The Endangered Asian Century
America, China, and the Perils of Confrontation
For very good reasons, news that U.S. President Barack Obama would make a stop in Cuba on his upcoming tour of Latin America sent diplomatic circles spinning. Calvin Coolidge, who arrived in a battleship in Havana’s harbor in 1928 to attend the Pan-American Conference, was the last American president to visit the island. Obama’s decision to travel to Cuba also shows just how seriously his administration is taking the ongoing rapprochement with Havana that began just last year and that aims to end the 57-year-old freeze in U.S.-Cuban relations triggered by Fidel Castro’s 1959 communist takeover.
Less noticed is that Obama’s Latin American tour will also take him to Argentina, another country with which Washington is hoping for a reset. No U.S. president has set foot in Argentina since 2005, when George W. Bush attended the Summit of the Americas, setting off riots all over the country. So why has Washington kept its distance from one of Latin America’s most important nations, and why is now the right time for a change in policy? The answer to both questions is far from self-evident.
There is no more vibrant democracy in Latin America than Argentina. In fact, with its 1983 transition from military dictatorship to democracy, the country pioneered the wave of democratization that has transformed the politics of the region. Since then, Argentina has become famous around the world for its human rights advances. In 1985, the old military junta was put on trial for crimes against humanity, which was the first trial of its kind since the Nazi regime was prosecuted at the end of World War II during the Nuremberg Tribunal. In 2010, Argentina legalized same-sex marriage and adoption, becoming the global South’s most prominent symbol of LGBT equality.
The United States also enjoys a healthy and favorable economic relationship with Argentina, befitting the country’s rank as the second-largest economy in South America, after Brazil, and a member of the G-20. In 2014, the United States exported $10 billion in goods to Argentina (mainly raw materials and machinery to feed Argentina’s industrial sector) and purchased $4.4 billion (mostly wine, fruit juices, crude oil, and iron-based products). In services, the United States exported $7.1 billion to Argentina and purchased $1.9 billion. These statistics place Argentina in the top ten among nations with which the United States enjoys a trade surplus.
When it comes to stable diplomatic relations, however, the United States and Argentina are a telling reminder that shared political values and robust economic ties are not enough. In almost 200 years of diplomatic relations, the two countries have rarely seen eye to eye. Indeed, no other Latin American nation has been a more persistent thorn in the side of the United States than Argentina.
One of the oldest bilateral relations in the Americas, U.S.-Argentine relations date back to January 27, 1823, when the United States recognized the United Provinces of the Río de la Plata, the legal predecessor to the Argentine Republic. In granting diplomatic recognition to Argentina, Washington was hoping to find a partner on the opposite end of the Americas to thwart European influence. For its part, Buenos Aires was banking on cultivating ties with a country that, much like Argentina, was blessed with an abundance of natural resources and had close cultural ties to Europe. But U.S.-Argentine relations quickly soured over a multiplicity of cultural, economic, and geopolitical disagreements and never really recovered.
It has not helped that Argentines have rarely seen the United States as a nation fit to emulate. More so than any other Latin American nation, Argentina has traditionally looked to Europe for its political, economic, and cultural models. Argentina’s Eurocentric worldview began to consolidate following its independence from Spain in 1816, when the country was incorporated into the fold of Britain’s international economy to such a large extent that it made economic relations with the United States almost redundant. Unlike the Americans, the British were willing and able to make the industrial infrastructure investments (factories, railroads, and ports) that Argentina desired. Less apparent is Argentina’s traditional self-perception as a “European society in exile,” which came from it having absorbed into its population millions of Europeans, especially from Italy, Spain, and Germany, from the middle of the nineteenth century through World War I. In 1914, close to a third of Argentina’s population of some eight million was foreign born.
There is also the intense rivalry for regional dominance that defined U.S.-Argentine relations for much of the twentieth century. An economic powerhouse almost from the start, Argentina was not shy about confronting the United States’ imperialistic ambitions in Latin America. The leaders of the early Argentine Republic took great offense to the Monroe Doctrine, a cornerstone of U.S. foreign policy toward Latin America from 1823 onward, which cautioned Latin Americans against entering into any alliances with European powers and warned the Europeans to steer clear of Latin America. Argentina also rallied the Latin Americans against “pan-Americanism,” a policy promoted by the Wilson administration that, for the Argentines, was nothing less than an American ploy to bring Latin America into the U.S. economic orbit.
Owing to a large population of German-Argentines, Argentina remained neutral during World War I, which allowed it to trade with both sides. During World War II, Argentina did not break diplomatic relations with the Axis powers until the closing weeks of the conflict, prompting U.S. Secretary of State Cordell Hull to characterize the government in Buenos Aires as “a pro-Axis, fascist clique.” After the end of the war, Argentina, under the leadership of General Juan Domingo Perón, a fascist sympathizer, became the favorite hiding place for Nazi leaders escaping prosecution for their evil deeds. These were not garden-variety Nazi leaders. Rather, they were the likes of Adolf Eichmann, the architect of the Holocaust, and Josef Mengele, the Auschwitz concentration camp doctor infamous for his deadly experiments on prisoners. Both fled to Argentina with the protection of the Argentine government. Eichmann was illegally captured in Buenos Aires by the Israeli secret service and sentenced to death in Israel; Mengele died of natural causes without ever having to account for his actions. Little wonder that one of the most contentious issues faced by the United Nations at its inception, in 1945, was Argentina’s admission into the body.
During the Cold War, Argentina openly flaunted its disdain for U.S. foreign policy. One of the strangest episodes of the era, and a source of much aggravation for U.S. officials, was Argentina’s emergence as one of the Soviet Union’s leading trading partners. Just as strange is the role of the U.S. government in bringing this situation about. Argentina refused to support the U.S.-led grain embargo imposed by the Carter administration on the Soviets following their invasion of Afghanistan in 1979. This, in turn, led to a surge in Soviet-Argentine trade that undermined the embargo and eventually led to its demise. According to data from The New York Times, after 1980 the Soviets turned to Argentina for grain supplies, and Argentine exports jumped fourfold in 1980. In turn, the Soviets developed a 50 to 1 trade deficit with Argentina.
In more recent times, a host of factors have conspired to create the impression among the Argentines that Washington is, at best, a fair-weather friend, and, at worst, an unreliable ally. Few in Argentina have forgotten the United States’ involvement in the infamous Dirty War, whose psychological scars remain visible to this day. Waged by the military between 1976 and 1983 to purify Argentina of left-wing influence, the Dirty War had the United States’ tacit support. U.S. President Ronald Reagan even rewarded junta leader General Jorge Rafael Videla with an official visit to the White House in 1980, after the political excesses of the military were already well known. A notorious dictator who died in jail in 2013 while serving a lifetime sentence for his role in overseeing the Dirty War, Videla fancied himself an expert in dealing with left-wing revolutionaries by pioneering the strategy of desaparecidos (disappeared or missing). A typical disappearance involved kidnapping, drugging, and then dumping a victim into the Atlantic Sea. This allowed the military to deny any responsibility. According to human rights activists, some 30,000 people disappeared in Argentina under the military dictatorship, although official records put the number at about 10,000.
Also lingering in the memory of the Argentines is the American role in Argentina’s humiliating defeat at the hands of the British in the Malvinas War. Hoping to distract the Argentine public from an atrocious human rights record and a disastrous economic performance, in April 1982 the Argentine military junta occupied the Falkland Islands (Islas Malvinas), a cluster of British-owned islands off the Argentine coast that Argentina regards as part of its national territory. When British Prime Minister Margaret Thatcher dispatched the Royal Navy to defend the islands, the junta expected the United States to either back Argentina or at least remain neutral. Giving rise to those expectations was the 1948 Rio Treaty, an inter-American security accord that calls for its signatories to defend each other against external aggression. But the Reagan administration unambiguously sided with Britain by providing the Thatcher government with assistance, leaving Argentina outmatched and feeling betrayed.
Most significant of all, however, is what transpired during Argentina’s epic economic meltdown in 2001, the first great depression of the twenty-first century. It rests at the very heart of the recent turmoil in U.S.-Argentine relations. What brought Argentina to the brink of economic ruin remains hotly debated. The leading explanations include the Washington-backed neoliberal reforms that Argentina adopted during the 1990s (especially the privatization of state enterprises); the lack of monetary independence created by pegging the value of the Argentine peso to the U.S. dollar, a decision adopted in a desperate attempt to cure Argentina once and for all of hyperinflation; and the loss of competitiveness of Argentine goods relative to those from other Latin American countries. But there is little debate about the political and economic toll of the crisis. Three presidents and five ministers of the economy came and went in less than a year, and more than one million of so-called “new poor” were created within six months of the start of the crisis. Unemployment soared to 25 percent, and GDP contracted by almost a third. With the banking system in tatters, savings accounts and pensions were all but destroyed.
The Bush administration’s response to the crisis in Argentina mirrored President Gerald Ford’s decision to nix New York’s request for a bailout during the city’s financial crisis of the 1970s, as captured in The Daily News’ iconic cover of October 30, 1975: “Ford to City: Drop Dead.” Reasoning that it could use Argentina as a teaching moment, the Bush administration ignored all pleas for help from Argentine leaders and other Latin American leaders. Treasury Secretary Paul O’Neill delivered the news to Argentina in an interview with CNN that stressed the futility of a bailout by saying. “We are working to find a way to create a sustainable Argentina, not just one that continues to consume the money of the plumbers and carpenters in the United States who make $50,000 a year and wonder what in the world we are doing with their money.” An editorial in La Nación, a leading Buenos Aires daily, condemned O’Neil’s comments as “outside all norms of respect and protocol.”
Forced to fend for itself, the Argentine government defaulted on a $104 billon obligation, the biggest default by any country in history. Argentina also delinked the peso from the U.S. dollar and devalued it by some 25 percent. These three steps (defaulting, delinking, and devaluing) did wonders for re-starting the Argentine economy by boosting exports, especially to China, which at the time was expanding at a ravenous rate and thus willing to pay top price for Argentine commodities such as soybeans. Argentina also became a top tourist draw, with Buenos Aires, its glamorous capital city, becoming one of Latin America’s most affordable destinations. By 2007, Argentina had regained almost all of the economic ground lost to the economic meltdown. Such a quick turnaround boosted the political fortunes of Peronist President Néstor Kirchner, who is credited with the economic recovery, and that of his wife and successor, Cristina Fernández de Kirchner.
But there was a very dark side to the economic rebound. Millions of angry foreign investors who were holding Argentine debt forced Argentina out of international lending markets, such as the IMF and the Paris Club, a consortium of European lenders. Argentina was also hit with a tsunami of legal suits in U.S. courts from debt holders demanding payment from the Argentine government, which refused to budge. This earned Argentine leaders the enmity of Washington and other Western capitals. Aggravating matters was the Kirchners’ governing style, including a penchant for fanning the flames of anti-Americanism to cultivate support, usually by blaming the United States for Argentina’s international economic isolation and by cozying up to the likes of the late Hugo Chávez, an avowed U.S. foe, upon whom the Kirchners relied for political expertise and financial support.
Unsurprisingly, during the Kirchners’ reign, Argentine presidents were treated like pariahs in Washington, and U.S. presidents were treated similarly in Buenos Aires. Bush’s 2005 visit to the Argentine resort city of Mar del Plata to attend the Summit of the Americas triggered mass protests, riots, and arrests. His Argentine host did little to discourage the mayhem; in fact, he contributed to it. Kirchner was a co-sponsor with Chávez of a “counter-summit,” a series of demonstrations designed to showcase the evil consequences of neoliberalism in the Americas. At the summit’s closing, attended by Bush, Kirchner accused Washington of driving Argentina into economic ruin. Bush felt humiliated and bowed never to return to Argentina.
Washington’s response to Argentina’s provocations was to isolate the country. Bush’s March 2007 farewell tour of Latin America, which stopped in neighboring Brazil and Uruguay, countries that Bush hailed as “strong allies in the region,” pointedly skipped Argentina. The Argentines responded to the snub by holding an anti-Bush and pro-Chávez rally at a Buenos Aires soccer stadium. In 2008, the Bush administration accused the Kirchner administration of receiving a campaign contribution of $800,000 dollars from Chávez. Kirchner retaliated by curtailing the U.S. ambassador to Argentina’s diplomatic access. Obama’s 2011 tour of South America, which made stops in Chile and Brazil, skipped Argentina, making the country the only major Latin American country not visited by Obama during his first term in office.
Last December’s election of Mauricio Macri as Argentina’s new president, which brought the end of “el Kirchnerismo,” is the catalyst for the U.S.-Argentine reset. Macri presents a very different kind of Argentine leader than his recent predecessors, especially the Kirchners. The son of an Italian-born tycoon, Macri hails from the world of business rather than from either one of the two historic reservoirs of Argentine political power: the populist and left-leaning Peronists and the center-right Radicals. After a career in construction, banking, and automobile production (Macri was president of Sevel Argentina, which makes Fiat and Peugeot cars in Argentina), Macri was elected to the lower house of the Argentine Congress. In explaining why he left business for politics, Macri cites having survived being kidnapped in 1991 by officers of the Argentine Federal Police. He was released after his family paid a multimillion-dollar ransom.
In 2007, Macri was elected mayor of Buenos Aires, the second most important job in Argentina. The city is home to almost a third of all Argentines and is something of a mini-state, given the tremendous autonomy that it enjoys from the federal government. As Buenos Aires’ chief executive, a post he held until 2015, Macri became the antithesis of the Kirchners’ bare-knuckled approach to politics. He developed collaborative relations with all the political groups represented in the Buenos Aires legislature, including Frente para la Victoria, the Peronist-led political machine built by the Kirchners. Macri also avoided the intense ideological battles of the Kirchner era by making improving city services the centerpiece of his administration. In his run for the presidency, against Peronist Daniel Scioli (Fernández de Kirchner was barred from running for a third term), Macri pledged to bring the same non-ideological and results-oriented approach to politics that he brought to the Buenos Aires mayoralty. “Our ideology is to resolve problems and get things done,” he said just before the elections.
So far, Macri is off to a good start. He is close to ending Argentina’s debt battle with Wall Street by offering $6.5 billion to settle $9 billion worth of claims from holdout bondholders. Once approved by the Argentine Congress, which is widely expected, the deal will allow for Argentina’s return to international lending markets. The deal will also add much fodder to the raging debate about the predatory behavior of private international lenders, with some American hedge funds expected make a return on Argentine debt approaching 800 percent. The funds’ modus operandi is quite familiar by now: wait for a developing country to hit the skids, move in and buy the country’s debt at a bargain basement price, and then to go to court to sue for full repayment.
Macri has also distanced himself and Argentina from Venezuela, having openly criticized Chávez’s successor, Nicolás Maduro, for his political excesses, including the arrest of political enemies and restrictions on press freedoms. Macri has pledged to work with other nations to expel Venezuela from Mercosur, South America’s trading bloc, if Maduro does not reform his ways.
Washington, as might be expected, is responding in kind. “Macri signaled that he’d like to have closer economic and diplomatic cooperation with the United States,” top Obama foreign policy aide Ben Rhodes said when announcing Obama’s visit to Argentina. This positive response to Macri is hardly surprising, since Obama is keen to avoid ending his tenure in office without visiting Argentina. Aside from Argentina’s economic importance and influence within Latin America, there is much symbolism attached to the Argentine trip. Obama has very cordial relations with the Argentine-born Pope Francis, the former Archbishop of Buenos Aires. The leaders are in agreement on a host of issues—climate change, immigration, and inequality—and Francis personally helped facilitate the warming of relations between the United States and Cuba. Obama regards the Cuban reset the capstone of his Latin American foreign policy, so a visit to Argentina serves as fitting symbol of gratitude to the Argentine pope.
Obama’s visit to Buenos Aires is not free of controversy, however. As fate would have it, his stay in Buenos Aires March 23–24 will coincide with the 40th anniversary of the 1976 military coup that ushered in the Dirty War. This unwelcome coincidence, which brings to mind the fact that the military coup and the ensuing human rights atrocities enjoyed American support, prompted U.S. ambassador to Argentina Noah Mamet to say in a press conference, “We understand that March 24 is a special date for the Argentine people and that the United States shares with Argentina the defense of human rights as a universal principle.”
But this may not be enough. Obama’s visit is intensifying calls from human rights activists for the U.S. to declassify hundreds of documents related to the United States' role in the Dirty War. Activists believe that these documents will substantially expand the historical record and assist with ongoing judicial investigations.
The American president might also be in for a cold reception. Fueled by the perception that the Americans are to blame for the economic disaster of 2001 and that Wall Street firms, routinely referred to in the Argentine press as “vultures,” profited handsomely from Argentina’s economic misfortune, anti-Americanism runs deeper in Argentina than in anywhere else in Latin America. According to Pew, the percentage of the Argentine public that views the United States favorably stands at a paltry 36 percent, significantly lower than in Chile (72 percent), Brazil (65 percent), Mexico (63 percent), and Venezuela (62 percent).
But Obama can take comfort in the desire by many Argentines for a semblance of normalcy in the country’s politics and its foreign relations after all the drama of the Kirchner era. Macri’s election and early policies reaffirm this sentiment and provide a good foundation for launching a new era of cooperation in U.S.-Argentine relations.