UNIVERSITY OF WARSAW INSTITUTE OF INTERNATIONAL RELATIONS

ARGENTINA IN 2050

Accomplished by Hanju Kim Natalia Herrera Polina Borshchevska Yuet Mun Kwong Nicole Ostrowska-Cobas

Developing Countries in International Relations Academic year 2016

1 TABLE OF CONTENTS

1. Introduction………………………………………………………………………...……...3

2. Political Situation……...…………………………………..………………………………4

3. Economic Situation…………………………………………………..……...………….....5

4. Relations with Neighboring Countries………………………..………..….……………....6

5. Regional and Global Influence.…….……………………………………………………...8

6. Population………………………………………………………..……………………….10

7. Conclusion…………………………………………..…………………………………....12

2 1. Introduction This report is devoted to discover the entire pattern of progress of Argentina until 2050 focusing on the different realms: political and economic growth, population, dynamics of relations with neighboring countries and the regional and global influence. The main idea is to portrait a general view of the country in 36 years based on predictions we derived from analyses that have been published. Nowadays Argentina is a country with a high level of development potential in comparison with some of the countries in the region, nevertheless Argentina still has to overcome plenty of obstacles in order to become a fully advanced state; for achieving this propose the government is trying to bind relations with other countries inside and outside of the region to increase the cooperation among them, relying on liberalistic IR theories this will allow the country to gain a more international position that will eventually lead to a prosperous future. To begin with, the political situation impresses with its progress in human development, simultaneously significantly improving the quality of living of its citizens and advancing the level of urban infrastructure. Although, in the economic field Argentina experiences steady growth, the likelihood of considerable boost is very high leading to economic stabilization. The influence in the regional and international arena is one of the most important aspects giving the fact it will completely change the perception of Argentina as an international player. Concerning population the odds are that the country will accomplish the maximum population in comparison with previous years, simultaneously experiencing an ageing society issue and a moderate fall in growth rate. The dynamics of relations with neighboring countries the main focus are countries adjacent to Argentina borderline: Chile, Uruguay and Brazil in a bigger scale and Paraguay, Bolivia in a minor scale; also the relations between Great Britain and Argentina was analyzed concerning the territorial conflict they had back in 1980’s. Through the analyses that we conducted, we derived to the possible outcome of Argentinian society in 2050.

3 2. Political Situation In the past 13 years, Argentina made a symbolic amount of social and economic progress. The Kirchners managed to reduce poverty by 70% and extreme poverty by 80%1. Unemployment fell from more than 17.2% to 6.9%. Nevertheless, economic growth has been slow for the past 4 years (averaging at 1.1%), inflation has been high and a black market for the dollar has developed. In light of this instability, newly elected president Mauricio Macri presented himself as a candidate for a better future.2 He started a new way of governing by undoing the populist policies of his predecessor. Export taxes on agricultural products such as wheat, beef and corn were scrapped and taxes on soybeans (biggest export) were reduced in mid-December. Shortly after, the new finance minister lifted currency controls thus allowing peso to float freely. In an attempt to end Argentina’s exclusion from the international credit markets, the new government met with foreign bondholders through a mediator. The changes seem to be working as the freed currency dropped by 30% - an improvement for exporters. Consequently, it elevated the inflation rate by more than 25% since Mr. Macri took office. The government is keen on persuading businesses and trade-union leaders to control their prices, however, those are little disposed to do so. The president is also demanding the resignation of General Attorney Alejandra Gils Carbó - an independent officer appointed by the congress with life tenure. The resignation is demanded on the grounds that she is a supporter of the former government – critics emphasize his hypocrisy by stating the fact that he appointed a former councillor of his own party as general attorney of the city of Buenos Aires. The Supreme Court is left with three members and he can appoint his own candidates, hence ensuring a majority. Having briefly explained the current political situation in the country, a rough projection can be made for the near future. Even though the Senate is controlled by Peronists, many of them need support from the central government to restructure their debts - this calls for a form of cooperation. By undertaking rapid transformations and taking such extreme measures to achieve them makes the future uncertain. If they manage to reduce inflation and create economic growth, the government will most likely gain more support and it will secure closer ties with the West. By doing so it may also alienate the neighbouring countries which have a different political and economic structure. It’ll be a tough road, ergo failure is also likely and if it happens the political system may pull a tango turnaround. There have been rumors in the media that Fernandez might try to return for a third term as president in 2019.

1 SEDLAC, poverty. Data from 2003 to mid-2013, based on independent estimates of inflation (http://sedlac.econo.unlp.edu.ar/eng/statistics-detalle.php?idE=34 – accessed 5.04.2016). 2 International Monetary Fund

4 3. Economic Situation In 2016, with a Gross Domestic Product (GDP) of more than US$ 540 billion, Argentina is one of the largest economies in Latin America. In recent years, the country has focused on economic development with social inclusion.

Argentinian economy enjoys valuable natural resources. It is a leading food producer with large-scale agricultural and livestock industries. It is among the world’s largest beef and soybean exporters and is the leading producer of sunflower seeds, yerba mate, lemons and soybean oil. The opening of the Chinese market has helped boost the country’s export potential.3 The country is pursuing an active foreign policy agenda and represents Latin America in the G-20, together with Mexico and Brazil. The Argentinian economy enjoyed significant growth over the past decade. Argentina invested heavily in health and education, areas which account for 7% and 6% of GDP, respectively.4

First of all, from the performance of Argentina since the 1980’s, its very likely to become the top 20 biggest economy in the world in 2050 due to the huge investments in the fishing industry and fish processing equipment become modernized. The export will be highly expanded.

Secondly, Argentine government is developing the new crops and non-traditional product development plans, especially in grain processing, grain ancillary products, processed foods, fruits, flowers and other organically grown crops.5 Furthermore, the government succeeded in establishing mechanisms for the vaccine, and the gradual improvement of health conditions in order to enhance the confidence of trading partners, which is the strong contributing factor for current situation and also for the future. Positive improvement of the Argentinian government and the technology will successfully derive them to ease the trade restrictions form other countries on animal health problems in Argentina.6

Lastly, if further tap the potential of agriculture, whether it is to meet the domestic needs or for the increase in exports, will need to invest more in infrastructure (including frozen, processing and transportation equipment); irrigation; fertilizers and pesticides; marketing; promotion and the information system.7 Credit mechanisms are also necessary to improve conditions for agricultural development potential in Argentina.8 According to the analysis that we have made, we can clearly conclude that Argentina has a mighty potential to become the World Top 20 economy in 2050.

3 Chudnovsky, Daniel, and Andrés López. The elusive quest for growth in Argentina. Macmillan, 2007 4 Cimoli, Mario, Giovanni Dosi, and Joseph Stiglitz. Industrial policy and development: The political economy of capabilities accumulation. Oxford University Press, 2009. 5 Cavallo, Domingo, and Yair Mundlak. Agriculture and economic growth in an open economy--the case of Argentina. Vol. 36. Intl Food Policy Res Inst, 1982. 6 Bruno, Michael. Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, Mexico. Mit Press, 1988. 7 Delacroix, Jacques, and Glenn R. Carroll. "Organizational foundings: An ecological study of the newspaper industries of Argentina and Ireland."Administrative Science Quarterly” (1983): 274-291. 8 Albornoz, Facundo, Darío Milesi, and Gabriel Yoguel. "New Economy in old sectors: some issues coming from two production networks in Argentina."DRUID summer conference. 2002.

5 4. Relation with Neighboring Countries Argentinian borders are touching with five Latin American countries, and having one territorial conflict with European country. Northern part of Argentinian border is contiguous with Paraguay and Bolivia, while the Eastern part is touched with Brazil and Uruguay. 9 Western and Southern border is adjacent with Chile. Argentina is currently having a minor territorial conflict with Figure 1 Latin American Map Great Britain by insisting its dominance over Falkland Islands and South Georgia and the South Sandwich Islands which belong to Great Britain in accordance with international concerns.10 Among five countries surrounding Argentinian borders, Uruguay is considered as the closest ally. Argentinian foreign relation with Uruguay has been formed positively after the Argentina-Brazil War (1825-1828). While Uruguay was used to be a Brazilian province called ‘Cisplatina’, Argentina deeply supported the independent procedure of the Cisplatina province. The war eventually led to the independence of the province and it became the country nowadays known as Uruguay.11 Still we can find the evidence of close relationship between Argentina and Uruguay with Uruguayan national flag. The newly-born Uruguayan government washed in ‘Sol de Mayo’ on its flag to thank Argentinian government which literally fought against Brazilian dominance in the territory of Uruguay, and supported its independence. 12 Currently around 120,000 Uruguayan nationals are residing in Argentinian territory.13 However, the first minor diplomatic tension has been burst forth with the issue of building a large pulp mill along the riverside of the Uruguay River.14 Argentinian government is also retaining positive foreign relationship with Bolivian and Paraguayan government.15 However Argentina and Paraguay were at war from 1864 to 1870 named the War of Triple Alliance. After the incident, both countries never fought again and maintaining positive relations without any military tensions.

9 Website 'World Atlas' «South America Outline Map - Outlibe Map Of South America»

10 “The World Fact Book” 『Central Intelligence Agency』. Retrieved 21 March 2016

11 “Bureau of Western Hemisphere Affairs,” “Background Note: Uruguay", US Department of State. 23 February 2011. 12 “Flag of Uruguay", Guide to Hispanic Heritage. Britannica.com. Retrieved 27 June 2007 13 "Uruguayans in Argentina" EL PAIS, 27 February 2012. 14 "Court allows Uruguay pulp mills", 『BBC News』. 13 July 2006

15 “Paraguayan Ministry of Foreign Relations about relations with Argentina” Website

6 However, Argentina was suffered by the foreign relationship with Brazil. After the Argentina-Brazil War, Brazil lost the war, losing the territory which nowadays we call Uruguay. However the democratisation of Latin American countries, both countries made a strong partnership, signed MERCOSUR regional trade Agreement together. They accepted military détente against each other, by lessening the tension around their borders.16 Argentinian government is still having difficulty regaining the positive relationship with Chile. While Argentina fought with British army with the issue of the territorial dispute of South Atlantic islands including Falkland Islands and South Georgia and the South Sandwich Islands, Chilean government indirectly supported British army. Furthermore, Argentinian government had a territorial dispute with Chile, dealing with the area called ‘Patagonia’, the most Southern part of the Latin American continent. Though Argentina and Chile are sharing the third-longest border of the world (over 5,300 kilometres), they are still in the negative contacts. However on June 2010, Chile officially has supported the Argentine position at the UN, about the Falkland Islands dispute.17 The relations between them have been changed positive quite dramatically for a decade; currently there are a lot longer ways to go.18 Lastly, the mighty anti-Britain animosity is rampant around Argentinian political keynotes. After the Falklands/Malvinas War (2nd April 1982 – 14th June 1982), Argentina completely lost the war, with total 649 soldiers been deceased, over 10,000 Argentinians been captured by British army.1920 In 1990, cut off diplomatic relations were re-established. Reinstated diplomatic ties led both governments installing an embassy in London and Buenos-Aires respectively.21 Currently Argentina is taking care of the South American regional cooperative community named ‘MERCOSUR’ (Mercado Común del Sur, in Spanish).22 Also Argentina is leading the group with Brazil. This MERCOSUR is consisted of 5 official members including Argentina, Brazil, Paraguay, Uruguay and Venezuela with 5 associated members Chile, Bolivia, Peru, Colombia and Ecuador. By actively communicating with other member states in the Common Market Council, Argentinian Minister of Foreign Affairs is shepherding the Latin American cooperative society with the peaceful foreign affairs issues among the neighbouring states. Furthermore, Argentina’s foreign policy is aiming for the formation of the Latin American collaborative community based on the peaceful economic cooperation and lessening military conflicts around the borders.23

16 “Useful Guide for Brazilians Argentina - Official Promotion Portal for Argentina” Retrieved 28 November 2010 17 "Special committee on decolonization reiterates call on Argentina, United Kingdom to resume negotiations on Falklands/Malvinas issue”. 2 April 2016 18 “Research Project on the History of the Relations between Argentina and Chile,” (1978-2000) 19 Tulchin, Joseph S. "The Malvinas War Of 1982: An Inevitable Conflict That Never Should Have Occurred," Latin American Research Review, 1987, Page 123–141 20 "Falklands 25: Background Briefing". Ministry of Defense, Retrieved 1 November 2009. 21 “British embassy in Buenos Aires”, “Argentine embassy in London” Websites 22 MERCOSUR Official Website “http://www.mercosur.int/”

23 Samuel A. Arieti, The Role of MERCOSUR as a Vehicle for Latin American Integration, 『Chicago Journal of International Law』 Volume 6, Page 761-773 (2005-2006)

7 5. Regional and Global Influence Argentina has played a very important role in the regional community within the last years, even though as a developing country hasn't reached fully potential in a global arena, it has definitely evolved in a remarkable way mostly because of the influence it has along with some of the countries in South America like Brazil, Chile and Colombia.

Regional influence

If we look at the regional situation Argentina will have we can see clearly a situation of power in comparison with the countries outside of MERCOSUR which means that Argentina will focus its relations mainly in the countries within this union because it facilitates its own situation, as we projected in the economic relations Brazil will still continue to be the most important actor of the country.24

Nevertheless Argentina is sometimes seen as a country in the middle of the game25, meaning its not seen as a fully regional power but is also never part of the lowest rankings, this situation will eventually evolve within the next decades and Argentina will regain the regional respect it had years ago before the crisis of the 30’s changed its entire economic, social and political situation.

This regional influence will be represented in different areas, in most of them Argentina already has a “stable” place but with the projection the ranking its supposed to increase.

In armaments Argentina once had the most powerful army in South America and even though in numbers it won’t be able to reach other countries it will definitely provide pilots among the best of the world and with quality training; the economic influence in the regional area will be major and it will only fall behind Brazil but this position of power will allow the country to be considered as a major actor in the region. Argentina will have the best position among the countries in the region in urban infrastructure with cities as Buenos Aires positioned in very good rankings.26

So in general the regional influence of Argentina will definitely grow and it will take one of the most important places in the region of South America and neighbouring countries.

Global Influence

In the global atmosphere Argentina will increase its relationships with global superpowers like China, India and the United States, nevertheless this increase will no be as fast as it might be expected giving the instability Argentina is currently facing. The position of power it has as one of the most important members of MERCOSUR will allow it to be considers as a major growing power.

24 La Argentina y sus relaciones con las distintas regiones económicas del mundo. (n.d.). Retrieved April 05, 2016 25 C. V. (2013, November 20). La idea de una Argentina potencia es irrealizable. Retrieved April 5, 2016 26 F. (2012). Argentina Pais Emergente. Retrieved April 05, 2016

8 According to the world bank Argentina is considered nowadays as one of the most solid emergent powers and that its a situation that will be extremely exploited, the country will gain major influence mainly because of its improvements in human development and quality of life. South America’s third-largest economy has expanded at an average annual rate of 7%27 and the growth is increasing, definitely the three most important aspects that will shape the future of this country in the international arena will be the achieving of energy independence, the increasing of the speed of industrialization in order to reduce imports, boost exports and achieve a new framework that allows for the creation of more jobs and even better salaries and the macroeconomic stability based on integrated infrastructure, to strengthen competitiveness and attain real, long-term income gains.28 The goal of the Fernández de Kirchner government has always been to create an international competitiveness where Argentina can play an important role and a place where it can fully develop its potential.

According to the words of Axel Kicillof, Argentine Ministry of Economy and Production, “There are American companies, from the industrial and financial sectors, who have business interests in the country. It is a myth that Argentina is isolated from the world and that it doesn’t have any foreign participation in its economy, we are open to all those who want to take chances in Argentina and make genuine and productive investments.”

And that is the statement that will be significantly important in the development of this nation in the coming years, Argentina has a very strong foundation and if the direction continues in the right path we could be seeing at one of the most powerful powers in the region of South America and a very important player in the global environment that could shape completely the international atmosphere.

27 Oviedo, E. D. (2015, August 4). Página/12 :: Economa :: La influencia de la potencia emergente. Retrieved April 05, 2016 28 Future growth prospects: Robust, sustainable, diversified. (n.d.). Retrieved April 05, 2016

9 6. Population Nowadays Argentina has one of the lowest population growth rates in the whole Latin America. Its population is growing very slowly at a rate of virtually 1% per year. However, the odds are that Argentina’s population is likely to approach 55,444,775 people by 2050, which puts it on the 36th place of the most populous countries in the world.29 For this reason, current predictions of this very sizeable country show the gradual growth in density, account for 20 people per square kilometer in 34 years with the growth rate 0,4 %. Approximately 87,2 % of the population is likely to live in urban areas. Current scientific researches point out four important demographic evidences inherent to the future of the state.30 Firstly, Argentina is going to experience advanced demographic transition in relation to the rest territories of Latin America. However, it is not so progressive in comparison with European and OECD member states.

Secondly, the rate of mortality and fertility is more likely to experience notable decline rather than in other countries of South America. Overall, the total fertility rate per woman is presumed to decrease substantially to 2.1 over the next 34 years’ time span from 2016 to 2050.31 As a result, the proportion of elderly population will constitute nearly 19 % of the whole population. The problem with aging population may interrupt further economic growth and produce more pressure on institutions responsible for dealing with changing demands and needs.32 Thirdly, drastic changes in the population age structure are expected to follow. The future progression for Argentina is called “from pyramid-to-pillar” which is different from the standard narrow-top population pyramids with youngsters on the bottom.33 Moreover, to run the forecast for 2050, life expectancy at birth is assumed to reach its whopping 80 years old in total (84 years for females and 76 years for males). In addition to that, feminization aging is foreseen, which makes women more prone to stay survive their partners, stay in widowhood and frailty without support. Finally, the period from 2015 to 2040 is defined as the most favorable age structure time for economic prosperity. It means that Argentina experiences its demographic bonus, when the proportion of working age productive people accomplishes its height. In turn, productivity of labor force and economic boost will take place. After 2041, beneficial period for growth will be over.34

29 Gragnolati, Michele, Rafael Rofman, Ignacio Apella, and Sara Troiano. “ As Time Goes By in Argentina: Economic Opportunities and Challenges of the Demographic Transition.” Directions in Development., Washington, DC: World Bank 2015 30 United Nations, Department of Economic and Social Affairs, Population Division, Population Bulletin of the United Nations: Completing the Fertility Transition, Special Issue Nis. 48/49, 2002. 31 United Nations, Department of Economic and Social Affairs, Population Division, “World Population Prospects: The 2015 Revision, Key Findings and Advance, Tables. Working Paper No. ESA/P/WP.241, 2015 32 United Nations, Department of Economic and Social Affairs, Population Division. “World Population Ageing 1950- 2050”, 2015 33 United Nations, Department of Economic and Social Affairs, Population Division, “World Population Prospects: The 2012 Revision” New York, 2013 34 United Nations, Department of Economic and Social Affairs, Population Division, “World Population Prospects: The 2012 Revision”, Population density New York, 2013.

10 Furthermore, the likelihood of subsequent falling of net migration rate to zero is incredibly high. The main reason is that immigration of foreigners for permanent residence is supposed to be compensated by emigration of native citizens from Argentina.3536

Demographic changes in 50 years 2000 2050

Population (thousands): Total 37 031.8 ~55,444,775 Age 0-14 10 264.9 10 749.3 Age 15-64 23 174.4 34 055.0 Age 65+ 3 579.4 34 055.0 Female propportion 18 868.3 27 778.3 Male proportion 18 163.5 26 744.0 Growth rate (percentage) 1.2 0.4

Ageing index 48.1 118.5

Median age (years) 27.8 38.5

Total fertility rate (per woman) 2.4 2.1

Dependency ratio (total) 59.8 60.1 Figure 2. Table. Potential Argentinian population differences in 50 years37 To recapitulate, demographic change in Argentina is by far one of the most influential forces shaped the structure of economic and social policy.38 It has direct impact on the state consumption, distribution of financial system, social services expenditures, employment programs, health and education. Admittedly, it is population that determines tax base, pensions, retiring period and poverty rates.39

35 The World Bank, Ignacio Apella, “Argentina’s challenge: getting rich before getting old”, January 2015 36 The World Bank, “Population Projections”, 2011. 37 Official UN report, «http://www.un.org/esa/population/publications/worldageing19502050/pdf/035argen.pdf» 38 United Nations, DESA, Population Division, “World Population Ageing” (1950-2050), Executive summary. 39 Alejandra Pantelides, “Completing the fertility transition: the case of Argentina”

11 7. Conclusion Argentinian economic power is definitely growing, even though this growth was not always severely increasing every year it has definitely shown some potential within the last years, Argentina is expected to be one of the most powerful economies in Latin America and some of the strongest in the entire world, this is because of its inputs in several important areas like the fishing industry, modernisation of equipments, non-traditional product development plans, improvement of the healthcare system which generates more acceptance from outside partners and mostly the fully development of the agriculture business.

By analysing the tendency of Argentinian foreign affairs, we have concluded the fact that Argentina now gradually tries to get rid of minor political and military conflicts which were devaluing the future potential of the whole continent and the surrounding areas. Through maintaining the scheme of cooperative Latin American countries based on the Argentinian lead, the Argentinian government has been successfully launched MERCOSUR, by resolving past conflicts with Brazil and Chile. Also by stepping forward as the future contender of the Latin American economic power, Argentinian relations with neighbouring countries is attaining the regional influence to Argentina itself. By applying liberalistic international relations theory with peaceful foreign policy, Argentina is now preparing for becoming as the leader of the cooperative Latin American intergovernmental community.

Influence in the regional and global area are projected to increase leading to a further internationalisation of the country, the first step will be to integrate even more the South America region through some of the unions mentioned before, nevertheless this unions will also evolve and will have major changes in order to fully succeed with their original objectives . The influence in the global level will be accomplished by the integration with some of the superpowers mostly The United States and China, furthermore the relationship among Argentina and European countries will also grow in a way that both parts benefit from each other support. Definitely the most important aspect will be to strengthen the influence Argentina had already in a regional level to a global one.

According to projections accomplished by scholars, Argentinian population is likely to experience significant expansion and increase in its density; however, the growth rate is supposed to fall. By 2050, decreasing dynamics was predicted to happen with fertility and mortality. Following consequences include drastic reforms in a majority of realms in the policy of the state as well as changes in government expenditures and social programs funding.

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