Welcome to the Latin American Brief of Foreign Policy.
Highlights of the week: Argentina tests new monetary system, Mexico and the US resolve water conflicts, and Trinidad and Tobago elects new leaders.
Argentine President Javier Miley was elected in 2023 on a promise to dramatically rethink the country's long-standing economy. He said that reducing public spending and deregulation would hit rampant inflation and restore stability.
Milei's success was not guaranteed. Argentina's economy is tightly controlled, and its leaders have tried to reform Promet in recent decades, but they often abandoned them.
Last month, Mairay's administration loosened Argentine's capital and currency controls with support from a new International Monetary Fund (IMF) contract. That had a risk. People who are not confident in the Argentine economy may sell their pesos in US dollars or send money abroad. When Argentina removed control in 2016, PESO crashed and inflation shot.
However, it appears that Milei has passed an important test. So far, this time it hasn't happened. Florencia Fiorentin, an economist at Argentine consulting firm EPYCA, said Mairei's policy approach was more “sophisticated.” Rather than floating freely against the US dollar, it is permitted to float between the upper and lower limits that expand over time.
The Argentina central bank has pledged to acquire the peso if necessary to implement this so-called partial float system. But that required more reserves than where the IMF came into being. The fund has confirmed a $20 billion new loan for Argentina ahead of the partial float.
Almost three weeks after the government enacted the partial float, the peso value has not changed dramatically and has settled in the centre of its target range. The Mairay administration declared victory: Economic Minister Louis Caputo posted on social media that he called for a “wave of apologies from colleagues and journalists” that he predicted a sharp decline in the value of the peso.
The new IMF deal shows strong US-brain relations since US President Donald Trump took office in January. The US is the largest shareholder of the IMF. During Trump's first term, the fund quickly tracked loans to Argentina, led by Trump's friend, President Mauricio Macri. Myray immediately feels comfortable with the US president.
Bloomberg reported last week that the Trump administration's proxy agent had previously refrained from making a loan decision, but has approved a new contract with Argentina. Some board members reportedly feel they are putting pressure on them to back this up.
The prospect that US political alliances could affect fund lending is a subtle thing from an organization that takes pride in its technical expertise. The IMF's Western Hemisphere director told reporters in Washington that the deal was approved “after a very strict valuation.”
At its annual spring meeting last week, the IMF expressed full cries support for Milei's efforts. “This time, that's not the case,” said Christarina Georgieva, managing director of the IMF, about reforms in Argentina. The fund projected growth of the country this year by 5.5%. This is the rate Fiorentin called “very optimistic.”
As Argentina headed for the midterm elections in October, Georgieva said, “It's very important not to let the will of change go wild.” She also posed for a photo wearing a gift from an Argentinean official.
Georgieva's remarks prompted accusations that the IMF was interfering with Argentina's internal politics. One opposition politician said the fund should investigate her actions and call it “irresponsible.”
However, the Argentinians may not have been Georgieva's sole target audience. Trump's militant stance on multilateral institutions has prompted fear ahead of the IMF and World Bank spring meeting that the US may withdraw from or seriously try to block the organisation. Meanwhile, the White House has revealed its desire to support Mailey along with Treasury Secretary Scott Bescent, who will travel to Buenos Aires in April.
At the spring meeting, Bessent did not announce plans to withdraw from the IMF, but he said the focus should be heavily on climate change and gender issues.
For Mairay, April was an important milestone month. However, leaders face further testing of the line. Fiorentin said the peso float is “very well managed,” but she added that Argentina's austerity and real wage declines were “unsustainable.”
Monday, May 12th to Tuesday, May 13th: Brazilian President Luis Inacio Lula da Silva visits China.
Brazilian Foreign Minister Maurovieira will speak at a meeting of Foreign Ministers BRICS held in Rio de Janeiro on April 28th.Mauro Pimentel/AFP via Getty Images
BRICS meeting. The Foreign Minister of the BRICS Group held this week in Rio de Janeiro to focus on how member states can oppose unilateral trade measures and deepen their commerce amid Trump's global trade war. Since 2023, BRICS has expanded from five to ten countries. Previous members: Brazil, Russia, India, China, South Africa, New, Egypt, Ethiopia, Indonesia, Iran, United Arab Emirates.
This brings more frequent contact between these countries, but the Foreign Minister's meeting also showed the pain of the group's growth. The country did not sign a joint statement this week after disagreements over the diversification of the UN Security Council. Brazil, which led the meeting, issued its own declaration instead.
Despite expressing interest in BRICS membership, Saudi Arabia has not yet completed its full membership to the bloc. Brazil's Foreign Ministry told reporters that Saudi Arabia is one of the main participants in the summit than the second tier of the “partner country,” but the envoy did not appear in the photos from the main meeting.
By expressing interest in BRICS, Riyadh may seek to gain leverage with Washington in separate bilateral negotiations, Oliver Stuenkel and Margot Treadwell wrote in Foreign Policy in March.
Mexico and water tension. Mexico and the United States have signed a contract with Mexico to separate water from Rio Grande into southern Texas under the terms of the 1944 bilateral treaty, the US State Department said Monday. Trump has recently accused Mexico of violating the agreement, and has called for regular water to be sent across the border from its tributaries of the river.
This topic is becoming increasingly sensitive as farmers from both countries, an influential political group, face a drier state. In 2020, farmers in northern Mexico took over a dam that sent water to the United States. The two countries said they plan to continue working together to address water shortages in the border areas.
Chile is commemorating the carabinorus. Chile marked a rare anniversary in Latin America on Sunday. This is a holiday dedicated to the country's military police, Carabinorus. Carabinolo maintains particularly strong ties with Chilean past military governments, and public sentiment towards them is often a clear marker of political identity.
Chilean far-right politician Jose Antonio Custo, who is set to run for president this year, has released a short film for the holidays. It provided sympathetic portrayals of officers, including those accused of injuring people during Chile's 2019 public protests. The current left-wing President Gabriel Borick defended some of the causes raised in those demonstrations.
According to the Pollster Cadem, public approval for Carabineros was less than 40% during the 2019 demonstrations, but rose to 75% last month.
The Rio Grande, which divides Texas and Mexico, has several twin cities on each side. Which of the following pairs is incorrect?
El Paso and Ciudad Juarez
Piedras Negras and Eagle Pass
Brownsville and Matamoros
Fredericksburg and Nuebola Redo
The American city is called Laredo.
Kamura Persad Bissessar, leader of the United National Congress party in Trinidad and Tabago, will speak to his supporters at a rally in the capital of the Spanish port on April 26th.Beharry/AFP in advance via Getty Images
The Snap Congressional election in Trinidad and Tobago on Monday brought the centrist former prime minister Kamura Persad Bissessar to power. The vote highlights concerns about crime in the country of around 1.5 million people.
Last December, rising violence prompted resignation of Prime Minister Keith Lowry to declare a state of emergency in Trinidad and Tobago. The country's murder rate was one of the highest in Latin America and the Caribbean last year. In March, Laurie announced that he would resign and hand over his leadership to Energy Minister Stuart Young.
Young, called the Snap Election, seeking popular mandate. His central left-wing national movement has reduced the representation in the legislative room to about half the United National Congress of Persia Bissessar and its allies. The centre's left wing ruled Trinidad and Tobago for ten years.
Hamid Gunny, a political analyst at the University of the West Indies, told the Guardian that Trinidad and Tobago might now lean even further towards America.
In recent weeks, the US has revoked licenses for two natural gas projects that have developed jointly between Trinidad and Venezuela.
Persad-Bissessar, 73, is the only woman to lead Trinidad Tobago. Her return to office will bring up to two women-led Caribbean community countries.