MERCOSUR Summit, Leaders Talk About Agreement with the EU & more –6th July 2023

¡Buenos días from The Springs! This is the Rorshok Argentina Update from the 6th of July twenty twenty-three A quick summary of what's going down in Argentina.

On Tuesday the 4th, President Fernández transferred the rotating presidency of the regional trade bloc Mercosur to his Brazilian counterpart Luiz Inácio “Lula” Da Silva at a summit in Puerto Iguazú. It was also an occasion to celebrate, as the bloc reached the greatest commercial volume of its history in twenty twenty-two. The volume of purchases and sales with the rest of the world topped 750 billion US dollars.

The European Union has already taken notice of the bloc’s commercial success, so hopefully, the negotiations for a free-trade agreement with be resolved. It’s been years of back and forth in that regard, and despite being announced in twenty nineteen, it still has unresolved issues.

To seal the deal, Mercosur countries will have to pay special attention to the impact the new European Green Deal will have on its exports, since it lays out heavy-duty fines for products that don’t follow certain environmental requirements. The norm aims to reach climate neutrality by twenty fifty.

That said, there are other issues with the proposed agreement between Mercosur and the Euopean Union, some of which Lula da Silva called “unacceptable.” During the summit, he said that strategic partners shouldn’t have to negotiate on the basis of distrust and the threat of sanctions, and that Mercosur is not interested in agreements that condemn them to forever be exporters of raw materials, mineral products, and oil.

On Monday the 3rd, Foreign Minister Santiago Cafiero proposed an update of the agreement, arguing the deal in its current form does not reflect the current international scenario. He said that as it was closed, the text reflects an unequal effort between asymmetric blocs and does not take into account the current events such as disruptions caused by the Covid-19 pandemic and the war in Ukraine.

Uruguay also had complaints at the summit, but for different reasons. The Uruguayan president once again said that the bloc’s regulations prevent his country from signing a free-trade agreement with China. Uruguay might at some point have to consider changing its status from a founding member of Mercosur to that of an associate member, which would give the country more flexibility to negotiate its own bilateral trade deals.

At the same time, Economy Minister Sergio Massa is aiming to strengthen trade in local currencies. To that end, the head of Argentina’s Central Bank and the president of the Uruguayan Central Bank signed a letter of intent committing to reducing costs in bilateral trade with local currencies.

Speaking of Massa, President Fernández showed support for him during the Mercosur summit. He made the decision to seat him to his left when the heads of state met and then insisted that he stay on for the presidential meeting, on the understanding that he would receive strong backing from the other leaders there. It seems that the president has taken it upon himself to ensure that Massa becomes the next president.

In other Mercosur-related news, delegations from Paraguay, Brazil, Uruguay and Bolivia recently convened a meeting to challenge Argentina’s imposition of a toll fee on the Paraná-Paraguay Waterway. The neighboring countries argued that the investment Argentina is making in the waterway area does not justify the charge it’s been implementing since last year. Argentina justified the fee by citing the need for investments in dredging, signaling, and technology.

On that note about the neighboring countries, presidential candidate Patricia Bullrich faced significant backlash after spreading false information. She said on Friday the 30th that almost half of college students in Argentina are foreigners, and blamed them for taking up places meant for Argentine nationals in universities.

Soon after Bullrich’s words went viral, the Education Minister posted the official attendance numbers on social media and reported that the total number of foreign undergraduate, graduate, and postgraduate students is four percent in public universities and five percent in private universities.

In Argentina, state-run universities are tuition-free and open to anyone, which is highly attractive to foreigners.

Since we’re on the topic of politics, the opposition coalition Juntos por el Cambio triumphed in the San Juan provincial governor race. On Sunday the 2nd, Marcelo Orrego ended twenty years of Peronist rule in the province. As you may recall, the Supreme Court blocked the re-election bid of the current governor, Sergio Uñac.

Up north, things remain tense after Jujuy Governor Morales’ attempt to reform the province’s constitution, which prompted people to take to the streets in a series of protests that were strongly repressed by the police. There’s an article over at the People’s World news outlet that explains the situation, so we’ll include the link in the show notes.

Another article worth reading is one published by the Buenos Aires Herald, which is an interview with Margarette May Macaulay, the President of the Inter-American Commission on Human Rights. She visited Argentina, Paraguay and Uruguay last month, and said that afro-descendants and indigenous people are still invisible in Argentina.

Macaulay also discusses the issues Senegalese migrants face, the concerns for the Haitian community in Argentina, and the precarious situation of indigenous communities, including the Mapuche people. Link in the show notes!

Back to the topic of Jujuy, which handles everything that has to do with lithium, Argentina will buy locally-produced lithium from the US company Livent Corp to produce cells and batteries in a new plant. Well, technically, this pant is located in the Catamarca province, which signed the purchase deal. Argentina is clearly looking to develop the value chain around its mining products.

Argentina has become the world’s fastest-growing lithium producers, and it’s also one of the the world's largest producers and exporters of soybeans and soy products. So, on that note, a new report revealed the real impact of the drought, which slashed soybean production to less than half of last season’s total. Soybean production totaled twenty-one million tons in the twenty twenty-two twenty twenty-three season, a year-on-year drop of almost fifty-two percent.

According to the report, almost all the growing areas were affected. The government estimates the drought will lead to overall losses of around twenty billion dollars, almost three percent of the gross domestic product.

This doesn’t help a country that’s already short on dollars. Speaking of which, Argentina has made a 2.7-billion dollar loan repayment to the International Monetary Fund, partly using Chinese yuan. Back in April, Economy Minister Sergio Massa had said that Argentina would use yuan to pay for Chinese imports instead of US dollars in order to preserve its reserves after securing an extension of a currency swap agreement with Beijing. Now, it’s making use of those yuan.

At the same time, the Central Bank is to allow the country’s commercial banks to open customer accounts in yuan. This is also part of the plan to encourage local companies to make overseas payments in Chinese currency, thus protecting dollar reserves.

As we’re talking about US dollars, we have to mention that New York City will dedicate a street corner to Charly García. Considered one of the most important and avant-garde figures of Argentine and Latin American music, Charly is an Argentine singer-songwriter, multi-instrumentalist, composer, and record producer. Forty years ago, he took the cover photo for his album Clics Modernos at an NYC street corner, at Walker Street and Cortlandt Alley. It is on that exact spot that a plaque will be placed to commemorate that event in music history. The ceremony, which was announced by the City of New York last week, will take place on the 6th of November at 11 a.m. local time.

Before we go, remember that Argentina’s Independence Day is coming up. You won’t be able to enjoy any days off as the 9th of July falls on a Sunday this year, but you may see celebrations taking place across the country’s main spots. This national holiday commemorates the day when Argentina officially declared its independence from Spanish colonial rule in eighteen sixteen. The process leading to independence began with the May Revolution of eighteen ten, which is why the 25th of May is also an important date.

That’s it for this week! Thanks for joining us!

This Argentina Rorshok Update is one of the country-specific podcasts we do.

But we've always wanted to try some on other topics less tangible than countries. And we finally have!

Last week we have launched the Rorshok Ocean Update, about the 70% Earth's surface covered in salt water as well as The Rorshok Multilateral Update, covering the world's major multilateral institutions. And coming soon, the Rorshok Arctic Update. You can look for them in your podcast listening app of choice or follow the links in the show notes! Tell your friends!

¡Nos vemos la próxima semana!