Argentina on the Mend

In June, the government of Argentina’s President Mauricio Macri applied for, and was given, an International Monetary Fund (IMF) $50 billion line of credit to solve pressing liquidity problems (the Buenos Aires government had asked for $30 billion). Earlier in the year, an Argentinian general named Reynaldo Bignone died, aged 90. Both developments, while unrelated, were landmarks of sorts in the Latin American nation’s efforts to grapple with its past. Bignone was the last leader of the murderous military junta (1976-1983), the memory of which still haunts Argentinians. The regime’s crimes included executing its opponents and handing their children to pro-government parents. Argentina’s Ambassador Fernando Oris de Roa said in a recent interview with Diplomatic Connections that the authorities are still handling the cases of 400 children whose real parents are not accounted for.

The IMF line of credit is an important part of the other Argentinian narrative: President Macri’s uphill battle to resurrect Argentina’s long failing economy. When the hoped for influx of new foreign investment fell sort of Macri’s requirements – the result of a lack of investor confidence the ambassador blamed on “seventy years of lack of (fiscal) discipline” – Macri resorted to the IMF to avoid a financial crunch. Macri has had considerable success reinserting Argentina in the world and repairing Argentina’s international relations, including with the United States. His visit to the White House in April 2017 was cordial - from all accounts despite the fact that the two presidents have had intermittent business contacts for many years, rather than because of it. Still, Trump has exempted Argentina from his new steel and aluminum tariffs.

Ambassador Oris de Roa is not a career diplomat, and this is his first diplomatic post. He has spent most of his career in private business in the agricultural sector, including as the owner of one of Argentina’s leading lemon plantations. It so happens that the Obama administration had barred the importation of Argentinian lemons and the issue is still in dispute. When the ambassador presented his credentials to Trump, the president greeted him with shouts of “Lemons! Lemons! Lemons!” Oris de Roa told Diplomatic Connections he sees his appointment as an opportunity to broaden the embassy’s traditional role in keeping with modern demands being made on the practice of diplomacy.

Diplomatic Connections: Good afternoon, Ambassador Roa.  Thank you for speaking with Diplomatic Connections.  Tell us how you came to be Ambassador to the embassy.

Ambassador Oris de Roa:  It’s my first (diplomatic) job, but diplomacy is a concept that is undergoing some re-thinking, so the role of the diplomat needs to be re-framed. It has to adapt to the needs of the people who govern, and those needs are different than they were many years ago. And so therefore part of my job is redefining what an embassy means for the rest of the government.

Diplomatic Connections: Have you changed anything in this embassy?

Ambassador Oris de Roa: I’m told the way I approach the U.S. administration is different. To begin with, I don’t feel that I’m here to represent Argentina to the U.S. administration only; it’s just part of my job. Also, my purpose in this position is to represent my country in the civil society, the private sector, and in front of individual American citizens, so I have a variety of counterparts.

Diplomatic Connections: Could you expand a little on that?

Ambassador Oris de Roa: I have redefined who my “clients” are; I work for Argentina’s ministry of foreign relations, but my clients are the ministers and the governors of the states. Basically, they’re the ones who formulate policy and since they’re not going to come to me with their needs, because they’re not used to that, I will go to them, and when I talk to governors and ministers, more than half of their (American) agenda is not with the U.S. government, it is either with state governments, with intermediate institutions as in health organizations, hospitals, educational institutions like universities, schools, or judges with whom Argentinian judges want to exchange views on the law. So there’s an abundance of need from the Argentine side, and that’s an important part of my job.

Diplomatic Connections: President Macri said last year, “Argentina barely has relations with the United States. There is a great deal that we could improve, and hardly anything we could make worse.” True, this was prior to his visit to Washington, but how would you characterize the prevailing state of U.S.-Argentine bi-lateral relations?

Ambassador Oris de Roa: Superb. I never ever expected such an open invitation for dialogue, not only for dialogue but, for actual help, of access, of travel. We have been treated in a way that I couldn’t describe any other way but deferential.

Diplomatic Connections: This is relatively recent.

Ambassador Oris de Roa: Completely. It is recent (by saying recent I don’t mean since my arrival). It is abundant because there was a vacuum before, and anything filling a vacuum does so at a certain speed, and later on, stabilizes. But I am absolutely surprised by the access and warmth with which we have been received at different levels of this administration.

Diplomatic Connections: To what do you attribute this, other than perhaps the fact that Macri and Trump have known each other for years?

Ambassador Oris de Roa: That is, of course, a good start. Furthermore, what Argentina is doing in terms of its policies is exactly what this administration, or any other administration, would want Argentina to do - and at a time when examples of success like ours are needed for the foreign policy of the United States in the region.

Diplomatic Connections: But does the U.S. have a coherent strategy towards the Hemisphere in general, and towards Argentina in particular?

Ambassador Oris de Roa: That is, of course, a good start. Furthermore, what Argentina is doing in terms of its policies is exactly what this administration, or any other administration, would want Argentina to do - and at a time when examples of success like ours are needed for the foreign policy of the United States in the region.

Diplomatic Connections: But does the U.S. have a coherent strategy towards the Hemisphere in general, and towards Argentina in particular?

Ambassador Oris de Roa: I can only speak about Argentina. Basically, my mission is to fulfill a mandate given to me by the president of Argentina and that mandate is basically to stick to the every day work and make sure that the policies of our government are implemented as far as this embassy is concerned. I would be a very poor dialogue partner in geopolitics.

Diplomatic Connections: But you have to pretty much know, for example, what U.S. expectations are in the region.

Ambassador Oris de Roa:  I do know about these expectations because they’re very clear, and very public. Basically, they’re concerned about Venezuela, number one. Second, there is a strong concern about the growing influence of Chinese trade and involvement in all of South America. And third, the security issues related to terrorism, narco-traffic and money laundering.

Diplomatic Connections: Not so much Cuba?

Ambassador Oris de Roa:  I think that Cuba is a situation that still needs to be resolved, but belongs to the past.  Many challenges are much more of the future; nevertheless, of course there are some of the present, like cyber security. For example, the challenge of what to do with the work force in the face of advancing technology. On one side you make progress and you alleviate poverty, but you have a good part of the work force that is left jobless by automation.

Diplomatic Connections: But that’s a global issue.

Ambassador Oris de Roa:  And also a regional issue. A region that is now in movement. You’ve recently had elections in Colombia; a change of government in Ecuador; there’s just been a change of government in Chile, and there’s a big, big coming election in Brazil – and I mean big because of the impact. Ours is at the end of 2019. And in the middle of this you have Venezuela, with an uncertain outcome. So South America as a region is of concern to the United States administration: it may not be a priority, but that doesn’t mean that it’s not a concern, and it doesn’t mean that they’re not working on it. Now, you have 10 hours in the day, maybe eight hours are dedicated to something else.

Diplomatic Connections: But whereas Trump is pulling apart U.S. trade agreements, Macri supports free trade, which is a different approach. In fact, what’s happening with trade here is contrary to what is developing in most of Latin America.

Ambassador Oris de Roa:  You are absolutely right. I guess that one of the reasons they asked someone such as myself to occupy this position is basically to adapt to these differences, and that’s an important definition. I don’t see any difficulty overall from the trade point of view. Our strategy should be, and has to be, in those areas that are not affected by the “big” policy of the United States. We need to develop literally, not hundreds but thousands of small companies interacting with other small or medium companies in the United States. All these trade deals become such a distraction. You have tariffs on steel, and aluminum. But I’m talking about deals that could change our economy in Argentina, the medium and small companies that employ most people. Together they represent maybe 60 percent of the Gross National Product. Those are the companies that we need to bring to the United States and find a market for them. Amazingly enough when you do this, and we are (so far) doing this on a relatively small scale, there’s no tariff, or barrier, that we encounter. Basically,  our objective is to engage with people interested in a particular service or product that we can produce. And it doesn’t have to be only in commerce, it can be in areas such as tourism, health, areas that also have large economic impact, and they’re not called trade. So I have to be able to adapt this embassy into whatever the environment favors.

Diplomatic Connections: Thinking small, in short.

Ambassador Oris de Roa:  Thinking small, but multiplied by a thousand rather than trying to make a home run with diesel oil. And also be defensive. We’ve had preferential treatment from the United States when we were spared the tariffs on steel and aluminum. Those are the not so small gestures that we are receiving.

Diplomatic Connections: What is your bi-lateral trade with the U.S.?

Ambassador Oris de Roa:  We have a trade deficit of $3.5 billion, that is, excluding services.

Diplomatic Connections: You concentrate on small businesses, and you’re not, for example, in NAFTA. On the other hand, if NAFTA were to be dismantled, you would be affected.

Ambassador Oris de Roa:  We would, but would it be positively or negatively? Let me put it this way: Would anybody be affected by Brexit? Actually, we are.

Diplomatic Connections: Well, you’re currently hoping to negotiate a post-Brexit trade agreement with the Brits –

Ambassador Oris de Roa:  True, because the Brits need it. And Mexico will need to increase trade with Argentina. One thing that we have done with the British as they face a post-European Union scenario is to say, this situation about the Malvinas (to the British: the Falkland Islands), could we keep on arguing about it, but on the side, because we have so many other things to talk about. We’re not relinquishing on anything (regarding Argentinian claims to the Malvinas) and when the time comes we’ll be as insistent as ever, but frankly speaking, we need the British to become interested in Argentina and we need the British market. The same thing happened with Mexico and with Canada. All these blocks that, in a way, kept countries like Argentina out of those markets, now we find out that it’s because the United States was, in a way according to this administration, subsidizing these agreements. If the United States stops subsidizing these agreements it’s good for us. But again, my point is – and this is the central point because it describes the modus operandi – is that I’m not here to say things are good or bad, I’m here to adapt. So I will adapt to any mood or policy that the United States administration displays.

Diplomatic Connections: President Macri, when he was elected, identified three priorities for his administration. The first was the reduction of poverty, the second was security, and the third was rebuilding the institutions. How has he done in these three areas?

Ambassador Oris de Roa:  According to the most conservative statistics, poverty has been reduced down to 25 percent from 31 percent. In two years, I think that’s an extraordinary achievement. Of course, 25 percent is still unacceptable, and you can’t celebrate an achievement like that for too long before admitting that it’s still an absurd level that Argentina should correct immediately – and we are in the process of doing that. Security: as far as anti-terrorism, narco-traffic, money laundering, I have just been involved in bi-lateral dialogue with the authorities from Homeland Security to the Treasury Department and we have been congratulated on our progress, and we cooperate closely with the United States. In terms of building the institutions, if Macri will be remembered for something it will be as a president who speaks the truth. He is ready to sacrifice political capital to remain close to the truth; and that helps a lot with institutional building. So, no fancy footwork where the institutions are concerned. They are recovering, public trust in these institutions is growing.

Diplomatic Connections: A year ago the Argentinian economy was doing a lot better than it is now. In June, Argentina negotiated a $50 billion loan availability with the IMF. Why is that, and what is the most recent economic prognosis?

Ambassador Oris de Roa:  We grew for seven consecutive quarters at the rate of 3.5 percent, which is quite extraordinary, until about two months ago. We’re going to have a setback this trimester.

Diplomatic Connections: And you now find yourselves in need of IMF support.

Ambassador Oris de Roa:  Financial. There has been a challenge to our finance by the market. We had a run-off: people started selling pesos and buying dollars to the point that we lost control of that, and we decided to take those extra measures so that we don’t fall into these crises that are typical of many places in South America, but particularly in Argentina. We go to the IMF already when we are about to default. The government lives with two situations that are particularly fragile in Argentina. Our political capital is slim: we don’t have a majority in Congress or in the Senate, whatever we do we have to do by consensus, and that is very expensive, very tiring, and slows down the process. Also, we never had any money and depended on credit in order to finance the turnaround of the country. We asked the IMF for $30 billion and were given $50 billion as a credit facility. Maybe it will be used. The market took it as a weakness.

Diplomatic Connections: But didn’t the market interpret is as a weakness because they are not seeing a sufficient flow of foreign investment?

Ambassador Oris de Roa:  True.

Diplomatic Connections: And isn’t one of the reasons why you, a successful businessman, are here is to promote more investment?

Ambassador Oris de Roa:  It’s one of my top three priorities. The fact is that we expected companies to bump into each other to invest in Argentina, and that didn’t happen. The thing is that we do have to carry the irregular behavior that we had in the past as part of our inheritance. We underestimated the weight of our past – seventy years of lack of discipline, and of surprising the markets many times. So investors are much more cautious. They are coming. We had $10.3 billion in new investments in 2016, and $10.1 billion in 2017, but we thought it was going to be more than that.

Diplomatic Connections: How much more?

Ambassador Oris de Roa:  We thought there would be close to double, and that was what was announced by different companies. We also thought that these investments would have a direct impact; and I was given a very, very good lesson by a representative of Apple in this office. He told me, I’m going to let you into – not a secret – but something you probably don’t know. The moment we decide to open an Apple store in any country, that Apple store will open five years after we make the decision. The whole process they have established in terms of training people, making sure that the stores are done the right way, finding suppliers, complying with the rules and regulations. I would take that as an example of what happens to many companies. Coca Cola has just announced a $1.2 billion investment in Argentina, the investment will be immediate, but the impact in terms of jobs is going to take a couple of years.

Diplomatic Connections: When the time comes for you to leave, what would you most like to have achieved here?

Ambassador Oris de Roa:  A change of attitude of the embassy towards servicing the ministers and the government. Rather than being passive in complying to the demands as they come, that we actually reverse the process and we are the ones looking for a mandate. That means changing the mentality of the organization, making them much more pro-active.

Diplomatic Connections: You’re talking about changing the mindset of a long-established institution.

Ambassador Oris de Roa:  The relationship that we have with the U.S. administration is like a tunnel that is very big, but the actual business is a trickle of water in that tunnel. We have a much broader capability of relating to our counterparts, whether it’s government, civil society or the private sector than we actually use to. What I need is “product.” I need the minister of health to tell me that they need at least two partnerships with different states or universities, I need the education minister to tell me that such and such an exchange program should grow from 50 students to 2,000 students. I need the judicial branch of Argentina to tell me they want an exchange of Supreme Court justices, to exchange places, or visit each other. The same thing with science, technology – tourism, for Heaven’s sake. None of those need to be affected by trade barriers.

Diplomatic Connections: But Argentina has a healthy tourist trade.

Ambassador Oris de Roa:  Compared to New Zealand we are at 10 to one.

Diplomatic Connections: Why do you chose New Zealand?

Ambassador Oris de Roa:  It’s a country with a similar history to ours in terms of development, we became independent at the same time, it is the Southern Hemisphere, it’s far away, it offers the kind of nature that we have. That is something that I need to work on for Argentina. We could have a multiple of ten more tourists than we have today, without making any major effort. We’re not going to promote tourism from this embassy: the strategy is to promote investment in tourism.

Diplomatic Connections: Do you tweet?

Ambassador Oris de Roa:  No. The embassy tweets. I’m 65 years old. I have put a limit to the amount of new things I’m going to learn. Being an ambassador is taking 99 percent of that space. I’m already long in terms of exposure, and given the effect that tweeting has on other people, I don’t need that.

Diplomatic Connections: As you pointed out earlier the Americans get uneasy about the Chinese activity in Latin America. But the Chinese perform a very useful role in Latin America, and wouldn’t you say that the Americans haven’t really challenged them for the turf in Latin America?

Ambassador Oris de Roa:  One official of the U.S. administration asked me, “What can the U.S. do to compete with the Chinese in Latin America?” My reply was: start by showing up. We put out tenders – for example, solar parks – and in that case the bidders were one from Italy, and two from China. None from the U.S.

Diplomatic Connections: The other topic I wanted to bring up is Mercosur. It has been trying to strengthen its presence in the Hemisphere, and at the same time to broaden its international reach – towards the EU, for example. Do you foresee any likelihood of Mercosur evolving into something similar to the European Union, a political as well as an economic regional union. After all, Latin America starts with the advantage of a common language (except for Brazil, of course), and a common cultural base.

Ambassador Oris de Roa:  I think that’s more than a dream: It’s a necessity, and a commitment from my president. It’s completely absurd that the number one trading partner for Argentina and Brazil, with whom we have had a Mercosur agreement for over 30 years, we still have not been able to advance on a better integration. Now, Paraguay is absolutely on board. Uruguay has had some reservations, but is on board. Depending on whose elected as Brazil’s next president in the coming elections (July-September), you may see a lot of progress in terms of Mercosur. Macri is completely committed, and, it’s difficult to forecast, but if either of three of the seven candidates is elected, you will see impressive progress in Mercosur.

Diplomatic Connections: The recent death of Gen. Bignone, the last of the military dictators. What does that mean for Argentina? How much residue is there still to deal with of that period?

Ambassador Oris de Roa:  There is residue, of course, substantial amounts. We are trying to overcome it. I can vividly recall, when I was twenty, everything that happened. I also vividly remember not knowing what was happening, and finding out later. The political differences of today are strongly influenced by the days of the dictatorship, and this is something that we have not yet resolved emotionally. A great deal of progress has been made, but it would be offensive even to mention that it’s just something of the past. With the dictatorship you had two periods. The state-sponsored terrorism and the Malvinas. I don’t know what number of people disappeared, died, particularly when you aggregate the casualties in the Malvinas. But it’s something that is still very much in the minds of every Argentinian. Right now a lot that has been written about the period in testimonials; it really is raw material, and you do need new generations to be able to analyze this with a bit of perspective. We are still finding children, or grandchildren, of people who disappeared. I think the number is 400.

Diplomatic Connections: You said earlier that the situation in Venezuela caused concern in Washington, but it must surely do the same in the Western Hemisphere. What do you think is going to happen in Venezuela?

Ambassador Oris de Roa:  I can tell you what I hope will happen in Venezuela. I hope it will soon change its regime. The real size of the crisis is still not known. But I hope that it’s an opposition led change, and not an outside led change. It may have help from the outside, and if it does have help from the outside, I hope it’s Latin American.