Guzmán to dialogue with US Treasury Secretary on negotiations with IMF and Argentina’s debt repayment program

Joseph Biden made another political gesture in favor of Alberto Fernández: consented to its Secretary of the Treasury, Janet Yellen, to hold a formal meeting with Martín Guzmán to know the reserved terms of the negotiations between the Minister of the Economy with the International Monetary Fund (IMF). Argentina has a debt of 44,000 million dollars with the organization – a legacy of the Mauricio Macri administration -, and it will only be able to achieve its refinancing with the political support of the White House.

Yellen’s Washington office informed Guzmán that the hearing had already been granted. But it remains to be seen whether the Minister visits the United States or moves to a room near his office, turns on the Zoom, and maintains a bilateral deal with the Secretary of the Treasury, which is critical in the process of negotiating with the IMF. .

“The ideal is to travel and for Martín (for Guzmán) to see Yellen in person. Obviously, we don’t decide ”, explained a member of the executive branch with proof of refusal.

If the owner of the Palacio de Hacienda flies to Washington, it would be in the next two weeks. Next, Guzmán has a G20 summit in Venice, where he will resume negotiations with the Paris Club. It will not be a Vaporetto crossing: The minister will confirm to his European colleagues that Argentina is proposing to pay off the debt which, from March 2022, will be $ 2 billion.

Yellen knows the negotiation strategy devised by Alberto Fernández y Guzmán. The Treasury Secretary is exchanging information with Kristalina Georgieva, Managing Director of the IMF, and already has a file with the look and data provided by Sergio Massa during his visit to Washington last week.

The head of the Chamber of Deputies played a key role in facilitating contacts between the Treasury Secretariat and the Ministry of the Economy, and his information on the IMF proposal reached the White House and the Treasury Department non-stop. This economic and financial data with a political perspective ended up in Yellen’s office one block from the Oval Room.

At the Treasury Secretariat, Guzmán’s image is solid. Yellen has the advice of Joseph Stiglitz, Juan González – Biden’s advisor for Latin America – and Kristalina Georgieva. However, and despite this handicap clean, the Minister of the Economy is confronted with a basic dilemma that he will not be able to solve with his academic or personal trajectory: Argentina does not want to pay on the terms desired by creditors and this cannot be resolved by citing John Keynes or the Laffer curve.

Biden made a geopolitical bet with Alberto Fernández, despite the questioning of Argentina’s position before the Nicaraguan dictatorship. The Democratic leader applies a basic concept of realpolitik and displays certain gestures of rapprochement with the Peronist government due to the institutional upheaval in Chile and Colombia, two traditional allies of Washington in the region.

In this context, White House believes Alberto Fernández administration can act as a counterweight in Latin America and also act as a rear channel with the populist regimes that operate in Bolivia, Venezuela and Cuba. This strategic perspective from Biden explains why Yellen allowed a formal dialogue with Guzmán, the economy minister of a low-world country and serial debtor of the IMF.

Guzmán assumes Argentina’s place in the world and negotiates with what he has at hand. It concludes an agreement with private creditors and comes to an agreement with the Paris Club. Yellen are the major leagues and its presentation will be the key to saving time and understanding to what limit the Treasury Secretariat will approve the negotiation strategy with the IMF proposed by Alberto Fernández.

This technical limit also has a geopolitical framework. Yellen’s breadth is directly tied to the president’s stance towards Venezuela, Cuba, Nicaragua, China, and Russia. If Alberto Fernández runs more to the center and blocks the Chinese 5G -for example-, the Secretary of the Treasury will be more inclined to the refinancing program that Guzmán will describe directly or via a Zoom from Buenos Aires.

It is a zero sum game. With a depleted economy and an unpayable debt of $ 44,000 million.