An Empire Upside Down, Part 1

Christy Thornton

This is the first part of a three-part article on the United States and Latin America in the Trump era, forthcoming in the July/August issue of Dollars & Sense magazine. This part focuses on Argentina, with the subsequent parts (which will be posted to Triple Crisis blog in the next two weeks) to focus on Peru and Colombia, respectively. Christy Thornton is an assistant professor of history and international studies at Rowan University.

In the early months of the Trump administration, high-profile White House visits from foreign leaders from Europe, Asia, and the Middle East garnered headlines about the changing role of the United States in the world. In the context of political and economic upheaval around the globe, observers worry that, under Trump, the United States is abandoning the global leadership role it has played for decades. But the Trump administration’s response to various crises—Brexit, North Korea, Syria—paints a chaotic and often incoherent picture. Looking instead to a region long assumed to be firmly in the grasp of U.S. hegemony—Latin America—can help us understand the contours of the changes underway. It’s true that Latin America has generally been a low priority for the new president: he did recently move to roll back Obama-era changes in the relationship with Cuba, but while he made Mexico a central focus of his campaign, promising to build a border wall and tear up NAFTA, there has been little action on either front. Despite the relative disinterest in the region, however, White House visits by three Latin American heads of state—Argentina’s Mauricio Macri, Peru’s Pedro Pablo Kuczynski, and Colombia’s Juan Manuel Santos—reveal three broad ways in which U.S empire is being reconfigured under Trump.

First, where Trump has a personal financial interest—such as in Argentina—his transactional deal-making instincts have marked a return to the “dollar diplomacy” of the early 20th century. Trump, however, has given the traditional exercise of U.S. political and military might in service of U.S. capital a particularly venal, personalist twist, looking to line his own pockets, even at the expense of other U.S. business interests.

Second, where the broader issue of free-trade agreements dominates the agenda—as in Peru—Trump’s disavowal is affecting those countries’ international economic strategies. Trump’s vigorous campaigning against such agreements is leading those countries to seek closer economic ties with other partners, such as China.

And, third, in those places—like Colombia—where leaders are seeking new solutions to the failed drug war, the Trump administration has pushed back, determined to re-escalate and remilitarize U.S. strategy. Meanwhile, U.S. non-military foreign aid to such countries is on the chopping block.

These changes come even with a resurgent pro-business right wing coming to power in various countries across the region—which might have portended even closer ties to the United States. Instead, Trump may be pushing Latin America further out of the United States’ shadow—with consequences good and bad.

Trump’s Personal Dollar Diplomacy

In the context of Donald Trump’s foreign-policy belligerence—trying to point aircraft carriers toward North Korea, dropping massive bombs on Afghanistan, announcing $100 billion in arms sales to Saudi Arabia—it’s easy to overlook a few Argentine lemons. But the recent deal to allow citrus imports from Argentina for the first time since 2001, made after the visit of Argentine president Maurcio Macri to Washington, reveals much about the nature of Trump’s intentions in Latin America, where the Washington Consensus is giving way to the “art of the deal.” Macri is the wealthy businessman who won Argentina’s presidency in late 2015, ending the rule of the Justicialist (Peronist) party of Nestor Kirchner and Cristina Fernández de Kirchner. The Kirchners’ party had been in power for 12 years, and was an important part of Latin America’s “pink tide” of center-left leaders. Macri’s election, therefore, signaled a broader regional shift toward the right, and he made clear his intention to bring Argentina back into the good graces of the United States.

But Macri was already a known quantity to Trump—and the two had a tense personal relationship. The massive Trump Place development on Manhattan’s Upper West Side—where residents notably rallied to remove Trump’s name from their buildings after the U.S. election—stands on land Trump bought in 1985 from an Argentine real estate magnate: Francisco Macri, the current president’s father. The deal was acrimonious, and Trump developed a strained relationship with the elder Macri, one of Argentina’s richest men. Francisco Macri told journalist Wayne Barrett that, on a golf trip in Argentina during the early 1980s, Trump spoke to him condescendingly, as if he were “a South American banana farmer” (leaving one to wonder how Macri himself might speak to such a farmer). And the rancor extended to his son Mauricio: when the younger Macri beat Trump during a later round of golf, Trump reportedly snapped his clubs in frustration. Perhaps this personal history was part of the reason that the Argentine president openly supported Hillary Clinton, a strong proponent of the neoliberal consensus to which Macri hoped to return, during the U.S. presidential campaign.

But when Mauricio Macri arrived at the White House, Trump was already eager to turn over a new leaf with his fellow real-estate scion. In fact, the path had already been cleared for a reconciliation: the Argentine newpaper La Nación reported that Felipe Yaryura, the main Argentine investor in a Trump office building in downtown Buenos Aires, was at Trump’s victory party in Manhattan on election night, posting celebratory selfies with Trump’s son Eric and having breakfast with the Trump children the next day. Then, just days later, after Macri made a congratulatory phone call to the president-elect, long-stalled permits for the Buenos Aires project were suddenly granted. Trump and Macri denied that the permits had been a subject of their conversation, but with Yayura in constant contact with the Trump children, the content of the short phone call between the two presidents was largely irrelevant. Trump’s business interests in Argentina would proceed as he had planned.

And then came the lemons. “I know all about the lemons,” Trump told reporters during his meeting with Macri in April. “One of the reasons he’s here is about lemons.” And indeed, the lemon issue was an important piece of Macri’s broader agenda. One of the touchstones of the Macri administration—besides rolling back the advances won by activists and human rights groups to confront the horrifying legacy of the country’s military dictatorship—has been what he calls the “normalization” of the Argentine economy. To him, that includes lifting currency controls, cutting public subsidies, dismantling trade barriers like the 35% tariff on electronic goods, and negotiating a deal with the intransigent “vulture funds” that scooped up Argentine public debt after the financial crisis of 2001. All of this is intended to open the Argentine economy back up to world markets. So reversing the United States’ 15-year ban on the import of lemons from Argentina was a part of this strategy. The Kirchner adminstrations had been unsuccessfully battling the restriction through the World Trade Organization (WTO) for years, but after Macri was elected, the Obama administration indicated a willingness to reconsider the ban. Trump, however, announced immediately upon taking office that he would block any further consideration of the Obama plans for 60 days—thereby convincing U.S. citrus growers that their lobbying for the continued ban would pay off. After he extended the ban again, it seemed that Trump intended to heed domestic producers’ concerns not only about any diseases the fruit might carry, but, more importantly, about competition, and that “America First” would win the day.

While citrus makes up only about half a percent of of Argentina’s foreign sales, which are dominated by $18 billion a year in soy exports, “normalizing” access to U.S. markets is especially important to the Macri administration. What’s more, Argentina produces nearly three times the volume of lemons that the United States does, making it one of the world’s leading suppliers.  In fact, a USDA analysis showed that even a small influx of Argentine lemons—20,000 metric tons, a tiny proportion of their overall production—would result in a 4% drop in prices in the United States, something domestic growers feared. Allowing Argentine lemons back in the country would hurt U.S. industry, growers argued. So when the Department of Agriculture suddenly lifted it the lemon ban in May, after Macri’s visit, citrus growers were shocked: the “America first” promise had been broken, and U.S. producers were left in the lurch.

This seemingly small deal reveals the first important Trump-era change to the way that U.S.-Latin American economic relations have worked in recent decades. In some ways, the agreement itself is fairly typical: a neoliberal Latin American leader argues for lifting regulations in accord with a free-trade ideology, accruing benefits to agricultural producers who have consolidated landholdings and concentrated capital in fewer, larger, and more vertically integrated industrial agribusiness firms. This is consistent with the longer trajectory of trade integration that has marked the process of globalization. But it’s how this deal was arrived at, the quid pro quo on which Trump’s deal-making instinct depends, that makes Trump’s strategy toward Latin America look a bit less like the neoliberal consensus of the last thirty years, and more like the gangster capitalism of the early 20th century—only now the gangster sits in the Oval Office. That the reversal of Trump’s nationalist posturing on the Argentine lemon ban came after meeting with the leader of a country that had recently approved his business dealings demonstrates that when Trump himself stands to gain financially, he’s willing to make a deal that might contradict his America-first promises. The story of Argentine lemons, then, seems to portend a new and deeply venal kind of dollar diplomacy, where aid and trade will be dispensed as rewards for help lining Trump’s personal coffers.

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