United States of Macri | Political and financial support …

The first agreement of June of last year with the IMF did not reach four months. It was a preemptive loan that would not be used, said Finance Minister Nicolas Dujovne. It was not like that. During this period, the Central Bank has squandered nearly 14,000 of the $ 15 billion of initial expenditures. The second agreement, presented by IMF chief Christine Lagarde, at the Argentinian consulate in New York, had a slightly longer trip, lasting seven months. The third has just been born, although the technical staff and the board of directors of the Fund do not want to formalize it so as not to become the laughingstock of the market, after the implosion of the exchange policy, has become mysterious since last week. The central bank can intervene in the field of trade without intervention, absurd official presentation in order not to recognize a new failure to control the price of the dollar, and can also do without indicating the number of greenbacks sold. Failure to comply with the fiscal, monetary and exchange rate objectives defined during the emergency situation persists.

The Fund now argues that there is no flexible exchange rate, as proposed in its recommendations manual; that the Central Bank may draw a portion of the dollars that it may lend to stop the outbreak of the exchange of parity, although its regulations prohibit it; that it is not reported daily if the reserves have changed due to sales on the foreign exchange market, in contrast to its policy of transparency; and that the Macri government is not respecting the agreement, which involves the preparation of three agreements in less than twelve months and the request for exemption (forgiveness) for non-compliance with the expected objectives.

Trump

The telephone conversation of Presidents Donald Trump and Mauricio Macri, demonstrating his support for a water-related economic program, the same day as the IMF mission landing in Buenos Aires, confirms that the United States, through the US Intermediate Fund, play to support a weak government. This is a geopolitical decision, which translates into a desire to stop the return of populism badociated with China's expansion in the region. This is also due to the economic logic of the sale of arms and the military training of world powers to the Argentine armed forces.

Another important reason is to look after the interests of the major US banks and investment funds, which have accumulated a significant amount of Argentine bonds during the first two years of Macri's mandate, while they claim that they were going to make Argentina a star. investors and not in the international market pariah as it is today. The extent of these bond purchases is visible as only eight issues in the international market amounted to $ 43,687 million from April 2016 to January 2018. Keeping the Macrista Afloat Offers Time necessary to detach them, without an even greater loss due to lower contributions, bonds that accumulated during the orgy of emissions – there was an expiry at 100 years – ordered by the mesadinerista of the government of Macri, Luis Caputo.

Oversity Private Investment Corporation (OPIC), the US government's financial institution, is also more active in the Argentine economy. Last week, a loan of $ 45 million to Plaza Logística was approved for the construction and expansion of the capacity of the company's logistics parks on 176,000 m2, representing a total investment of $ 76 million. dollars. This line of financing is part of a set of six letters of intent to promote several private projects for a total of $ 813 million.

Whether to stop the return of populism, allow military and energy-related businesses, protect the wealth of financiers or intervene in private investments in the country, the attempt to save the Macristan economy from sinking is a mission that the US C is elusive, like that of moving Chavismo to the head of Nicolás Maduro in Venezuela. This is a risky gamble for Trump and can generate as much frustration as Guaidó's failed state coup.

More than carnal relationships

The role played by the Monetary Fund in the Argentine financial program can only be explained by the US policy decision to avoid Macri's default, both the bonds and the policies. Juan Gabriel Tokatlian, professor of international relations at Di Tella University, has the virtue of clarifying the darkness and making the complex understandable. Again, this appears in the text published in the latest Crisis magazine "The Global and Regional Context of Elections in Argentina". In the article, there is a subtitle "Braden Returns" to emphasize that in the current election campaign, the key data are the relations between Washington and Buenos Aires. He states that "in my opinion, since the advent of democracy in 1983 and the constitutional reform of 1994, no president had had as much political support in the United States for re-election as Mauricio Macri ".

Without neglecting the weight of Wall Street in this link, if you focus on Washington, it is possible to identify a quadrangle of indisputable backs, which Tokatlian then enumerates:

1. Statements on the country's executive power (of the White House and state departments, Defense and Treasury);
2. The resolutions (five between 2017 and 2018) emanating from Congress and the creation of the so-called Argentine caucus of the Congress;
3. Actions and statements of multilateral banks (especially the International Monetary Fund);
4. The events, guests and comments from several think tanks (among them, the Wilson Center's Argentina Project, the Argentina-US Strategic Forum of the Center for Strategic and International Studies, the Council of Atlantic, the American Enterprise Institute, the Council on Foreign Relations, the Heritage Foundation and the Foundation for the Defense of Democracies).

Tokatlian claims to attend an infrequent case in the contemporary history of bilateral relations, stressing that "this is no longer the" Braden or the Peron "agitated Buenos Aires, but rather a kind of" Macri or l & rsquo; Abyss "tacitly articulated and pre -electly from Washington DC". He does not consider that these supports are necessarily effective, because "it will be necessary to see if it works for the purposes of the change or if it becomes a political boomerang". And he concludes that "in all cases, the intensity of support (to Macri) influential forces in the US capital is unusual".

Rescue

The macrismo-radicalism alliance enjoys the support of international financial organizations that the two previous governments did not have in the critical cases of their respective economic programs. Raúl Alfonsín was abandoned in early 1989 by the World Bank. When this multilateral agency suspended disbursements, it accelerated the crisis that led to hyperinflation and rapid delivery of power. With Fernando de la Rua, after the mid-term elections of October 2001, which weakened the party in power, the IMF began to let go of it until, in the early days of December, the technical mission had was announced, announcing that I was not going to transform the $ 1260 million programmed. The immediate result was the corralito, the defect, the appearance of the convertibility and the fall of the government.

What will change if the IMF abandons it in these months, as it did with the governments of Alfonsín and De la Rúa? And he could have done it rightly before the bad currency management made with their dollars by the Central Bank. The defect and the collapse of the government would have been the fate of this neoliberal experience.

But the IMF has not abandoned the Macri government. On the contrary, it saved him from the precipice of the cessation of payments with the first agreement, he became the main funder of the campaign 2019 of Cambiemos with the second, to finally turn into the key political support of an alliance in decay by the electoral weakness of its leader.

The Fund occupies this central place in the economic and political life of a country when the design and audit of economic policy are entrusted to them. With Macri & # 39; s Argentina, the Board of Directors of the Fund has flown to the surface and removed the mask it hid on the political role it plays when it issues its lines of financing with conditions. In this case, appears the true boss of this international financial institution: the United States.

Mnuchin

The extraordinary financial aid granted to the Macri government has prevented its collapse. US Treasury Secretary Steven Mnuchin has played a key role in easing the IMF to allow the Central Bank to liquidate dollars. This ordered that the repertoire not object to the request of Argentina.

The goal is for dollar sales to keep the exchange rate under control and improve financial market expectations, which translates into higher parities in government securities, ie low country risk. With the rise of bonds, banks and investment funds that have Argentine papers in their own portfolios and those of their clients benefit.

Before being a Trump administration official, Mnuchin and other partners were owners of California's OneWest bank which, during the subprime crisis, had executed 36,000 mortgages and then sold the property. Entity a few years ago, providing an advantage to the control group. $ 1,500 million. He and his father are millionaires and both worked at Goldman Sachs Bank. Mnuchin did it for 17 years. Democratic Senator Elizabeth Warren called it, according to CNN, "Forrest Gump of the financial crisis" because "it was part of the worst practices of Wall Street".

Mnuchin holds finance from international banks with the financial rescue of Macri Argentina.

Net reserves

The IMF is the front of the United States, especially when its intervention is in Latin America. In recent months, this decisive influence has been very clear. Some $ 50 billion will eventually be distributed, over a short period from June 2018 to the end of this year, to avoid the scenario of the cessation of payments and a devastating exchange rate. This huge financial package may be that it is in any case insufficient.

Last week it was revealed in these pages that there was about $ 17 billion in free reserves. In total, with the last debt repayments lowered to about $ 68 billion, subtract the unavailable amount from the savers' deposits in dollars ($ 16 billion), the swap with the central bank of China ($ 19,300), the line with the bank Basel (2500), repo transactions with international banks (1100) and the IMF contribution to the payment of debts (12 400).

Official economists have come to neutralize this fact by spreading the fact that the net reserves for sale on the market total $ 23,000 to 30,000 million. If the position of the reserve was so comfortable, the government would not be so desperate to get more dollars. It negotiates with international banks the expansion of repo transactions (loan against bond bonding). In the market, they speculate that, in case of emergency, the Monetary Fund could increase financial aid or accelerate the recovery of $ 5900 million expected next year.

The government has also explored the possibility that the Federal Reserve (US central bank) or the Treasury will be directly involved in the financial rescue. The Trump administration must justify to the Congress the need to help a country facing economic problems, although there are exceptions, such as the rescue in Mexico launched in January 1995. The then president, Bill Clinton, authorized the Treasury to grant a $ 20 million loan line. This was badistance channeled through the Monetary Stabilization Fund (ESF), which was used for the first time to stabilize the currency of another country.

This fund now totals $ 105,000, of which $ 58,100 million is part of the US contributions to the IMF. The Macrista's economy could receive financial aid from the US Treasury in the same way that Mexico was helped during the Tequila effect. But Trump must then get the support of Congress and justify the urgent need to attend a distant economy on the edge of the abyss.

The IMF's political gamble in the United States is unprecedented and risky, both because of the size of the dollars involved and because of the direct involvement in a local electoral process. This is a move in which there is a high probability that the central bank's reserve fund is empty, leaving a heavy legacy of debt in the government's 2020-2023 backpack.

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