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statements by Diana Mondino put the agreement in check

But let’s get to the important thing, how can it affect this provocation from the new chancellor from Argentina the swap with China?

The rudeness of Argentine diplomacy to China

It is worth remembering that the short circuit in bilateral relations began from sayings and actions that find their genesis in presidential campaign and they state that, With the arrival of Milei, a change in the orientation of international politics and geopolitical alignments of Argentina is being experienced, to the detriment of relations with regional partners and with rising emerging China.

Declarations of alignment with the West (mainly the US), the refusal to join the BRICS bloc and Mondino’s growing rapprochement with Taiwan, which breaks the traditional position of Argentine diplomacy in relation to the issue, They caused expected discomfort among the Chinese authorities.

In economic and financial terms, these actions already had important repercussions on the swap of coins. First, China froze the expansion that had been agreed to by the government of Alberto Fernández (for about US$6,500 million) and could continue, “with the requirement of payment of the tranche used, of approximately US$5,000 million,” he explains – in statements to Ambit Emilia Valdoctor in sociology and researcher at the Center for Social Studies of Economics at the IDAES School of the University of San Martín.

Val adds that, while this shouldn’t be repaid immediately, “Yes, it would add external tensions, potentially affecting other aspects of economic relations.such as commercial ones and those related to investments in infrastructure”.

The Economist Federico Glustein agrees with this view and maintains that China could react with an export embargo because The debt with that country is very large“both in terms of import suppliers and swap funds.”

However, he clarifies that it is unlikely that progress will be made in this direction. since he points out that the Asian giant also needs Argentine exports.

Swap: the Mondino effect on reserves

For her part, Val explains that the escalation of the conflict and the eventual closing of the swap for our country would leave the Government without access to financing that is “fundamental for the reserves of the Central Bank (BCRA) in the face of the recurring difficulties of our economy to accumulate dollars“and pay debt and imports.

Remember, in this sense, that the swap even made it possible to meet commitments with the International Monetary Fund (IMF) in the previous government administration. And he adds that, although now it is being possible to add reserves“the external fragility is still noticeable.”

Val warns that access to international debt markets still seems distant for our country while commitments are increasing and the IMF is not providing net positive financing. but, only what is necessary to cover the commitments to the organism itself.

Pablo BortzCONICET researcher and teacher, agrees that, for now, the agreement with the IMF brought some relief for the first quarter regarding debt maturities. However, he warns that the supply of dollars, after that period of time, may be affected, since more foreign currency may have to be allocated to cancel the swap already used or pay for imports with China. This last aspect is also partly covered by the swap.

For Bortz, apart from the question related to Central Bank reserveswe must consider the repercussions of “hurt relations with China“Given that country’s centralized trade, a dispute with that giant could result.”in a decrease in exports, with China being one of the main markets, especially for products such as soybeans and their derivatives“.

BCRA renews swap with China for more than US$10 billion

In that same sense, it is expressed Alejandro Olmos Gaonahistorian and researcher of public debt, who points out to this medium that, although the Government will not need the swap to pay the IMF, so the problems of the relationship with China would not be so immediate, in the future ” We are going to have problems because we have a chancellor who He has no idea what foreign relations are.“.

In his view, confronting China, which is one of our most important trading partners, is extremely harmful to the Argentine economy, which needs a lot of investment at this time.

For Olmos Gaona, at this moment, the swap will remain on stand-by, unless the Government needs it. And he hopes that, if that happens, China will agree,”but in his times“In fact, remember that, recently, the Executive raised a request for the reactivation of the mechanism and”there was no response“.

The historian emphasizes that privileging Taiwan over China, “is suicidal“, so analysts agree that there will have to be great work on the part of the Argentine ambassador in Chinese territory, as well as the Argentina-China Chamber to be able to calm things down a bit and correct the diplomatic mistakes.

A necessity in the second trimester

In addition, there are investments already committed and some already made, recalls Bortz, as well as Chinese financing that could suffer. “The possibility that China decides to accelerate the repayment of the swap It also adds complexity to the situationposing potential problems in the future,” he warns.

Thus, internal tensions within the Government in relation to China reflect an obvious dichotomy. On the one hand, there is a pragmatic approach that fits the urgent needs of an economy in crisis. On the other hand, there is an international realignment driven by ideological positions that are notably far from pragmatism and seem to lack an adequate reading of global geopolitics.

This duality of approaches generates internal conflicts and, as Val says, “highlights the complexity of decision-making in a context where immediate economic interests and long-term ideological considerations intertwine“.

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