Chile and Argentina

The following notes are inspired by a 16-day trip to Patagonia. The actual trip report is on my family blog. This general background information was partly compiled during the trip and helps me to better understand what we saw and heard there. [Some of the following is hearsay and other parts are from internet sources of unknown quality; please leave comments regarding perceived inacuracies.]

Argentina and Buenos Aires

Argentina is the second largest country in South America, and its second largest economy. The name derives from argentum, the Latin name for silver. The Spanish conquistadors were motivated to go there by rumors of a mountain of silver in the area.

The interior of the country has four agricultural zones, from north to south: river valleys of the northwest (agriculture), humid pampas (agriculture), dry pampas (cattle), and arid steppe (sheep; rain 10cm/yr). Our time was spent largely in the two southern zones.

Agriculture, including cattle and sheep ranching, have been mainstays of the economy. Argentina is reported to be self-sufficient in food, perhaps by the measure of being a net exporter of agricultural products, and also probably on an affordability scale. Currently oilseeds are the big money crop, principally soybeans; sunflower seeds are a distant second in the oilseed category. Fish exports currently exceed beef exports.

Beef export quotas were installed to make local beef less expensive, but rather than local consumption increasing, it is falling, resulting in falling livestock numbers. Our experience was that inferior cuts appear to be kept for local consumption. Sheep are raised for meat and wool, with meat becoming more economically important; young male lambs are largely sacrificed for meat.

Argentina is 97% caucasian and 97% literate. Education is free and compulsory through middle school, but among the poorest, the compulsory part is overlooked, putting these kids on a slippery slope to nowhere. Argentina has over 70 public and private universities.

Buenos Aires was our entry and return port. We spent 3 days there, enough to sense the flavor of the place. The greater metropolis, the major Atlantic port for southern South America, is home to ~20 million, but the city proper reports just 3 million. The city name means fair winds, and the residents call themselves porteños.

Buenos Aires is an autonomous Federal District and the seat of the Federal government, which still attempts to recover from the disaster of a decade ago. The currency collapsed under the strain of immense debt resulting from political corruption and incompetence in monetary policy. (As one of our presidential candidates repeatedly tells us, protecting one’s currency is a highest priority for a government.) The collapse emptied the banks and resulted in massive unemployment (well over 50% at peak in 2003). The peso (ARS) now floats vs. the dollar, currently ~4.3:1.

A generation prior, the despicable dirty regime ‘disappeared’ many citizens. Annual marches in the central plazas of Argentine cities commemorate the disappeared and seek justice and closure. The most prominent of these demonstrations is the Abuelas de Plaza de Mayo, grandmothers of the main city plaza in Buenos Aires. They search for their lost grandchildren, the children of their disappeared children. We sensed that many families there still bear the scars of these bad times, similarly to what we sensed in China, where the older generation recalls the pain of the cultural revolution. Traveling abroad can make an American more fully appreciative of our systems at home.

We were told that an entrenched political corruption culture is still rampant and reaches the highest places. The government is not yet transparent, resulting in a disconnect with the people. In one reported poll, over 70% suspect their officials of malfeasance. One study ranks Argentina 107 in the world on transparency and freedom from public and private corruption.

Buenos Aires presents a young face at street level and the streets are busy. Some machismo is encountered in the city, but overall an open cheerfulness is evident. One senses the old money (land) behind the gates in its more wealthy enclaves and its large mansions. And new money is everywhere, as industry and services sectors are prospering. Listening to stories from our contacts there, one senses the ranks of the nouveau riche are further swelled by those who prosper illicitly at the public till.

After the mid-19th century, Argentina began wooing European immigrants with gifts of land. Empty land is an attraction to a neighbor (Chile) or a remote imperial power, so filling such land with their own citizens is an imperative, permitting a developing nation such as Argentina to maintain its borders. The resulting influx has left Argentina with a decidedly European look. That look is further enhanced by past cleansing practices that eliminated nearly all indigenous peoples from the Atlantic to the Andes. Any remaining have been ‘invisibilized’ until recently; the government is now reported to be expressing some interest in ethnic issues.

While all European countries contributed immigrants, with Spain the largest contributor, we were made aware specifically of German and Italian immigrants. Of the over a million Italians, most remained near the city, while of the 100K German speaking immigrants, many went inland to the Patagonian lake district, an alpine setting perhaps more familiar to them. We detected no significant German or Italian-speaking centers in these places; language assimilation has been complete. As with most places we visit, English is the lingua franca. We encountered a park in Chile with some signs surprisingly entirely in English.

Argentina continues to maintain one of the world’s most open immigration policies, perhaps necessitated by competition; the economic power of its large neighbor to the north is formidable. Yet shanty towns are visible around the outskirts of the city, suggesting that an internal labor force remains underutilized. Unemployment of the undereducated is a problem the government has not yet fully engaged. As in most countries, only educated immigrants will find much success.

The government of Cristina Kirchner currently is reported focused on large infrastructure projects and wooing of extraction industries. For example, southern Patagonia has almost no people, but natural gas and modern telecommunications have been undergrounded across vast expanses of nothingness (sheep estancias). Massive borrowing and taxation on exports largely funds the infrastructure upgrades. In the future, resource extraction is increasingly intended to keep Argentina’s trade balance favorable.

In order to keep up with debt payments, Argentina has embarked on massive nationalizations of the postal service, the largest water utility, telecommunications, the national airline, railways, and the private pension system. Inflation has risen steadily during the current recovery, putting their currency at risk once more. Export prices are now trending downward, putting further pressure on what is again looking like a house of cards.

Argentina’s stressed economy seems to be dangerously exposed to outside events beyond its control: rapid fluctuations in local climate and world commodities prices, coupled with regional politics and the possibility of new military action over the Malvinas. Three decades ago, the Falklands War was a nonsense exercise in belligerence. (At the time, Jorge Luis Borges attributed significance on a par with two bald men fighting over a comb.) But as estimates of petroleum reserves there grow, it seems doubtful that Kirchner will be content to leave these reserves to England. And the presence of OIL will surely dissuade England from adopting Borges’ surreal suggestion to give the Malvinas to Bolivia.

A large power-generation dam is planned at the outflow of Lake Argentina. It is rumored that land graft is commonplace in the lead-up to this construction. Argentina has the resources to be energy sufficient in the future, but there is a trend away from that position. Thus the dam will help maintain self-sufficiency. Undeveloped petroleum reserves in the Malvinas will almost certainly lead to future contention with the UK, which currently claims them.

In spite of economic progress in the last decade, the gap between the haves and have-nots is still wide. Inflation pushes the poorer to new lows in basic food security, and laissez faire trickle-down stops high in the food chain, particularly in a corrupted food chain. The current prosperity continues to leave the poorest to fend for themselves.

On the other hand, as a foreigner I was surprised not to encounter a panhandler anywhere in Argentina. Street crime seems limited to theft and bunco, which is rampant in the big tourist city, but seldom threatens personal safety. As one gets farther from Buenos Aires, the preying on tourists seems to lessen. We were alerted to the possibility of some terrorist threats to foreigners in Buenos Aires, but the city streets felt safer to me than downtown Seattle.

Chile

Chile lacks Argentina’s land resources and hence is less self-sufficient in agriculture. Economically, Chile is in the same class with Argentina and Colombia, leading the second tier of South American countries. Minerals account for half its exports, being the world’s largest producer of copper and a source of molybdenum derived as a byproduct of copper mining. Energy self-sufficiency is Chile’s main strategic issue, with few hydrocarbon reserves. Thus hydroelectric power is vital to the economy, as is natural gas from its eastern neighbor.

The name Chile comes from tchili, an indigenous word for snow. The population of Chile compares to Argentina’s in whiteness and in literacy.

Chile fought 19th century wars with its indigenous peoples with as much intensity as the Argentinians did in the same period. The Mapuche tribe from the south fought the Europeans to a standstill for 300 years in Chile before finally being subjugated. Both nations have since endorsed the 1989 international Indigenous and Tribal Peoples Convention, forerunner to the UN Declaration of Rights of Indigenous Peoples.

Chile has also experienced the pain of dirty government, at the culmination of the Pinochet years. In the last two decades, successive democratic governments have done much to elevate Chile to a regional power.

Chile ranks internationally much higher than does Argentina with respect to government transparency and freedom from corruption. Governmental transparency is furthered by laws regarding freedom of information. Public opinion in Chile seems to reflect confidence in the government. Corruption is reported in isolated cases, but does not seem systemic in the culture. Thus Chile seems a more stable candidate for international investment than does Argentina at this time.

Argentine-Chilean Relations

The border between Argentina and Chile runs for 5300km, third longest in the world. Both countries were allied in their 19th century wars of independence from the Spanish Viceroyalty of Peru.

In the 1860s, Spain attempted to regain a foothold in the Pacific, prompting an alliance between Chile, Peru, Bolivia, and Ecuador, closing off Pacific ports to the Spanish fleet. This marked a split with Argentina, who denied support to the alliance.

After this, Bolivia and Peru signed an alliance against Chile. Argentina nearly joined, but ultimately did not. In 1881, Argentina and Chile signed a formal border treaty, making the continental divide of the Andes the border.

Patagonia is the name applied to the southern part of South America. The southern parts of Argentina and Chile are both referred to as Patagonia. The border between the countries was clear along the high Andes (except in the Patagonian Ice Field), but in southern Patagonia, the mountains cease and it was difficult to map the precise contours of the watersheds, causing more border arbitrations. The matter seemed settled in 1902 after independent arbitration resulted in a straight line border. But the two countries nearly went to war in 1979 after further disputes over islands. Large areas of the Patagonian border were mined and remain so today. Only the Pope’s intercession prevented Argentina from invading Chile.

The matter remained unsettled as Argentina began the Falklands war. They expected to win, after which they would simply go on to seize the contested islands from Chile as well. But they lost, the Argentine military junta collapsed, and a friendship treaty was signed with Chile in 1984.

Argentina and Chile are trading partners. Goods are trucked over Andean passes currently, with two rail routes over the Andes being reconstructed. There is a natural gas pipeline between the two countries. The trade is currently asymmetrical, with Chile importing Argentine agricultural products and natural gas. Chile in turn invests in Argentina.

Highlights of South American International Relations

In 2008, the Union of South American Nations, Unasur, came into being, modeled after the EU. It promises defense and economic cooperation, but differences between members have meant a slow start. It was finally ratified by 12 countries and became effective a year ago. Member countries hold US$574B in international reserves.

It seems a mistake not to include Mexico and the Central American countries in such a union, considering their close ties and mutual economic interests. Mexico’s petroleum and mineral assets and its economic status as Latin America’s second largest economy would seem to make it an automatic anchor country for such a Union, rather than an afterthought associate member.

The union calls for a South American Parliament to reside in Bolivia and a Unasur administrative headquarters to reside in Ecuador. A multilateral payments system will be established that will replace the US dollar as a base currency for regional trade. A regional development bank is being established, to be called Southern Bank.

Hopefully, Unasur may provide a framework for resolving minor disputes between members, such as the Bolivia-Chile Atacama Border Dispute that has persisted for a century after Chile seized Bolivia’s claimed Pacific coastal border, rendering Bolivia a landlocked nation. The countries have been without formal diplomatic relations for decades. Chile historically has good relations with Ecuador to balance its poor relations with Peru and Bolivia.

While the foreign policies of most Unasur countries are rationally interest-based, Chavez has added an ideological base to Venezuelan foreign policy, evidenced by his close ties with fellow demagogues (Ahmadinejad and Qadaffi come to mind). Venezuela had been relatively free of anti-semitism until the rise of Chavismo. Chavez supports the fomenting of anti-Semitism in the media there, perhaps for the usual and well-remembered reasons.

Chavez is the most violently anti-American head of state in the region, even getting out in front of Kirchner in America-baiting. Opposing American interests at every turn, he is likely to spearhead efforts steering Unasur countries away from the American-based OAS, substituting a Latin American consortium instead.

Kirchner is clearly a Chavista, based on her Peronist DNA. This friendship has been cemented by Chavez’s attempts to covertly fund Kirchner’s election, and by his buying of Argentine debt to help keep Kirchner afloat despite her profligate spending ways. The relationship is further advanced by mutual interests: authoritarianism, anti-Americanism, a highly controlled press, oil, and corruption at the highest levels. It seems an unholy alliance that reveals a lot about the true nature of Kirchner and her government. One hopes this disease is not contagious to other states in the region.

On a more positive note, Kirchner joined with Brazil’s Lula in condemning Chavez’s anti-semitism, although Lula like Chavez is an ally of Iran. The Kirchners have been consistent in opposing anti-Semitism and in strongly denouncing Iranian-sponsored terrorism against Jews in Argentina. This is a welcome change from Argentina’s past anti-Semitism during its facist periods.

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