Argentina has been in a precarious financial situation for decades, with high inflation, stagnant wages, high youth unemployment, and corrupt leadership from both sides of the political aisle. To alleviate the spiraling debt and slow economic recovery, Argentina’s leaders have sought financial assistance from the United States, China, and Russia. Still, the Peronist left, including the current government of Alberto Fernández and Cristina Kirchner, has been particular in its rapprochement with China, Russia, and Iran, signing free-trade deals, including them in regional trade blocs, and signing new strategic-security partnerships. These efforts have alienated the United States and its allies, who have offered an International Monetary Fund (IMF) debt restructuring package, free trade deals, foreign investment, and infrastructure financing in the past. The US might choose not to provide economic assistance to Argentina, further crippling Argentina’s chance of recovery.
The Peronist left, which first took power in Argentina in 1946 under Juan Perón, can be characterized as a nominally nationalist, anti-imperialist, populist, and pro-labour movement. The Peronists have won an overwhelming number of presidential elections since 1946, forgoing the two-decade military dictatorship that came after Juan Perón and outlawed the movement. The current Fernández-Kirchner government, elected in 2019, has taken the Peronist mantle, adopting an anti-imperialist, nationalist, populist, and pro-labour message while improving relations with non-US great powers, all while being one of the most corrupt governments in recent Argentine history.
Kirchner is now back as Vice-President after having served as President from 2007 to 2015 and is said to wield more power and influence than President Alberto Fernández, who Kirchner has pushed aside. Since her re-election in 2019, China and Argentina have continued to grow ever closer, axing the geopolitical gains made by the West during the administration of centre-right President Mauricio Macri, who was a Trump ally in the region, which lasted from 2015 to 2019. Cristina Kirchner has a long history of turning a blind eye to or outright supporting the United States’ geopolitical enemies, including China, Iran, and Russia.
China’s Grand Economic Strategy
Arguably since the ascendancy of President Xi Jinping to power in 2013, China has taken a much more entrepreneurial – some would say aggressive – approach to promoting its interests abroad. China has ventured to all continents to spread its various economic statecraft programs including the Belt and Road Initiative (BRI), a massive infrastructure investment program in over 70 countries worldwide.
These initiatives have provided China with a great deal of economic, financial, political, and cultural power and influence. China’s geopolitical and strategic ambitions have reached the backyard of its greatest rival, the United States. Through the BRI and mass-lending schemes, the Chinese Communist Party (CCP) has inserted itself into various domains of strategic importance, even taking over land for military and strategic footholds.
In Argentina, the pattern repeats itself, with China taking an increasing role in all aspects of governance, economy, and society. Starting in 2014, then-President Cristina Kirchner signed an agreement with President Xi to establish the construction of a Chinese space base, named the Espacio Lejano Station, in Neuquén Province, in the Patagonian desert. The base would be financed, built, and operated by the CCP, as well as by its National Space Administration and the People’s Liberation Army Strategic Support Force (PLASSF) — the Chinese equivalent of the United States Space Force. At the base, China collects all kinds of strategic intelligence, which consequently deals a blow to Western nations’ intelligence capabilities in the region. China also hopes to send multiple rover missions to the dark side of the Moon through the base, having already completed one in early 2019.
The Neuquén base is clearly part of Chairman Xi’s strategy to further extend the CCP’s grasp. The base, most importantly, gives China a military foothold in America’s sphere of influence. It allows China to influence Latin American military and strategic affairs from within while gaining an advantage over the Americans in the intelligence and information domain. In return, Argentina gains an economic partner, crucial given its precarious financial situation.
China’s Non-Military Footprint in Argentina
The Neuquén base came after a series of new economic and socio-political agreements between China and Argentina. Most notably, Argentina just joined the BRI, adding it to the list of Latin American nations now in China’s economic sphere of influence. China has taken up an increasing role in the MERCOSUR regional trade bloc and rapidly increased investment in the Inter-American Development Bank (IDB).
In recent years, China has also signed a series of cultural and educational agreements with Argentina, solidifying its soft power appeal in the region. China opened its third state-run Confucius Institute in Cordobá in late 2020. While teaching Chinese language and culture, the Institutes also promote Chinese Communist values and preach a revisionist, pro-CCP interpretation of history and geopolitics throughout the world.
The Bloody Kirchner-Iran Connection
Apart from China, Vice-President Kirchner has long-standing ties to the Iranian regime and its proxies. Case in point, Kirchner was previously indicted for covering up the 1994 bombing of the AMIA, a Jewish cultural centre in Buenos Aires, which killed 86 people. The suicide attack was allegedly conducted by Iran’s Islamic Revolutionary Guard Corps and Hezbollah, both designated terrorist groups in Canada, the US, and the European Union. The leading prosecutor for Kirchner’s involvement in the affair, Alberto Nisman, was found murdered in his apartment one day before his testimony. Kirchner was indicted for assisting his murder and charged with treason by federal judge Claudio Bonadio, but Bonadio died shortly after, and the case was dismissed.
Kirchner has also been investigated for other charges, including corruption. During her presidency from 2007 to 2015, Kirchner also turned a blind eye to the increased smuggling of arms, drugs, humans, and counterfeit goods on Argentina’s northern border with Paraguay and Brazil. At this juncture – also called the Tri-Border Area (TBA) of the Southern Cone – Hezbollah and other Iranian-backed terrorist groups conduct heavy intelligence and financing operations, with billions of dollars in dark money and illicit goods allegedly flowing through the area.
Rapprochement with Putin’s Russia
Regarding Russia, the current Kirchner government has pursued a position of rapprochement with Vladimir Putin, signing various diplomatic, financial, economic, and socio-cultural agreements with the Putin regime since 2007, decreasing Argentina’s reliance on Western powers. These agreements included the removal of visa requirements for visitors (2009), law enforcement cooperation (2014), an extradition treaty (2014), and an intelligence-sharing agreement (2015). Kirchner has been a close ally of Putin in the region, meeting him more often than any other Argentine or Latin American leader, and even exchanging personal letter correspondence.
On policy, Kirchner’s government has increased trade between the two countries, though Argentina-Russia trade does not come close to trade with the US, China, and Argentina’s neighbours. Russia also sold 25 million of its Sputnik V COVID-19 vaccines to Argentina.
While the current Fernández-Kirchner government condemned Russia’s invasion of Ukraine, few specific measures have been taken beyond providing food, clothing, and medical supplies to refugees fleeing the conflict. Despite the invasion, the Argentinian government has continued its close strategic, economic, and diplomatic ties with Putin’s regime.
Kirchner has also used Russia’s takeovers of Crimea and Eastern Ukraine to argue for a revival of Argentina’s claim over the British Falklands (called the Malvinas in Argentina), a claim which violates the territorial sovereignty of the United Kingdom and the people of the Falklands. Argentina has thus proven to be one of Putin’s closest remaining geopolitical partners in Latin America, alienating the United States and its allies, at least as long as Kirchner and the Peronists remain in power.
The Economic Cost of Alienating the United States
After decades of rapprochement towards China, Iran, and Russia, the United States and its allies feel left out, hampering Argentina’s chance at economic recovery. South America, seen in Washington as America’s backyard since the articulation of the Monroe Doctrine in 1823, is expected to fully cooperate with Washington’s policies, and anything short of full commitment is perceived as insolent alienation. At this time, the government is attempting to get another IMF relief package, along with comprehensive economic and financial reforms as required by most IMF structural adjustment programs. This is not the first time that the IMF has interceded directly in Argentina’s economic affairs, with interventions in the late 90s, early 2000s, 2018, and 2022.
Despite austerity-oriented IMF programs, populist-left Peronist governments in Buenos Aires, including the Kirchner government, insist on high deficit spending, leading to astronomical amounts of debt from foreign loans – including from the IMF and China – floating currency exchange rate, and abysmally high inflation compared to other developed countries. Argentina has been stuck in this downward spiral arguably since the 1990s, with the national economy shrinking by almost a third from 1998 to 2002.
Potential Loss of Partnerships
Kirchner’s Argentina has been unstable, poorly led, and averse to the West. Combined with a continuous brain drain to the West, neighbouring countries, and China, Argentina has become less and less attractive for foreign investment, robbing Argentines of their social spirit, economic promise, and political future.
In an April 2020 Poliarquía-Wilson Center poll, it was found that only 43 percent of Argentines have a positive image of the IMF and that a majority of Argentines believe the government should not follow the IMF’s recommendations on economic policy. With the people’s backing, the Fernández-Kirchner government may look to distance itself from the IMF, or risk heavy political losses. Assistance from the IMF and the World Bank would be crucial in helping alleviate the economic pain across the country which has been festering for decades. Argentina has been unable to pay back its debt to the IMF, and continues to borrow, owing 45 billion USD to the IMF. While the new deal postpones debt payments until 2026, alienating the West may lead Argentina to lose its strategic economic partners, forcing it to rely on other great powers like China for help.
Overall, with the Argentine government and people being reticent to receiving their help, the IMF, the US, and their allies might choose to reverse their economic assistance policy with Argentina, calculating that the benefits are not worth the reputational, political, and financial costs.
Edited by Hannah Frederiks