan González, Biden’s right-hand man for the region, anticipating that the political endorsement for that is. The United States is the one with the button panel to allow these disbursements. This Monday, meanwhile, there will be a test response from the markets, which seem reluctant to give the Government a calm present with a run that has not yet shown its teeth.
Technicalities and geopolitical thread
The rebalancing of the agreement with the IMF has two paths, technical and political. Regarding the first, those in charge of carrying it out are Deputy Minister Gabriel Rubinstein and the Lavagnista Chief of Staff, Leonardo Madcur. They both come in a dynamic of daily Zoom meetings with Kristalina Georgieva’s officials. The first contacts were made on the trip that Massa made a few weeks ago to Washington. It is worth clarifying that the task is not easy because the gorge is narrow: you have to rebalance without breaking the agreementsomething that the United States does not want because it goes against internal regulations, and they do not want to renegotiate it either, something that they understand should be done by the next government.
But the cream of the new pact is cooking in the upper echelons of political power. Massa has had a relationship for decades with what they call “the school of Colombians” who work for the Democratic Party. One of those enabling the game is Dan Restrepo, who was Barack Obama’s Security Advisor. The son of a Colombian father and a Spanish mother, Restrepo leads the bloc made up of Juan González born in Cartagena and Honduran Ricardo Zúñiga, regional undersecretary of the Department of State, with whom Massa was a few days ago on his way through the Dominican Republic. “They are the most political and those who understand the needs of the country,” they describe close to Massa when referring to the pack of negotiators on the US side.
They were the ones who received the minister’s report on the impact of the drought on the numbers of the economy and who sought to convince them to make them understand that Argentina wants to comply with the agreement with the IMF, but that under these conditions it is practically impossible to do so without reviewing some points. “The people are not ready to face such a complex situation and we need to review things,” he told them. Naturally, the other side of the pact is that the United States sees that Lula Da Silva’s Brazil recently began to align itself with the Russia-China axis, and wants to guarantee itself a pole of stability for Westernism in the region. Nothing is free in this type of relationship.
The “yankee” eye in the PASO
Argentine negotiators talk all the time with their counterparts in the United States about the only way to guarantee social peace and growth “is with a Peronist formula” in PASO. The issue under debate at this time is whether there will be internal or a consensus formula. Massa is closer to thinking about the second option, with the candidate that emerges from the talks with CFK and the President. The theory is to strengthen the space to avoid surprise results, which hit the economy, in the STEP. Some reasons support them, such as the furious run that is taking place four months before the primaries and with no candidates running. The Americans, for their part, neither believe nor disbelieve, but they have some serious concerns about the future scenario that have to do with what has just been said.
They are particularly concerned about the phenomenon of the libertarian Javier Milei. They believe that if the poll numbers are true, the country will be in serious trouble. They assimilate the process to that of Jair Bolsonaro in Brazil, who ended up making an alliance with Republican Donald Trump; and with the rise of Nayib Bukele, the president of El Salvador who became famous for ending the gang members of Las Maras and today is growing in internal support challenging the power of the United States.
This newspaper consulted different sources from the IMF and terminals in the United States about what they see in Together for Change. “Undefined and internal”, they describe, and repeat that you have to look at Milei and her chances. A coincidence with the local sphere: this week, at the Llao Llao Forum, the meeting of CEOs with the policy put together by Eduardo Elsztain (IRSA) and Marcos Galperín (Mercado Libre), the business community began to be scared of the Milei-Patricia Bullrich tandem. The libertarian made water with his speeches and the head of the PRO moderated the verba to avoid the same rejection. In this highly complex current scenario, the power factors seem to be looking at the extreme right is on its way to crash a ship in a world that does not admit eccentricities.
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