One of the centrepieces of the Mauricio Macri administration’s policies has been the return of Argentina to the global stage, becoming a relevant actor in the international community.
Among the president’s key objectives is his desire for Argentina to become a full member of the Organisation for Economic Co-operation and Development (OECD), the so-called “rich countries club.”
Yet, while the second-largest economy in South America counts on broad support for its bid among member countries, it will have to continue building on its arguments and policy commitments – and in convincing some of the more dubious member countries that Macri’s reform agenda is for here to say, that it will last beyond the current administration – whether it achieves re-election in 2019 or not. A smooth G20 summit in Buenos Aires will add another brick in the wall.
Since June 2016, then-foreign minister Susana Malcorra and ex-economy minister Alfonso Prat-Gay formalised the request to join the OECD, beginning to take an active role in the group’s committees. Argentina has secured the support of some of the most influential members of the OECD – including the United States and Japan – yet this year’s acute currency crisis, coupled with capital flight and stagflation, has generated doubts among some European nations, given the weight of Argentina’s foreign debt and the unprecedented size of an International Monetary Fund stand-by loan, as Alejandro Rebossio reported in Noticias.
“Nations like Germany support [Argentina’s proposed membership], yet they argue that the IMF has never lent so much (US$57 billion) and that payment must be guaranteed, noting the expectations cannot be lower than those of European member states like Greece,” Rebossio said.
While the OECD supports the general policy trajectory set out by the Macri government, it also acknowledges the economic risks. While back in May the organisation predicted solid economic growth for the Latin American country, in its November update it had downgraded its GDP projections to a 2.8 percent contraction this year, with a further 1.9 percent in 2019, when Macri will seek re-election.
Inflation, which is expected to end the year around 50 percent, and some of the world’s highest interest rates mean unemployment will rise and public consumption fall until 2020, the report projects.
Part of the risk, of course, is political. The process of admittance into the OECD is by definition lengthy, as member states must demonstrate that adherence to a set of best practices of economic, institutional, social, and cultural norms will outlast the political will of one administration.
It took former Colombian President Juan Manuel Santos five years, stretched out over two terms, to be formally invited to become the organisation’s 37th member, a process that will take several more years to fully materialise.
Not only is the trade war between the US and China sending reverberations through the global economy that could destabilize emerging market economies like Argentina, but the spectre of former president Cristina Fernández de Kirchner and a return of her populist policies could also derail Macri’s ambitions.
The G20 summit will grant the president one more opportunity to illustrate the country’s commitment to liberal democracy and open markets is irreversible, but he’ll have to wait until the 2019 election to prove it.