Saturday, July 13, 2024

OPINION AND ANALYSIS | 19-10-2019 13:27

High-flying club up in the air? The OECD and Argentina

Should a populist government emerge next weekend, it might well find itself quoting Groucho Marx in saying: “I refuse to join any club that would have me as a member.”

Today could (that verb chosen with care because nothing is certain in Argentina today) mark the end – for now – of this series on international organisations now into its ninth part. This series has served its purpose in filling the gap between next weekend’s general elections and last August’s PASO primaries deciding everything and nothing. Various of these organisations still remain to be covered – the G20 (the story of an increasingly distant 2018), NATO (where Argentina’s promotion to major nonNATO ally status under Carlos Menem has been dormant at best throughout this century), some United Nations agencies like the World Health or Food and Agriculture Organisations and economic groupings like the Davos Forum or the Paris Club – but the moment of electoral truth is arriving. Once the electoral dust has settled, we may come round to them if they enter the news – or return to organisations already covered once the new government has defined its stance, especially the International Monetary Fund – but we’ll be taking a break for a while.

For this last pre-electoral weekend, today’s choice is the Organisation for Economic Co-Operation and Development (OECD), due to its recent news appearance – last Thursday US President Donald Trump and his Secretary of State Mike Pompeo delivered mixed messages on Brazil’s OECD bid, eventually saying that the United States supported it but that Argentine accession was first in line. One can only wonder how long would that latter backing survive the return of a populist regime in Argentina.

So what is the OECD, who are its current members and which criteria should Argentina or Brazil meet to join?

Established in 1961 to stimulate economic progress and world trade, the OECD actually started life as a G20 since it was founded by that number of countries, but today it has 36 members. Born as the heir of the 1948 Organisation for European Economic Cooperation (OEEC) to make more intelligent use of Marshall Plan aid, the original membership was entirely European apart from the two North American giants – today Europe still accounts for threequarters with 24 of its 27 countries also members of the European Union (Iceland, Norway and Switzerland being the exceptions). These origins were reflected in all secretaries-general being European until 1996 but since then the OECD heads have come from this hemisphere – Canada’s Donald Johnston (1996-2006) and Mexico’s Angel Gurría since then.

By the end of the century the OECD had 30 members with the new recruits also including Japan, Australia, New Zealand, Mexico (the first Latin American member, joining in 1994 in the midst of its tequila crisis) and South Korea. Chile and Israel (both in 2010) are the only non-European newcomers since then but South America dominates the recent interest in joining – Colombia (with an accession agreement already signed last year and awaiting ratification) heads the queue, followed by Argentina, Brazil and Peru with Malaysia and recent EU entrant Croatia the other countries interested.

The OECD started out as an exclusive club of highly developed countries – even now with several middle-income recruits it accounts for over 62 percent of global economic output with less than 20 percent of world population – but its greater diversity today with outreach to every continent, except Africa, also makes its criteria more diffuse. The organisation has evolved into primarily a statistical agency publishing a wide range of comparative data helping to identify good practices and co-ordinate policy. These statistics (especially the economic significance, cyclical behaviour and data quality of each country) are a key to selection although the four official criteria are more abstract: “like-mindedness,” “significant player,” “mutual benefit” and “global considerations.”

The organisation has its bureaucratic structures (the Secretariat, an annual Forum, Thematic Ministerial Meetings, committees, etc.) but little point here in delving unduly into them until Argentina forms a part. Time to look closer at the Argentine bid.

That bid dates from the current administration – part of President Mauricio Macri’s crusade to reconnect Argentina to the world. Although Argentina has long been participating in OECD committees, especially by virtue of its G20 membership in the last 20 years, the candidacy for OECD membership was first formally announced in mid-2016 – neither of the ministers making that announcement (Susana Malcorra and Alfonso Prat-Gay, representing the Foreign and Treasury/Finance portfolios respectively) is still around. The accession process takes at least a year but Argentina’s action plan for entry has been before OECD members for the last 30 months, winning praise for its commitment to export-led growth and global integration via dismantling tariff barriers (although also adverse comment on generally negative data and slow progress towards structural reform), but no membership in sight. By way of contrast, Colombia was invited to join only 17 months ago and has been on the fast track ever since with an accession agreement already in its pocket.

In that context should a populist government emerge next weekend, it might well find itself quoting Groucho Marx in saying: “I refuse to join any club that would have me as a member” (as Brazil’s Jair Bolsonaro probably should be saying in all honesty).

Indeed Frente de Todos presidential candidate and frontrunner Alberto Fernández more or less said as much four months before being so abruptly catapulted into the top of the ticket by his current running-mate ex-president Cristina Fernández de Kirchner (when their estrangement had yet to end in alliance). Early this year Fernández told an audience of small businessmen: “Did anybody stop to think of asking a shoe manufacturer to pay the costs of belonging to the OECD just because Macri had the bright idea of joining? Being part of the OECD does not help Argentina one little bit and furthermore it destroys industry.” Since then Fernández has questioned the European Union-Mercosur agreement along similar lines but has not returned to this issue to date, having any number of ongoing sticks with which to beat Macri at his disposal without needing to peer into the future.

As for the other candidates in last Sunday’s presidential debate, Roberto Lavagna’s son Marco (one of four deputies pressing Argentina’s case in Washington some 20 months ago) was backing OECD membership in a report to Congress last month. But market fundamentalist José Luis Espert questions the sincerity of Argentina’s candidacy, detecting the lack of any real will to go far enough along the road of free trade and an open economy to meet the requirements.

As from next weekend this series will be suspended for the elections and its aftermath and when it resumes, we will look at Argentina’s relations with continents, regions and nations rather than the planet as a whole.

Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.


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