Wednesday, August 27, 2014

Russia's Sanctions and Argentina

As Russia faces sanctions, it is looking to Latin America to fill its food gap. For example, the Russian government predicted confidently that Argentina would double its meat exports to fill the gap. There are various interesting dynamics all coming together.

1. Argentina is especially annoyed at the United States because of the U.S. judge blocking various Argentine efforts to resolve is debt problem. Politically, then, President Fernández sees it as an opportunity to boost domestic support.

2. This is a good way to shore up Argentina's reserves, which are $29 billion versus $53 billion in 2011.

3. At the same time, the Argentine government imposes caps on exports to keep inflation down at home, so even a major beef exporter seems skeptical of the plan to boost exports to Russia. So she can appease exporters but will have to be careful about the economic impact.

Notice I did not mention a threat to the United States, Russian incursion, loss of U.S. influence, or the like. I suspect that such arguments will be coming soon, but I think this situation is best viewed in terms of careful political calculations by Cristina that will be based largely on her own domestic position.


Anonymous,  8:41 PM  

Win win situation for both countries. Meanwhile the European economy not looking too good.

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