Tobías Belgrano. B.A. Political Science (UCA) and Master in Government (UBA). Professor of Government and Administration of the Argentine Republic (UCA).
Tobías Belgrano, holding a Bachelor's degree in Political Science from the Catholic University of Argentina and a Master's degree in Government Affairs from the University of Buenos Aires, is primarily invested in the study of Latin American democracies and the causes of political instability in the region. He has further specialized in the social integration of slums within urban areas of Buenos Aires, having experienced working in both NGOs and the public sector.
Up until now, Argentina is the first Latin American middle-income economy to join the Silk Road agreement. Given the size of the economies of Mexico and Brazil, Argentina's accession is by no means a minor event in geopolitics. Consequently, the SPCIS interviewed Tobías to get his insights on Argentina's accession to the Silk Road agreement, the Sino-Argentine relationship, and the Western perspective on the agreement.
Argentina and the Silk Road agreement
President Alberto Fernández is in his last year in office. He will be remembered as the President who signed the incorporation of Argentina into the Silk Road, one of the largest regional trade agreements in the world since the Trans-Pacific Partnership.
The Silk Road Agreement, also known as the Belt and Road Initiative (BRI), is a massive development strategy proposed by the Chinese government in 2013. The objective of this initiative is to build infrastructure and strengthen economic and cultural ties between Asia, Europe, Africa, and Latin America. The agreement aims to create a modern-day Silk Road that connects China with the rest of the world, facilitating the flow of goods, services, and ideas across the region. The origins of the Silk Road agreement can be traced back to China's desire to expand its economic influence and create new markets for its goods and services. The Chinese government recognized that the country's economic growth was heavily dependent on exports, and the initiative aimed to open up new trade routes and markets for Chinese businesses.
China is Argentina’s strongest commercial partner after Brazil. Between January and July 2022, exports reached US$52,151 million, reaching a record level for that period, exceeding the previous maximum value of January-July 2011 by almost US$5,500 million. China is the main destination for the country’s main commodity, soybeans. The south-american nation is the third largest supplier of soybeans to China, with an average of 6 million tons of exports per year.
Furthermore, Argentina is so far the first member with a middle-income economy to subscribe to the agreement in the region. Considering the size of the economies of Mexico and Brazil, the incorporation of Argentina is not a minor geopolitical event, revealing Beijing's intentions to make a strong presence in the region. In this context, President Alberto Fernandez and his government are suffering an economic crisis. The main goal of joining the agreement, was to get access to investments valued at 23.000 million US dollars in infrastructure works relevant to the energy sector, the water and sewage network, transportation, and housing construction. Previously, we have seen the expansionist will of the Asian giant when it requested in 2021 the incorporation in the Trans-Pacific Partnership (TPP), making it clear that, after the incorporation of Argentina into the Silk Road, we find ourselves in a region disputed at a commercial level.
Additionally, Argentina is interested in joining the BRICS, as President Fernandez has stated in several opportunities to his peer President Xi. BRICS is the group of emerging economies made up of Brazil, Russia, India, China, and South Africa, the South American leader discussed this also with Russian President Vladimir Putin during his visit to Moscow in early 2021.
Evan Ellis, professor of Latin American institutions at the Institute for Strategic Studies of the United States Army War College, affirmed that "Argentina's strategy is deep and we can see it more connected to the red economy of China, and the situation in Argentina with "Belt and Road" (or New Silk Road), which became official in the 2021 summit.
In Washington, this was not taken for granted. Matt Gaetz, representative of the state of Florida to the US Congress and an ally of former President Donald Trump expressed his concern by stating that Argentina is "a critical nation and economy in the Americas" and added: "The nation has just joined the Chinese Communist Party by signing the One Belt, One Road (Silk Road) initiative. The cost to China was $23.7 billion, a mere fraction compared to the trillion dollars the United States has spent to build sand and blood democracies in the Middle East."
Argentina's participation in the agreement also raises concerns at home. One concern is that the BRI could increase Argentina's dependence on China, which is already a significant trading partner. Critics argue that this could potentially limit Argentina's ability to pursue independent economic policies and result in a loss of economic sovereignty. Additionally, the significant investments in infrastructure development required for BRI projects could lead to unsustainable debt for Argentina. This could potentially lead to a debt crisis and financial instability if these investments do not generate the expected returns.
However, it is also possible to speak of a certain shyness from Washington in facing the Asian advance. One should go back to 2006 to see the last serious attempt made by the U.S. to make progress on an economic integration agreement with the region. After its rejection and exit from the TPP, the White House has not presented any serious proposal capable of tempting the countries of Latin America and incentivizing them to ignore the offers coming from Beijing. Donald Trump's withdrawal from the TPP was only an invitation to its member countries, (Chile and Peru) to move toward Xi Jinping's sphere of influence.
Likewise, the agreements between Mercosur and the European Union have not been auspicious either. Despite of the great announcements, the advances were truncated due to French resistance, officially because of the deforestation of the Amazon, but in fact to protect its agricultural sector.
The inaction of Western powers has led South American countries to gradually move on trading agreements with China. In the mildest cases, such as Uruguay and Chile, these have been simple trade and technology transfer agreements. In more concrete cases, such as Venezuela, Beijing is the leading actor in the oil-producing country's economy.
States are rational actors seeking to maximize their benefits, in a context of a world that is gradually becoming more and more bipolar, the signing of these agreements has its costs and benefits in diplomatic and commercial terms. One of the greatest “fears” expressed by the critics of the Silk Road agreement is the risk faced by the democracies of countries that approach Beijing, giving as examples the cases of Hong Kong or Taiwan. However, we do not see such belligerence in countries such as Chile, Italy, or Uruguay, no one can seriously affirm that these nation’s democracies have been under threats caused by the Asian giant.
In other words, we can conclude that China is making decisive progress in trade agreements in the region, which is good news for Argentina, especially due to the few trade agreements signed and put into force in recent years. Likewise, the complementarity between both economies may imply a comparative advantage for Argentina in the region. Provided, of course, that the agreements are put into effect, and that our country does not let this opportunity pass by.
Contact: Chao Wei
Interview: Chao Wei