Analysts Call Massa's Surprise Win in Argentina Good News for China
After placing third in an August primary, ruling Peronist coalition candidate and current economy chief Sergio Massa captured nearly 37% of the vote over the weekend, defeating two other contenders both of whom questioned their nation’s ties with Beijing.
Argentina’s battered economy was a key focus in the race in a country that has seen poverty rise and inflation surge into the triple digits under Massa and other current government officials’ watch. If he wins a runoff next month, analysts say it’s not likely that China’s ambitious economic and strategic plans for the second largest country in South America will get the scrutiny some want.
Placing second was Javier Milei, an anti-establishment contender who called China an “assassin” in a Bloomberg news interview in August and pledged to freeze relations with Beijing if elected. The third-place finisher was former Security Minister Patricia Bullrich, a mainstream conservative who told the Financial Times before the vote that she wants to rethink her nation’s ties with China.
Bullrich is now out of the race, and Milei and Massa move on to a Nov. 19 runoff.
Beijing’s radar
Over the years, China has inked strategic deals with successive Argentine administrations and used currency swap agreements and other lending measures to simultaneously bail out Argentina and entrench it deeper in debt to Beijing, analysts tell VOA. Those deals have raised red flags among lawmakers and presidential candidates alike.
Massa “is the least likely to review those deals” with Beijing, according to Gustavo A. Cardozo, an Argentine scholar who studies his country and Latin America’s ties with China.
He was also the only one of the three top candidates to embrace China’s invitation to join BRICS, a bloc of major emerging economies that includes Brazil, Russia, India, China and South Africa and which often presents itself as a counterbalance to traditional Western influence. At a meeting in August, the group invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join in January.
Additionally, Massa welcomed an emergency loan delivered by Beijing in the form of a bilateral currency swap agreement just days before the election.
Last week, at a forum in Beijing on China’s Belt and Road infrastructure initiative, China extended that offer to Argentine President Alberto Fernandez.
“We asked for $5 billion, they gave us $6.5 billion,” Fernandez, who is from the same political party as Massa, told Argentine media last Wednesday.
That largess is very much consistent with the size of Beijing’s strategic interest in Argentina, as Cardozo sees it.
“Argentina has always been on Beijing’s radar for geopolitics objectives” both in the hemisphere and in global terms, Cardozo said.
Christopher Ecclestone, a London-based commodities expert who spent 10 years working in Argentina, says Massa’s win in the first round signaled a comeback of left-leaning populist forces known as Kirchnerism, made famous by the husband-and-wife team, Nestor and Cristina Kirchner, that presided over Argentina from 2003 until 2015. The Kirchners are known to have brought Argentina closer to Beijing.
“Totally shocking. The Kirchnerites rose from the dead. The ‘Voice of Reason’ party [a coalition led by Patricia Bullrich] was trounced,” he told VOA in an emailed response. “Now there is another month of uncertainty between Massa and Milei.”
Largest recipient
Research published by the AidData project at the College of William and Mary in Virginia confirms Argentina’s importance in China’s strategic thinking.
As countries that receive loans from China for their Belt and Road infrastructure projects show increasing difficulty in repaying the loans, Beijing has pivoted to a new form of lending, “ramping down infrastructure project lending, ramping up emergency rescue lending,” such as making available funds through currency swaps, the project’s executive director, Bradley Parks, told VOA.
The caveat, he added, is “Beijing’s biggest sovereign borrowers are, for all intents and purposes, swapping less expensive debt for more expensive debt.”
To date, China has provided 128 emergency rescue loans worth $240 billion to 24 countries, William & Mary’s research found, while Argentina is the “largest single recipient,” Parks noted.
“I think it’s fair to say that the country is a priority for Beijing,” Parks said.
While Argentine media have described such borrowing practices as paying for Chinese goods with higher-interest loans, Massa welcomed the latest credit extended by Beijing. The $6.5 billion credit line is “huge news for the strengthening of Argentina’s reserves,” he said in a press release last week.
“We can also accelerate payments for imports made by small and medium companies, as well as intervene in the [currency exchange] market,” he was quoted as saying.
Resources and military ambitions
Ecclestone, the London-based commodities expert, said Argentina’s significant lithium and liquid natural gas deposits are critical to China’s industrial and military ambitions, as is Argentina’s critical geographic position straddling both the Pacific and Atlantic Oceans at its southern tip.
“If China wants to sail anything into the Atlantic, it needs to come around either Cape Horn or the Cape of Good Hope in South Africa,” Ecclestone told VOA in a phone interview. Although some have pointed out that the Panama Canal is another option, Ecclestone said the canal can easily be blocked.
Not being blocked to sail around either cape, therefore, is a key strategic priority for Beijing, as Ecclestone sees it, for commercial and military ships alike. He says it explains the efforts Beijing has made to cultivate ties with Chile and Argentina, which control access to Cape Horn, and with South Africa, which controls the Cape of Good Hope.
Rick Fisher is a senior fellow at the International Assessment and Strategy Center in Washington and an expert on Chinese military strategy. Fisher sees key infrastructures tied to the Chinese, such as a space facility China established in Argentina, greenlighted during Cristina Fernandez de Kirchner’s presidency, as worrisome for the United States.
“From this base the PLA can track and control satellites, track and control anti-satellite operations, control Fractional Orbital Bombardment nuclear weapons traveling over Antarctica” and potentially flying north to strike against U.S. targets, he said.
Washington, in Fisher’s view, should be pressing Argentina to terminate this base, which has been described in a Reuters news agency report as a “black box” in how it is run.
Ripple effects
Should Massa win the runoff in November, Beijing could also see one of its long-cherished strategic objectives advance: the internationalization of China’s official currency, the RMB, also known as the yuan.
During a visit to Beijing earlier this year, Massa told Chinese officials that the two countries’ currency swap agreement, which analysts say are essentially emergency loans Beijing makes available to Argentina, serves to “consolidate” the yuan as his government’s currency of choice. Such gains are precisely what Beijing is seeking in forging ties with governments it appears to be helping, Cardozo said.
What happens in Argentina could have a ripple effect in other parts of the hemisphere, and beyond, he pointed out.
China’s efforts to beef up the yuan as an international currency has long been viewed as a proxy to challenge the U.S. dollar, and the U.S.’s primacy in international trading and global affairs.