How Argentina became a member of the G20

“We didn’t move a finger to get into the G20. We were invited”.

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That’s the first response that comes to mind for former Finance Minister Roque Fernandez when asked a question that will surely, at least for a brief moment, crossmany people’s minds during the G20 Summit in Buenos Aires. How did a country like Argentina get into a club that gathers some of the world’s most powerful leaders? What were the organizers looking for? What did they take into account? The country’s GDP? Perhaps some promise Argentina made? What was it?

On one hand, Argentina’s membership to the G20 seems somewhat distant today. Its economy faces macroeconomic challenges that the rest of its members overcame. And Cristina Kirchner, the main political alternative to Mauricio Macri’s reelection in 2019, is critical of these forums and meetings. Under the Kirchner administrations, the country continued to be linked to the group, but with a more secondary role than when Argentina was invited by the United States, in the late 1990s.

On the other hand, the country now upholds a vision of globalization more in line with the rest of the member countries, or at least, a vision its majority supported until the arrival of Donald Trump and Theresa May. Macri, from that standpoint, is not out of tune with the G20; nor are his views of the administration of the country, or the way in which he highlights the virtues of free trade as a means to obtain prosperity.

This view, precisely, helps to explain not only Argentina’s role this weekend, but also to understand how Argentina became a member of the G20: a sign from world powers in favor of how Carlos Menem’s policies integrated the Argentine economy into the world through the trade liberalization and financial globalization in the 1990s.

It is also helpful to put into perspective the following: Menem’s approach to the financial world had been so great, that on the eve of his re-election in 1995, capital began to flee, and Argentina jumped into the arms of the IMF to sign an agreement. Sound familiar? It was 23 years ago, and it was called the ‘Tequila effect.’ An event similar to what Argentina experienced a few months ago: a crisis of its balance of payments.

The IMF lent Argentina the money, Menem won, and the country continued with its structural reforms. For the market, the country had passed a test. That was in 1997.

However, the upheavals in the financial world on a global scale did not stop. Mexico, Thailand, Russia followed. Then, the United States said enough, because if the situation were to continue, aid packages would become very expensive, and the risks of contagion, like in the case of Argentina, for example, would also increase. Time would prove Washington right.

“Larry Summers was the key to building a first block that embraced the G7 and emerging countries after Mexico’s financial crisis,” Roque Fernandez recalls.

These words of the former Finance Minister date back more than 20 years. In 1997, Summers was Undersecretary of the U.S. Treasury. From there, he would go on to become Secretary. “Summers and his boss, Robert Rubin, convinced Bill Clinton that another crisis like the one in Mexican could have a severe impact on the financial markets’ stability.” That’s how it was.

Today, Fernandez teaches at CEMA. He remembers many of those talks, and how the group was put together. It’s one thing to talk and teach economics. It’s another to implement economic policy. “Putting the G20 together did not happen overnight. It took time”.

Fernandez names the architect of the Argentine side of negotiations: Pablo Guidotti, today a professor at UTDT, he is another politician who now works in academia. Back then, he was Secretary of the Argentine Treasury; one of his advisors was Nicolás Dujovne, Minister of the Treasury of the Macri administration.

“The finance ministers of the countries that were meeting at that time were more like Guidotti than I was,” Fernandez says, referring to the academic background of the people recruited by that group since its beginnings.