Crisis in Argentina: China and Russia in the USA’s backyard

Conference call between Argentinian President Kirchner and Vladimir Putin broadcast on the new RT channel in Argentina. Screenshot from RT video.
Conference call between Argentinian President Kirchner and Vladimir Putin broadcast on the new RT channel in Argentina. Screenshot from RT video.

As vulture capitalists continue to deepen Argentina’s economic crisis, China and Russia are showing increasing interest in strengthening their economic, military and cultural influence over the country. Argentinian socialist David Justo asks what this new situation means for anti-imperialist politics in Latin America.

In the so-called “multipolar world”, with the USA losing its hegemonic dominance, we are seeing new deals between the emerging powers and Latin America. Countries such as Argentina can effectively be seen as “semi-colonies”, politically independent but economically and financially dependent. This needs further analysis but we can outline some features for the Argentinean case.

Recently both Russia and China signed deals with Argentina. In March this year Argentina backed Russia’s annexation of Crimea by abstaining in the United Nations General Assembly vote. In return, Russia supported Argentina in the “vulture funds” conflict when the US Supreme Court voted in favour of US-based hedge funds that were demanding full repayment for Argentinean debt previous bought up for a pittance. Russia has also supported Argentina against the UK over the Malvinas (Falklands) islands.

Of course, there is an economic basis to these diplomatic novelties. On 12 July Vladimir Putin arrived in Buenos Aires and signed several deals with his counterpart, Cristina Fernández de Kirchner. Russia and Argentina currently have a US$ 2000 million annual trade which will therefore be enhanced. Russia will invest and supply nuclear power technology, helping with one of Argentina’s main current problems in terms of its infrastructure. Meanwhile, Argentina is committing to sell agriculture goods that Russia needs after the economic sanctions applied by the USA and the EU. Moreover, Russia will be part of mining and hydroelectricity projects whilst Argentina will buy military equipment such as helicopters and warships. Putin and Kirchner have termed their relationship a “strategic alliance”.

The “strategic alliance” was celebrated a few weeks ago with a videoconference in which they announced the forthcoming broadcast of the Russian state television channel RT (formerly known as Russia Today) in Argentina. According to both presidents the Spanish version of the channel will enable mutual understanding.

Five days after Putin’s visit to Argentina Xi Jinping arrived in Buenos Aires as scheduled in his world tour. A new set of deals were signed between the Chinese president and Kirchner. These are mainly similar to the ones agreed on with Russia. Yet China came with an even stronger financial input. The Central Bank of Argentina will receive US$ 11000 million for its reserves. China has already deposited the equivalent of US$300 million in order to soften the disturbing decrease in Argentina’s reserves.

This is crucial as the unsolved litigation with the vulture funds acts as a financial straitjacket for the government. This is because they cannot count on the World Bank or the IMF. Argentina’s lack of international currency (US dollars) and foreign investment has led Kirchner’s government into a desperately search for new investors. This is the context within which I think we should read these new deals with Russia and China.

The Chinese-Argentinean relation also suggests “strategic” features. After the dreadful 2012 train accident where 51 people died due to lack of maintenance and bad infrastructure conditions Kirchner’s government announced the purchase of Chinese trains. Chinese investment in the Argentinean railway system has been boosted up in the recent deals. Like Russia, China will take part in the building of two hydropower dams and in a nuclear power station. It has also become a partner of Argentina’s national oil company (YPF).  At the same time, China remains one of Argentina’s main buyers of its most lucrative product – soybean (“Argentina’s oil”), besides being a good source of cash.

It is interesting to note how the mainstream media and the right-wing opposition in Argentina has reacted to the Russian and Chinese deals. In spite of been historically pro-USA they did not offer a strong rejection, as one might have expected. They stuck to arguing about the small-print. They drew attention towards a clause which would mean Argentina would not be granted the funds for the hydroelectric dams if it remained in default. This is currently the case, due to the vulture funds. So they are not against dealing with USA’s rivals but rather criticize the deals for not fully resolving the financial problem. China concurrently shows it makes sure the financial lending takes place within international regulations, the ones Kirchner so vigorously opposes in her discourses.

Another controversial point in the Chinese-Argentine deal is the lending for 50 years of 200 hectares in Patagonia for a Chinese space research base. The work for this base has already begun and a substantial part of it is expected to be finished by February 2015. Clauses of the deal have been kept secret by the government and the base would have alleged military purposes.

Shortly after their meeting Putin took Kirchner as a guest to the meeting of the BRICS (Brazil, Russia, India, China and South Africa) in Brazil. Despite Kirchner’s wishes it is very unlikely Argentina will be allowed to join the group. Not least because of Brazilian opposition. The role played by the BRICS in the increased Russian and Chinese involvement in Latin America remains an open question. But their involvement is a fact. Between 2005 and 2013 China made loans of US$ 102 000 million to the region. It has acquired and invested in mines in Peru, oil projects in Venezuela and Brazil, alongside agriculture development and building businesses. In this picture Russia does not lie far behind. What they are doing is basically stepping on USA’s backyard setting up deals that embrace economic, military and even cultural levels of relationship.

Nevertheless, at least as far as Argentina is concerned, we must take into account that in global terms USA and its EU partners are still the principal international investors. The new deals drawing Russia and China into Latin America are perhaps less a matter of financial power shifting and more a matter of a new dynamic of competition among imperialist powers. With these sorts of deals we have good samples of how imperialist relationships are being build between states in the multipolar world. For the left in Latin American countries the next challenge will be to understand this dynamic and to develop anti-imperialist politics suited to the struggle against the new semi-colonial situation.


See also Rob Owen’s article, The Changing Face of Imperialism


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