Alberto Fernandez. Picture: GETTY IMAGES/PEDRO MERA
Alberto Fernandez. Picture: GETTY IMAGES/PEDRO MERA

Buenos Aires — Argentine president-elect Alberto Fernandez’s stance on Venezuela may pose another challenge to his ability to renegotiate the terms of an aid package from the IMF.

An imposing debt load and uncertainty about his economic policies already limit Fernandez’s room for a renegotiation of the record credit line, but his views on the Venezuelan regime of Nicolas Maduro are also softer than those of outgoing Mauricio Macri.

A more sympathetic approach towards Maduro could hurt Argentina’s standing with President Donald Trump, who has put Venezuela among his priorities in Latin America. The US holds the most influence at the IMF as its biggest shareholder and was key in the approval of the $56bn package given to Macri in 2018 amid a sharp currency crisis.

“Whatever policy the new government decides to do with Venezuela will have repercussions in the bilateral relationship with the US,” said Hector Torres, a former IMF executive director from Argentina who represented South American countries. “Argentina depends heavily on the IMF and the US has a lot of interest in Venezuela right now.”

During the campaign, Fernandez suggested Argentina could leave the Lima Group, an ad hoc outfit created in 2017 by nations seeking free elections in Venezuela, and align with Mexico and Uruguay, which have taken a less confrontational approach. He has also demurred on calling Venezuela a dictatorship — a term Macri has repeatedly used. A week after beating Macri in the election, Fernandez has yet to comment specifically on his policy for the country stricken by a deep humanitarian and economic crisis.

At a press conference Monday Fernandez reiterated his view that the IMF is partly responsible for Argentina’s economic crisis and skirted a question on Venezuela, saying “everybody knows” what he thinks about that country. One of his top foreign policy advisers, Felipe Sola, said that Fernandez’s stance on Venezuela would not change because of the IMF negotiations.

A US state department spokesperson for Western Hemisphere affairs said “the crisis in Venezuela has already formed part of the discussion with the new Argentine team, and we hope to work together to help Venezuelans recover the democracy and rule of law they are being denied.”

A spokesperson for the IMF said “the decision to support a country’s economic programme with IMF lending is a prerogative of the IMF’s executive board which represents the 189 members of the fund.”

Mexico visit

Fernandez made his first international trip as president-elect to Mexico on Monday and met President Andres Manuel Lopez Obrador, a leader who has tried hard to keep a distance from the Lima Group, calling for a peaceful resolution in Venezuela without labelling Maduro a dictator.

If Fernandez adopts a similar middle-ground stance when he takes office, it would not go well with the US, said Benjamin Gedan, a former White House National Security Council director for South America in the Barack Obama administration.

“It would likely provoke a negative response from the Trump administration, and potentially jeopardise US support, including at the IMF,” said Gedan. “That’s particularly because President Trump is a very transactional leader.”

Gedan points out that Argentina’s relationship with the US does not hinge on many other issues beyond the IMF and Venezuela. That leaves Fernandez, who will be sworn in on December 10, with few alternatives to appease the US.

On Friday, Trump called Fernandez to congratulate him and said he asked the IMF to work with the incoming government. Fernandez told Trump he hoped they would have a “cordial” relationship, according to a statement distributed by the president-elect’s press team in Argentina. The White House transcript of the call made no mention of the IMF.

Economic policies

To be sure, the IMF will negotiate with Argentina through the prism of economic policies, not foreign policy, said Claudio Loser, an Argentine who served as the fund’s western hemisphere director from 1994-2002. Closer ties with Venezuela would increase tensions in case Fernandez comes up with a “very undisciplined” economic programme, but would not be enough to derail the programme, he said.

“The Argentines will have to go beyond just having closer relations with Venezuela for the IMF to withhold their help,” Loser said.

Sticking to Macri’s Venezuela policy is not much easier for Fernandez. His running mate, former president Cristina Fernandez de Kirchner, was one of Venezuela’s top allies when she governed for eight years until 2015, at one point even giving Maduro the country’s top honour. Maintaining Macri’s confrontational policy would reflect on Fernandez’s judgment as president and is likely to anger her noisy radical left base.

Torres, the former IMF official, says there is a chance Fernandez’s strategy may embody a phrase made famous by Juan Peron, Argentina’s three-time president last century and founder of the political movement Peronism: “Put your left-turn signal on, but then go right.”

“Part of what Fernandez is doing in giving signs that the Lima Group isn’t his favourite — that’s putting on the left-turn signal, but he may turn the steering wheel to the right,” said Torres. “I’m optimistic that Fernandez is pragmatic.”

Bloomberg