How internal crises undermined the geostrategic capabilities of Argentina?
Presentation: Interregional Strategic Analytics
At one time, especially in the nineties of the last century, Argentina was one of the emerging models that was viewed positively, especially with its ability to achieve significant economic growth rates accompanied by Argentina’s attempts to take advantage of its geostrategic position in South America, which allowed it to strengthen its relations a number of major countries in the international system. But this model did not last long; Where Argentina has been subjected to many economic crises that undermined its positive image.
In this regard, Stratfor published a report titled “Argentina’s Geopolitics: The Great Power That Wasn’t” on August 8, 2022, by writer Adriano Bosoni, through which he analyzed the dilemmas facing Argentina, and how they affected the position of Argentina. The state and its ability to take advantage of the advantages of its geostrategic position.
untapped power
Bossoni began the report by emphasizing the important geostrategic nature of Argentina, and how internal crises restricted this importance; Argentina, from his point of view, shares many common geographic and strategic commonalities with more prosperous and stable countries such as the United States of America and Australia, including its possession of vast and resource-rich lands, its geographical nature that helps protect it from external aggression, and its easy access to a large network of The rivers and oceans that facilitate foreign trade, along with a growing, educated and multicultural population. Argentina also has a legal and political system that guarantees (at least on paper) a division of power, protects private property, and promotes the role of free markets.
Nevertheless, Argentina went from being one of the world’s ten largest economies at the beginning of the twentieth century to being barely in the top 30 at the beginning of the twenty-first century. This resulted from the massive economic turmoil that the state faced in recent years, which restricted the state’s capabilities and made it a “great power that has lost its compass.”
protracted crises
Over the past years, Argentina has been subjected to many crises that restricted the country’s external movements, which can be addressed as follows:
1- Deep-rooted problems facing the new Argentine Economy Minister: On August 3, 2022, the Argentine government appointed the third Minister of Economy within about a month, in a clear indication of the volatile political situation and the economic disintegration that exists in Argentina; The new minister faces enormous challenges related to dealing with spiraling inflation amid low levels of central bank reserves, and reviving the fragile debt restructuring deal with the International Monetary Fund, to restructure the huge network of subsidies and welfare payments that drains state revenues, and to convince foreign investors that Argentina is a trusted country to do business. But like his predecessors, the new minister will likely fail to meet all of these challenges, as political, economic and social factors that prevented Argentina from tapping into its enormous domestic potential will continue to be affected.
2- Implications of the gradual erosion of the rule of law: The unprecedented economic decline in Argentina reveals that geographical data alone are not sufficient to build a prosperous country. In contrast, a series of military coups in Argentina in the mid-twentieth century led to military dictatorships that promoted violence as an effective means of gaining and maintaining power, abolished democratic institutions and severely weakened the rule of law while systematically violating human rights. Although most of Argentina’s democratic governments in the late twentieth and early twenty-first centuries were slightly better, they also circumvented, and colluded with, the country’s legislative and judicial branches for the personal, political, and social interests of the ruling allies.
3- The decline in the role of the judiciary is a reason for diminishing investment: the decline of the judicial institution as an independent and transparent authority that ensures that everyone adheres to the same rules has created an environment in which contracts are implemented and property rights are protected in a selective manner (Argentina sometimes tends to nationalize and confiscate property, whether from companies private or individuals’ savings in banks with the government defaulting on its sovereign debt).
Similarly, corruption of laws enhances the unequal distribution of wealth by concentrating economic resources in the hands of corrupt business elites and the public servants who support them. This gave way to a large informal economy; Companies and families often choose to perform their activities off the record due to selective oversight from the authorities or excessive taxation, all of which are reasons to undermine Argentina’s economic development by deterring investment.
4- The negative repercussions of populist risks: While the weak rule of law is one of the causes of the country’s economic problems, the expansion of populism, according to the article, is perhaps the biggest cause of the ongoing economic turmoil in the country. Under flimsy pretexts to help the needy, most Argentine governments in recent decades have kept large sectors of the population dependent on the state; To make sure that she continues to vote for leaders who ensure the continuation of the system of favoritism. However, such populist regimes are costly, which explains why expansionary fiscal and monetary policy often leads to very high levels of inflation amid large fiscal deficits; that on the one hand. On the other hand, if subsidies are lifted, reformist governments risk widespread social unrest. Thus, addressing that problem is a major dilemma in Argentina.
The report concludes by confirming that the policies adopted by Argentine governments have negatively affected the internal conditions in the country, which may confirm the vision presented by “Daron Acemoglu” and “James Robinson” in their book “Why Nations Fail”, which explains that “poor countries poor because those with power make choices that create poverty; They make mistakes, not through error or ignorance, but on purpose.” This is painfully true for Argentina; As the intended political decisions with mismanagement are the first reason for the deterioration of the economic conditions in the country.
