Argentinian Foreign Policy Under Mauricio Macri

Susana Malcorra, the foreign minister of Argentina under the country's newly elected government, joins CFR's Shannon K. O'Neil to discuss Argentina's foreign policy priorities. Malcorra outlines the priorities of President Mauricio Macri's government, identifying the elimination of poverty as the country's top goal. She further discusses the challenges facing Argentina as it seeks to strengthen its democratic institutions. Malcorra further assesses the country's ongoing attempts at regularizing the financial relationship with the United States, the challenges arising from drug trafficking, and the Falkland Islands dispute with the United Kingdom.

O’NEIL: Good evening. Welcome to the Council on Foreign Relations meeting, “The Future of Argentina: A Conversation with Foreign Minister Susana Mabel Malcorra.” We’re very pleased to have her here with us today at the Council.

Now, as you can see, reading her longer bio, which is in the materials that you have, the foreign minister is no stranger to New York City. After a very successful career in the private sector in Argentina, where she ran one of the nation’s largest corporations, she came to New York to work at the United Nations, and she held a number of positions there. And for the last three years she’s served as the Chef de Cabinet of the current secretary general, Ban Ki-Moon. And she stepped down just a couple of months ago to assume her current role as the foreign minister of Argentina.

So at this time I’d like to welcome her up here to the podium to share a few brief remarks about Argentina’s foreign affairs and its future. And then we will begin a conversation here up on the stage. Thank you.

MALCORRA: Good afternoon. It’s good to be here, and I thank you all for coming to listen to where our country is in these days. And I really want to thank the Council on Foreign Relations, because it’s a great opportunity to be able to talk about Argentina.

First of all, let me say we have only been in the administration for less than two months, so we are still testing the waters. It’s a very, very initial phase of our work. And I’m sure, as we move forward, we’ll be learning more from what we do. And as we learn, we will get better. But I will try to explain to you where we stand at this very early stage.

President Macri has defined three objectives for our government. The first, and I will say the key, driver of our administration is to eliminate poverty. This is a very, very significant objective, because it is in the context of the post-2030 agenda that the world has signed to that the president has defined the elimination of poverty as a key central element of our agenda.

The second one is the fight against narcotrafficking. And that element has to do not only with our internal challenges related to the drug trafficking, the problems of corruption, the problems of institutional corruption, the problems of managing the security forces and the larger institutions of the government, but it also has to do with Argentina in the region, its integration to the countries around Argentina and beyond, starting from Mexico, I will say, and also the interconnection between narcotrafficking and the financing of extreme groups in West Africa.

Our drugs come to—go to Europe through West Africa, and it’s part of the overall financing of illegal extreme institution—groups that are fed by this narcotrafficking. So again, the second objective is totally in line with some of the priorities that the world has these days, both in terms of security and in terms of the elimination of extremist groups in the world.

The third objective is the objective of rebuilding democratic institutions, being able to bring together the Argentinians for once behind objectives that allow all of us to work together through a common agenda to reinforce and in some cases start the serious work on democratic institution-building, separating powers, ensuring that the executive, the legislative, and the judicial have their own space, and each one of them through the normal means of balance in democracy do their part of the work in a constructive manner.

So these are the three drivers that the president has set for us. And these are, I will say, the drivers of the agenda for the foreign ministry.

In the case of the first objective, of course, what we are trying to do—and I have been dedicated and I am dedicated in these first initial weeks to represent Argentina to the world, to show what Argentina is today, what our objectives are, but also to try and capture the interest and the imagination of the ones that can invest in Argentina to create jobs that are sustainable jobs for a future that has more opportunity for all. And this again has to do with the elimination of poverty.

The second objective, which is the one related to narcotrafficking, again, the foreign ministry is at the center of the relations with the rest of the world. And as such, we have defined our agenda fully in line with the objectives set by the president.

And the third objective, the one of institution-building, is part of the responsibility of all of us. So again, the foreign ministry is very, very engaged in trying to further this agenda.

It is clear that what we have to do today is show to the world that Argentina is trustworthy, that we have become a partner that can be talked with and that can be part of a long-term project, even though historically there may be proof that we haven’t behaved always the way we should.

That’s why the president has, from the very beginning, acted in line with what he promised during his campaign. In the first few days of the administration, he eliminated all the hurdles on imports and exports that have become a real nightmare for the ones who are trying to do business in Argentina. He was able to put together a very complicated package to unify the currency and allow us to become a normal country with a single currency. He has fixed the many imbalances we had in the relationship with some of our neighboring countries—Uruguay, Brazil—to make sure that we have a playing field to play. So he has systematically delivered on the promises he made in his campaign.

The latest development is very close to New York, because, as you know, the economic team has put on the table an offer to the holdouts with the intention to regularize the relationship in the financial front so Argentina again is open to the world in a manner that is predictable and is systemic.

In that regard, we really hope to be able to sort out the holdouts issue in the next few days. And I’m sure you’ll have questions about that. But we believe that what we have put on the table is a fair offer to finalize a longstanding conflict that definitely we need to fix.

In terms of the international priorities, what we have defined is that multilateral relations are going to be central to our work. We are going to insert ourselves in all the multilateral platforms that are available. We are going to work in Mercosur. We are going to work in UNASUR. We are going to work in CELAC, in OAS, and the United Nations. We don’t see any contradiction in that. We feel that we have to take advantage of each one of those very important tools to insert our country and to give our perspective in order to maximize the influence that Argentina can have as a traditional bridge-builder in the world.

We are going to keep working on some of our long-term priorities, like, for example, the case of Malvinas. I know this is something that has caught interest in many people. We believe that Argentina has to relate to the world as a whole. But there is nobody in the world that we should put aside except the extreme cases of people who are absolutely out of the world in their rules of engagement. And in doing so, we have to emphasize the things we agree on and put a little bit aside the things that we disagree on.

But also, in doing so, we have to have a very broad agenda, an agenda that allows us to discuss all matters. In the case of the United Kingdom, we feel that there is an opportunity to build on the many opportunities that we have to do business, trade, investment. But we also want to keep the dialogue open with the U.K. in order to work on a potential solution for this longstanding issue.

So in a nutshell, what we hope to do is to open up to the world in a mature way, setting up what Argentina believes is a priority, which are the principles that we have all signed up to, the principles of human rights, of freedom, the principles of trustworthiness, and in doing so, trying to relate to all our potential partners so that Argentina becomes a very interesting place to invest, a partner to work with in the long run, and a place where you think that it’s important to have business with, because there is a chance for prosperity and a chance for good business in a mature manner.

This is, I will say, my summary, because I’m sure it will be much more interesting to have an exchange of Qs and As, and I don’t want to take much of your time in just a boring introduction. So thank you very much. (Applause.)

O’NEIL: Well, let’s pick up a bit on a few of the things you mentioned there and one that, given we’re in New York, is of great interest to many New Yorkers here, and that is the ongoing debt negotiations. Let’s start with that. And, you know, Argentina obviously has been at an impasse for many years here and unable to access international credit markets.

So can you talk a little bit about Argentina’s strategy? And one is in the international realm with creditors here and elsewhere, but two, domestically. And what are some of the barriers that Argentina needs to overcome at home to resolve this issue more broadly?

MALCORRA: Well, first of all, yes, this is an issue that has been lingering for a long time. As you know, Argentina found a way to solve its debt problem with a very high percentage of the debtors, 93 percent of the time. But there were some that were left aside, the famous holdouts. And in a way, leaving that as a pending issue became a big issue on its own.

And clearly what President Macri felt is that unless we really went into it heads-on, it’s going to be very difficult to unravel this pending question. And those were the instructions he gave to the economic team, which worked very hard to try and solve the question and put what we consider a fair offer on the table.

We feel it’s so fair that some have already accepted it. And the Italian bondholders accepted it. Some of the ones that have the case in the court of New York have accepted. Others are still looking into it. We are very confident that the whole mediation process and negotiation process will yield a good result.

What are the hurdles? Well, the main hurdle is that whatever the outcome is has to be approved by congress. And I have to say it is our view there is an understanding in congress that we’ll get this approved in a very, very fast-track manner.

Why so? Because even though the government doesn’t have a majority on its own, there is a broad spectrum from the opposition that believes that, yes indeed, this has to be resolved in order to open up for investment opportunities, financing opportunities. There is a huge need for infrastructure building, which the provinces require. And as you know, we have a similar model than the U.S. on the federal system, so the governors of the provinces are very keen to unlock all of these. And that means that many of the parties in the opposition will be part of this decision-making.

So in our view, what we are offering is so balanced, so mature, to unlock a huge opportunity that we will count on that support. And I have to say there are a few both senators and congress people in the room, some of them from the official government, the governing power, the party in power, and some from the opposition. And they are in New York, among other things, trying to relate that message. It’s a message of maturity and democracy.

The president likes to say that we are now having a new group of politicians in power that all of them come from the period of democracy in Argentina. So they have learned to live in democracy. Some of us are older and have lived in more challenging times and maybe have that in our—in the back of our mind, that the time of tension and continuous fight.

I think there is a new way. And we bet on the fact that there is this new generation of people who think about how to make the politics enable the reality that the government has to deliver on. So that’s where we are.

O’NEIL: Great.

So last week 12 trade ministers flew to Auckland, New Zealand to sign the Trans-Pacific Partnership, the TPP. And among those trade ministers were some of your Latin American colleagues, so Mexico, Peru, Chile. And there are other governments in Latin America and the region who have said that they will sign on as soon as they can, so Colombia, Costa Rica, Panama among them.

Now, Argentina is not party to the TPP, nor are its largest trading partners, both Brazil and China. And as you think about this new administration, particularly the economic foreign policy that you will be guiding with others, where will trade fit into it as an active or less active lever that you might be using?

MALCORRA: Well, it’s the first priority. I mean, trade is the driver of opportunity in the world these days. So denying that will be just trying to protect yourself from the sun with one hand. I mean, it’s a reality.

It’s also true that when you look at the trading pattern of Argentina, the biggest partner is Brazil. And we are in Mercosur with Brazil. So the first thing we are trying to do—and President Macri went to Brazil even before he was sworn in—to really establish the fact that Mercosur is key for us and that we want to strengthen those ties. And that’s why he eliminated some of the barriers that were created just to make the trade in Mercosur more difficult. So that’s our first priority. Any country in the world knows that the neighborhood is the first priority.

And he also went that very same day to Santiago, Chile. And he did that because he feels and we all feel that this dichotomy between Atlantic and Pacific is a false dichotomy. Latin America, that big triangle, has both Pacific and Atlantic. So we need to work towards the Pacific. What we are doing in the very short term is to strengthen the opportunity between Mercosur and EU. This is a long-pending homework to close that deal.

Finally, Mercosur is ready. We have a proposal, and we hope to be able to put the proposal on the table together with the EU sometime towards the end of this quarter, beginning of the next one, so that we start the real negotiation based on cards on the table.

So for us, EU is historically very important. From a partner trade perspective it’s very important. And that’s what we have prioritized. Now we’re going to—once we put that in motion, we are going to start looking into the Pacific, and we will see whether the TPP is the next phase or we have some bilaterals first. You can construct in different ways, no doubt. But for us, Pacific and Atlantic, Atlantic and Pacific are an answer to our needs, no doubt.

O’NEIL: Now, one of the sharper differences between the foreign policy of the new administration and the former Kirchner administration has been Argentina’s position on Venezuela. And from the beginning, President Macri spoke out about political prisoners there, talked a bit about Venezuela’s democratic deficits, even suggested it should be suspended from Mercosur if some of these things weren’t addressed.

Can you talk a bit about how you see the social and political situation in Venezuela right now, particularly given we now have a divide between the legislative and the executive branch in terms of parties, and also with the deepening economic crisis that’s happening there?

MALCORRA: Well, Venezuela is a very important country in Latin America. I mean, it has a lot of weight. It’s a strong partner with our key partner, Brazil. So by default, it’s a key partner for us also. It has a strong influence in the whole of the Caribbean. It has an influence in Colombia, you know, that it’s trying to fix the only pending big issue in Latin America.

And so Venezuela is very important. And we value Venezuela as such. We are looking into Venezuela and its internal issues with the respect that is required, because it’s a sovereign country. But we have said it clearly. We will always talk—and I said it earlier—in principle about freedom, about respect, about human rights. And when that is the case, we’ll raise it.

The biggest concern is how to help and support Venezuela come through a very challenging situation. We have been through those challenges in the past in different shapes or form. And having people close to you who understand the way of being, the culture, is always very helpful.

So what we are trying to do is be as close as possible to both government and opposition in order to relay to them the need to have an open dialogue, to come with a common agenda. You cannot get out of a crisis situation leaving any view outside. You have to be able to produce a common agenda. And that’s what we are trying to be supportive of, without at all giving up on the principles that we believe in.

O’NEIL: Let me ask you, in your opening remarks you mentioned your interest in multilaterals and working with multilaterals. And obviously you have a deep understanding of the working of one of the largest multilaterals. But Latin America is actually home to many regional multilaterals—the Organization of American States, CELAC, UNASUR, and many others.

And given your long experience there, are there particular issues—when you think about the challenges the region faces, whether economic ones, democratic governance, health epidemics, what have you, are there particular issues that you think these regional multilaterals can take on, that there are strengths that they have that they can really push forward, that they should be prioritizing, and you, as a member of all these, that you can help them really focus on?

MALCORRA: Well, you mentioned one, which is the health challenges. We had a very interesting discussion in CELAC in Quito two weeks ago, yeah, because of Zika. And out of that came the idea of establishing a regional discussion, which took place last Wednesday in Montevideo.

I happen to have experience—I wish I didn’t have it, but experience with the Ebola fight. And the first thing I understood is that the region—it took long for the region to come together and understand that this was a trans-boundary question, that there was no way you can stop and, you know, build walls to the disease.

So now we are working within CELAC and really setting up working groups to mobilize everybody to try and first have a common strategy to stop what—it’s called the vector, the mosquito. And that is very important, because it has to be integrated. You know, Colombia today is the most affected country, even more than Brazil. This moves around very fast. And we have the first cases in Argentina.

So that is an example of a body that can move fast, that can react very fast, and can act as a connector to PAHO or OMS and even CDC. You know, you can invite CDC to take part of the—(inaudible)—in Europe.

So I see that there is an opportunity there to use CELAC in a very practical manner with the large political (support ?) to really send a message of coming together. So there is space for each one of them. I think what is very important is that we start to find concrete objectives and work towards them.

Sometimes we tend in Latin America to spread ourselves too thin, and you end up not being concrete in any of your aspirations. So one of the things we have discussed is how to narrow, be more focused, and in being more focused, be deeper to get things done for our people, which is what makes a difference.

O’NEIL: You mentioned one of the three priorities was building or rebuilding democratic institutions. And when you think about that in a foreign-policy perspective, how does Argentina go about doing that? Is it through multilaterals? Is it in some other mechanism? What does that policy look like on the international stage?

MALCORRA: Well, the first thing is that we have signed up to every convention, every agreement, every piece of legislation of international nature that is in line with this principle. So for us it’s trying to be consistent with what we have adhered to in our way of doing politics in our country.

Now, rule of law is something that has a huge meaning to enable or disable development. And I think we have a lot of to-dos in the rule-of-law front. So what we can do is take from the multilateral what we have signed up to and implement it, and eventually use the lessons learned from other countries that have gone through processes that are equivalent and try to get the best out of that.

It’s clear that unless we water down, in a systemic way, this institutional building, we make it independent of people, of profiles of a person, we will not get where we need to get. So that is what we have to do. And I think we don’t have to invent the wheel, just get it done.

O’NEIL: Let me ask one more question before I open it up to the rest of the members. And here, you know, I think it would be fair to say that U.S.-Argentina relations over the last several years have not been particularly warm. I also think it’s fair to say that here in the United States, many see—most of us see a real opportunity to change that, to change some of the distance that had developed. And so, as you think about that shift, what is it, one, that the two governments should do? Where do you start in sort of revamping or beginning again these types of relationships? And two, given who we have here—this larger U.S. foreign policy community—what is it that perhaps we could do, or members here could do, to amplify a more positive shift?

MALCORRA: Well, I think the first thing one needs to do is sit at the table. You know, it’s as simple as that. Once you sit at the table, you have opportunity to listen to each other and understand each other, and find common ways forward. So that is the first thing we intend to do.

And our new ambassador to Washington has only presented his credentials a few days ago, and he comes with a very broad agenda—an agenda that has the political aspects of the relationship with the administration, with Congress, but also an agenda that involves the different governors of the states, the private sector. So we really want to broaden the agenda. And hopefully, in broadening the agenda, be consistent with a single message that makes us predictable.

We are going to provide our view. And this is very important, because there is this notion of the carnal relations with the U.S. that have been used in the past. We don’t believe in carnal relations. We don’t believe that that is mature in any—with any country and by any country in the world. We believe in serious, predictable, mature relations, where we agree, I’m sure, on many aspects of our common agenda, and we may agree to disagree on others. I think as long as we tell each other where we disagree and we don’t surprise each other, that is fine. And I think that is the basic principle to come up—come back, I will say, to a relationship of two mature countries.

The U.S. is the largest power in the world. One cannot deny that relating to the U.S. is very important. We will have common interests most of the time, and we will live with our differences when that has to happen.

O’NEIL: Great.

Let me open up to member questions. Remember, please, this is an on-the-record meeting. So please, when they bring the microphone over, stand, state your name and affiliation, and ask your question.

Q: Thank you. Very good to see you again. I’m Evelyn Leopold, correspondent at the United Nations, contributor to Huffington Post.

And you know what I’m going to ask. If there is a groundswell that you run for secretary-general, would you do it? That’s my first question, are you at all interested in it?

And my—

MALCORRA: And the second? (Laughter.)

Q: My second one is, on the human rights, on the Dirty War, on the grandmothers from the Plaza de Mayo, is there any action to find still the missing grandchildren?

O’NEIL: So they’re only allowed to ask one question, so you can pick which one you’d like to answer. (Laughs, laughter.)

MALCORRA: OK, OK.

Q: The first one was a—

MALCORRA: Being a good—being a good friend, I’ll address both of them.

Let me start by the second one. I think that there is—the work done by the grandmothers has been amazing, and they have been able to recover a number of grandchildren. That is incredible, you know. The one thing that Argentina is well-recognized in the world is by its forensic. And I always say that it’s a pity that we are recognized by that because we only had to do that because of the need of so many who lost their beloved ones during the Dirty War.

So I think the work done by the grandmothers will continue. There is an increased awareness from the generation of children that are of the age that can fit the profile, and many spontaneous people are coming forward. Some of them—we had a recent case of a theoretical grandchild that was recognized, and in the end there was a mistake. So I think that is our pride, the work that both the mothers and the grandmothers have done, but in particular the fact that the grandmothers have been able to continuously dig into it in a way that I would say is constructive, not adversarial. So that will continue, and is a pride for all Argentinians.

The first question, I have a full-time job. I am very dedicated to what I’m doing. And for the time being, that’s what I’m doing. (Laughter.)

O’NEIL: Thank you.

Q: The time being? (Laughter.)

O’NEIL: Please go ahead. The microphone’s coming.

Q: All right, then I have to ask the follow-up question. Madam Foreign Minister, Shannon, thank you very much, and it is good to see you both at the U.N. It’s Pamela Falk from CBS News.

There is a move afoot to have a woman as secretary-general. Do you support that? And what do you—it’s a follow-up to Evelyn’s question—what do you say you think that Argentina will do in terms of nominating a candidate? And, if nominated, would you accept it? We have to ask. Thank you.

MALCORRA: Well, I think it’s high time to have a woman. It’s going to be the first secretary-general after 70 years of the U.N.—70 years were celebrated last year. It’s high time. There is no reason. You know, when people say, why a woman, I say, why not a woman? You know, that’s my question. So I think that that is high time.

You know that there is a sense of geographic rotation in the United Nations. People talk about now being the term of Eastern Europe. So we have to see. I’m sure that the Eastern Europeans will be putting forward candidates, and we’ll have to see those dynamics, and then Latin America will look into it. So that’s where we are.

O’NEIL: Good.

Back here.

Q: Hi. Les Baquiran from Alpine Capital Advisors.

First of all, I think what you—what the government has done as far as reforms have been breathtaking and very impressive. But the holdouts seem to be a very difficult issue because there’s two constituencies you have to convince. First is the people of Argentina, and as we know the holdout issue was a very popular issue for the Kirchner administration. And then on the other side are the—are the hedge funds, the holdouts. If the hedge funds don’t take the deal, is there any kind of effort to involve multilateral organizations, even the U.S. government itself, to get involved with this? Obviously, in Greece, multilateral organizations and governments got involved there—got involved there. So, as a foreign minister, if they don’t do anything, are there any—is there a plan B if they don’t accept the deal?

MALCORRA: Well, first of all, it would be very irresponsible of me to talk about plan B when we believe deeply in plan A. So we are going for plan A. We really think that the situation is such that it will be very hard for the holdouts not to accept the proposal. I think it’s a matter of time, of some discussion, but we are persuaded that this is going to go forward. And not only we are persuaded this is going to go forward on the holdout front, but also, as I mentioned earlier, on the Congress front in Argentina. And the Congress is a proxy of the people. I mean, they are there because they represent the people. So I don’t think that there will be a problem in explaining to the people in Argentina why this is a good deal, because time only play against us in the case of the holdouts. You know that the interest (taxi ?) that was applied to the debt was huge, and in fact that’s one of the disincentives to come to an agreement, the interest (taxi ?) clock ticking every single day.

So we believe that we are—we have made a fair offer. We believe it’s time to close a deal. And we believe our offer on the table will be accepted. And we are fully convinced that this upside of closing this with the holdouts is such for our people, for the provincial governments, and for the federal government that this will be—properly explained, will be accepted.

Q: Good evening. Thank you for being here. My name is Silvina Sterin Pensel. I’m the New York City correspondent for TN, Todo Noticias.

And my question is, again, about the holdouts. The U.S. secretary of treasury spoke with Alfonso Prat-Gay, our minister of economy. And also the president, Mauricio Macri, spoke personally with Daniel Pollack, the special master. Is there anything that you, the secretary of state, is doing right now to complement those actions?

MALCORRA: Well, first of all, I will say—just remind everybody that I’m the foreign minister. I would like to have Alfonso Prat-Gay here sitting with you; I’m sure he will do much better than me in explaining what is happening.

Yes, conversations have taken place. I think it has been clear that the administration has come out very, very openly, recognizing that what the government of Argentina has offered is a reasonable offer. And there has been exchanges between different officials of the administration in the U.S. and the Argentinian administration.

It is also clear that this is a problem of the judicial in the U.S. So that has to be sorted out at the judicial level, and we really believe that that will happen.

From my perspective as the foreign minister, what I’m trying to do is explain to people, as today, what we are doing, be as clear as possible, as assertive as possible. And whenever my colleagues in the economic Cabinet call on me to do something, I’m ready. But it is their call, and they are the ones in the lead.

O’NEIL: OK.

Go ahead.

Q: Madam Foreign Minister, in your introductory remarks, you—

O’NEIL: Please introduce yourself.

Q: Oh. Claude Erbsen, INNOVATION International.

Madam Foreign Minister, in your introductory remarks, you sounded rather optimistic, if I can ascribe it—describe it that way, about resolving the Malvinas issue. What makes you think that the Brits would be more willing now than when they fought a war to make sure that it stayed the way it is?

MALCORRA: Well, if I sounded so optimistic, I may overstated my case, so I ask for forgiveness. I do believe deeply in the principle of sitting at the table. It applies to the holdouts. It applies to the U.S. It applies to the U.K., with the larger agenda and Malvinas. I am not suggesting this is an issue that is going to be sorted out overnight. I think it has deep roots in both peoples. This is something that is very, very close to the heart of Argentinians. It’s in our constitution, so it’s a constitutional responsibility for me to pursue this issue. But I only know that we will be closer to a solution the minute we sit at the table. And that’s what I feel we should do. That’s what President Macri has told Prime Minister Cameron. No expectations of a fast result, but do—we do have expectations of a conversation that may bring to the table some measures that will give confidence to both parties that we could have a way to sort it out.

O’NEIL: Good.

Jose.

Q: Thank you. Jose Fernandez, Gibson Dunn.

Madam Minister, I think it’s fair to say that the Mercosur has not worked, has not lived up to its potential in the—in the last few years. And one of the—one of the questions, one of the issues has been trade disputes between Brazil and Argentina, between Argentina and Uruguay, and others. And another point that’s been raised is the requirement that Mercosur negotiate trade agreements as a bloc. And I would like to ask you your thoughts on the—on the future of Mercosur within the general framework of trade agreements in Latin America. But also, would Argentina negotiate on its own? Or would—do you believe that that requirement of negotiating as a group will remain?

MALCORRA: Well, it’s absolutely fair to say that Mercosur has not lived up to its expectation. I mean, we have not been good partners among ourselves. We have used each other to hide our own disagreements or limitations. And we have blamed the other often when it was our fault, vice-versa. It goes in all directions. I think for once, we have now come to an understanding that there is a value that President Sarney and President Alfronsin saw at the time of having a common market to negotiate together. And that’s why I think we have come to the point of being ready to negotiate with the European Union.

My sense is that we need to test ourselves really on this one, and EU-Mercosur negotiation is key on this test, before deciding to split, because if we decide to split, then what is there left for Mercosur? So maybe there was a need for maturity and a need for a learning curve among all of us. It’s a very asymmetric set of countries, very large Brazil, second larger Argentina, then Uruguay and Paraguay, then Venezuela was added, and now Bolivia is coming to the table. So my sense is that we have to give ourselves an opportunity. But if we decide that each one of us will go its own decision, that means that probably Mercosur doesn’t have much substance left. But we’re not there yet. Maybe we can do work together better than what we have done in the past.

Q: Madam Secretary, in respect of the Malvinas—

O’NEIL: Use the microphone.

Q: Stephen Schwebel is my name.

In respect to the Malvinas, Great Britain proposed long before the war that the dispute be submitted to the International Court of Justice. Argentina declined, though it’s always maintained that its legal as well as equitable case is strong. Do you see any room for reconsideration of that matter?

MALCORRA: Well, I think we have, first, to try and test the willingness of both parties to discuss. This has been called for many, many years by the United Nations. And I think we could—I’m convinced we could have, if we worked together, an alternative—or a couple of alternatives to consider. In the end, eventually, one could think about going to the International Court of Justice. But I think before doing that, it would be better if we could agree to something. And again, I’m not—and again, sorry about overstating my optimism earlier on—I’m not hopeful that this will happen overnight. But if there is a will, there is a way. I learned that in the United Nations in dealing with very intractable problems. So that’s where I stand now.

Q: Robert Kaufman from Rutgers.

Madam Minister, thank you for your presentation. Your largest neighbor and the one that you have the biggest trade relation with, Brazil, is undergoing incredible turmoil at the moment, the worst economic situation that it’s faced probably since the 1930s, a government which is stalemated, widespread problems of corruption. I wondered if you can talk about how you see this crisis in Brazil as impacting Argentina, and how it affects your—Argentina’s relations with Brazil?

MALCORRA: Well, first of all, denying the fact that whatever happens in Brazil has a huge impact on Argentina would be untrue. So we are impacted by the reality of what is going on these days in Brazil. And it’s—as I said earlier, it’s our largest partner. So there is no way not to feel the impact. And it’s also true that the content of the world is not an easy one. It’s quite gloomy, everything going on with commodities, oil price, et cetera. But there is also an opportunity in that regard. You know, there is a very interesting level of integration between Brazil and Argentina. So if we could work well that integration, maybe we could become solid partners in exporting some of that integration. I mean, the supply chain between Brazil and Argentina, not because of the governments but because of the private sector itself, has integrated quite a lot. So there is a good opportunity if we can open up to the right markets to utilize part of that as a leverage to export in a common market.

There is also an opportunity for some of the investments that are being assessed by the private sector to position either in Brazil, or Argentina, or somewhere else, maybe Argentina becomes a little bit more attractive in this context. But it’s true, we do have a challenge to face. The point is, you can only test your integration in the difficult moments. If you, at the moment of difficulties of your partner in the integration walk away from it, then what is integration there for? So I think we need to work with Brazil. We need to work with Mercosur. We need to expand our—the scope of our objectives as trading partners to, from there, take it to the world. When you look at the level of exports from the Mercosur, even within Latin America it’s quite low.

So there are opportunities there where we can—we can do better. And we have to find a way to get to the competitive advantage that both Brazil and Argentina can have together. It’s a test. It will be better to have tailwind from high commodity prices. It would be better to have the oil price at 80 (dollars), or 60 (dollars) at least. It would be better to have Brazil in a situation of boom. That’s not the cards we were given. And with the cards we were given, we still believe that there is an opportunity to reposition, gauge where we are, and get advantage out of that.

When you look at the agribusiness, which is one of our big competitive advantages, we provide—we produce food for about 450 million people. We believe that in three, four years’ time, we could be producing food for around 750 million people. That’s a huge, huge jump. We believe that that is possible. And, you know, food is one of the things that the world is desperately needing. And it’s not only basic commodities, but trying to build on the value chain of food. That can be done by Argentina, and also can be done jointly by Argentina and Brazil by the Mercosur at large. So there are chances there to test ourselves in a very difficult moment of the world.

O’NEIL: Let me ask you, we’ve talked about your largest trading partner, but not a lot about your second-largest trading partner, which is China. And you look at that relationship, and China’s been incredibly important for Argentina, buying many of the commodities, though some people criticize that relationship in leading to, a least in some areas, a deindustrialization of Argentina. So instead of Argentina, for instance, sending processed soy oil out to China it now just sends soy beans, so the value-added is captured by China. China’s also been involved in foreign direct investment in Argentina, and has had some significant investments there, though again some of those have been criticized, particularly in the energy sector, because of some of the strings that were attached to it.

And China at times provided a lifeline for the former government in terms of credit swaps and the like to keep their reserves up. So as you think about this new government and the new relationship with China, and particularly given the new global context where China is today or may be moving forward, how do you see—what are going to be the big issues that you would deal with, as the Foreign Ministry, or some of the challenges when you go out and work with China?

 MALCORRA: Well, as I said earlier, that having the U.S. as a partner is a no-brainer, same is with China. China is the second-largest power in the world, by almost all measures, and is a country that needs many things we produce. So it’s clear that we have to have a very close relationship with China. The point is, the terms of the relationship—again, that takes me back to the notion of a mature relation. I think have to sit with China and discuss the value chain and try and see whether some of the things we need to add value can be accepted by China, and what terms. I think the investments that China may bring to Argentina are welcome, as long as they are aligned with the priorities that the administration has set. I said before, we need huge infrastructure building.

Energy is absolutely key. We are in a deficit mode in energy. Tourism is very important. Being able to capture tourism from China will be very good for our balance of payment. So there are areas of opportunity where we can define, yes, these are niches where we welcome investment, be that in the—in the renewables in energy, be that in a hotel chain for interesting tourists coming from China, or be that the construction of a road in the context of the development of our infrastructure. It’s just making sure that the priorities are aligned and that we have a good and fair discussions of the terms of those investment. As long as we can agree on that, there is no issue.

O’NEIL: Right.

Another question?

Q: Ivan Rebolledo with TerraNova Strategic Partners.

Madam Foreign Minister, I’d like to ask you if you could discuss with us the specific role you see for UNASUR, continuing on the question of regional multilateralism. How affective you see the organization, and what specific tasks your ministry will assign to UNASUR, and whether there’s some redundancy with CELAC. And I ask this in light of today’s announcement by the U.S. State Department, where they will not be receiving UNASUR’s secretary general who was asked to come up and negotiate on the Venezuela-U.S. bilateral tensions. Thank you.

MALCORRA: Well, first of all, I was unaware of that decision by the State Department, so I cannot comment on that. I will have to see.

I think UNASUR has an established secretariat that CELAC does not have. CELAC is more of a political forum that brings together the heads of state with a certain frequency, and shapes a political agenda, but then can be a channel through different ways—bilateral, multilateral. UNASUR could be a way to channel some of those political agenda, although the membership of each one of them is not exactly the same. So I don’t’ think there is an overlap. There is a discussion more than between CELAC and UNASUR, between CELAC and OAS. And there has been some thinking that maybe CELAC could replace OAS. That’s not our view. We think that they are two totally different fora, that we have OAS for certain things and with a certain membership.

We feel very comfortable about OAS and we are part of OAS, as much as we feel comfortable in CELAC. And again, the political nature of CELAC is such that it’s essentially a way to foster this positioning and discussions within the region than then allow us to align our agendas in a very clear way. But I don’t think there is overlap. And one needs to be careful not to overload those agendas because, as I said earlier, you can spread yourself very thin and lose opportunities. So we need to work together and really focus on what are the priorities, integration being one of them—how you invest in integration, how you really deliver on integration—and use the different tools to deliver on that integration.

O’NEIL: We’ve reached the end of our hour. We greatly appreciate you being here. And so please join me in thanking the foreign minister.

MALCORRA: Thank you. (Applause.)

(END)