[ANALYSIS] Multi-level Politics in Argentina

[ANALYSIS] Multi-level Politics in Argentina

Joaquin Gomez Amato
Tobias Belgrano
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[ANALYSIS] Multi-level Politics in Argentina
President Alberto Fernández (right) and Governor of Córdoba Juan Schiaretti (left). Source: infobae.

Argentinian democracy has been classified as a “flawed democracy” in the 2021 Global Democracy Index. Although the consolidation of a bipartisan coalition party system has given balance to the national arena in Argentina, the subnational level has its own dynamic, where the “strongmen” of many provinces have reportedly bent the rules of democracy to tilt the playing field in their favor.

But first, it is quintessential to analyze the characteristics of Argentina’s federal system and its effects on democracy.

The Argentinian Constitution was signed by provinces that pre-date the Argentine nation, giving them a long-standing legitimacy. The current system includes 23 provinces and the capital city of Buenos Aires – each one of them has its own legislative organ, its own supreme court, and most importantly, its own constitution. These constitutions allow the provinces to choose their own authorities without the intervention of the national government. While on paper this may seem reasonable by allowing provinces to retain autonomy, in practice this autonomy can easily translate into abuses of power, and, in some cases, to the construction of a feudal-style state.

The Political Sphere

At the political level, there are 24 provincial party systems that compete for positions of power.

[ANALYSIS] Multi-level Politics in Argentina
Democracy levels of the Subnational units in Argentina. Source: “LA POLÍTICA TERRITORIAL DE LA DEMOCRACIA SUBNACIONAL” by Agustina Giraudy.

In the case of national elections (presidential or legislative), the provinces are their own electoral district. Usually, as the provincial party leader, it is the governor who chooses the representatives and senators for the national chambers. However, this can give provincial strongmen the power to use their votes as a bargaining chip for extra resources; if the chosen legislators do not deliver on the governor’s demands, they can simply exclude the names of the rebel congressmen in the next election – ruining their political career.

With such a diverse and complex political scenario, it’s no surprise that the levels of democracy within Argentine provinces tend to differ so much from one another.

Complex Decision-Making Arena

The fragmentation and de-nationalization of party politics in Argentina generate the need for agreements between several actors, which sometimes adds a high level of instability to the decision-making process due to the competing interests of political actors.

At times, this complex decision-making process ends up cornering presidents, as they must contend with many different, contradictory demands. When this occurs, it can appear as though the only way to successfully reform policy is to raise the president’s voice and suppress other political actors, which has occasionally led to authoritarian positions. 

This was the case with Carlos Menem’s presidency and with the Kirchner governments, where, through the discretionary distribution of soybean export surplus incomes, the Kirchner couple was able to reward loyal governors and punish dissidents at the provincial level.

The Legislative Sphere

The Argentinian Congress is divided into two branches: the Senate that represents the provinces (three senators per province and the capital district), and the Chamber of Deputies (with one representative for every 33,000 citizens to be updated every ten-year census).

The problem arguably lies in the flat rate of representatives per province, despite their widely varying sizes and populations (see graph below). This causes a distortion in the representation of the provinces, which is especially damaging to the Buenos Aires province – the biggest in size and population – and disproportionately benefits small (typically with poor democratic standards) districts like Formosa, Santa Cruz, and Tucuman.

Small districts with a smaller population and strong leaders can have a lot of influence in legislative debates. This can create a temptation for members of the executive branch to use their influence to sanction their own laws, especially given the carrot and stick dynamic that exists between governors, senators, and representatives.

The Economic Sphere

The consequence of this amplification of influence in small districts is reflected in the distribution of resources between the provinces. The national government and the sub-national provinces first divide Argentina's tax revenue equally between themselves and the provinces then divide their half between the 24 districts in a fixed percentage.

[ANALYSIS] Multi-level Politics in Argentina
President Alberto Fernandez with Buenos Aires Province Governor Axel Kicillof and Chief of Government of Buenos Aires City Horacio Rodriguez Larreta.
Source: Casa Rosada

This way of dividing resources is deeply damaging to the finances of a province like Buenos Aires, which despite providing services to 40% of the country's population and producing almost 40% of the national GDP, receives only 20% of the taxes raised by the government. The major part of these resources instead goes to "rent-seeking" provinces that then become fully dependent on them. This generates a dual economy with provinces that act as free riders, while the sub-national state becomes the only motor of the economy.

The International Sphere

The Multi-Level Economic Approach: A Blind Spot

When approaching the subject of multi-level politics from an international perspective, one can already identify a lack of multi-level analysis. In fact, the focus of a great part of international analyses has been on analyzing the economic interactions between transnational companies and national states, avoiding analysis of how government systems (federalist or unitary) could have a considerable impact on political-economic negotiations. Moreover, globalization should be understood as a dynamic process where economic changes are more common than before.

A New Economic "Interdependence” 

In many cases, international media can have significant blind spots when it comes to understanding states, as they cannot perceive the internal specificities that impact the political, economic, and social spheres. Nowadays, globalization has permitted numerous channels of transition where national and local governments interact at the same time with important transnational companies and non-profit organizations. This makes it very important to observe the economic and political relationships between provinces and other important private sectors. As a result, understanding and analyzing how federalism can shape political and economic dynamics requires a strong definition of federalism.

Federalism can be understood as a particular political dynamic in which national, provincial, and local governments interact simultaneously, while also having the autonomy to legislate in certain areas. China´s 'multi-tiered' approach in Latin America provides an interesting case study on federalism. Not only has federalism encountered certain difficulties in terms of managing the COVID-19 pandemic, but it has also sparked considerable debate around the sub-national and territorial politicking between presidents, governors, and municipal mayors in the structuring of commercial, financial, and joint cooperation agreements.  

The Vigorous Increase of Sino-Latin American Ties (2000-2021)

Destination of Argentinian exports during the period 1995-2019

Over the last twenty years (2000-2020), China has been vigorously expanding its financial and economic ties with Latin America and the Caribbean. According to Harvard's Atlas Economy of Complexity, and as we can see in Graphics 1, 2, and 3 below, there has been significant growth in exports to Asia and China, particularly in three strategic trade partners: Argentina, Brazil, and Uruguay (the three most significant actors in the Southern Common Market [MERCOSUR]).

Since the early 2000s, most Latin American countries have been experimenting with this trend towards increased ties with China, as can be seen in the graphs below. This trend is important to consider when analyzing how negotiating dynamics are managed within the political systems, both unitary and federally.

Destination of Brazilian exports during the period 1995-2019
Destination of Uruguayan exports during the period 1995-2019

The gradual growth of Sino-Latin American ties has also been created by a series of official documents and bilateral meetings between a wide range of actors. So far, over the course of the twenty-first century, China has written two important white papers, in 2006 and 2016, which have drawn Sino-American linkages closer and embedded economic and soft power sources. Both documents represent points of inflection due to the emergence of decentralized economic negotiations.

In the image below, it is evident that Chinese engagement has become highly decentralized in Latin America in three particular moments. The multi-level approach favored by the Chinese can be understood as a useful tool for increasing their negotiating capacity. By pursuing decentralized negotiations, China was able to avoid the legal and political obstacles in the electoral cycle, which typically go against projected results. This was the case with the last two Argentinian presidents: Cristina Fernandez de Kirchner and Mauricio Macri. As both presidencies struggled to maintain a mandate, which made it difficult for legislation to be passed, the position of China was to establish a multi-level approach between local governments and the local private sector instead. 

Put simply, the current multi-level approach of China in their dealings with Argentina has been very important.  The possibility of three different levels of government in Argentina, even during problematic economic and political situations, can make the timing and speed of political and economic projects complex, diverse, and, at times, cause unexpected national results. This makes the case of Argentina very useful in understanding how multi-tiered Chinese diplomacy can represent a timely opportunity for state-state negotiations. In fact, Argentina has been a large recipient of important, strategic Chinese investments.

According to the University of Boston, Chinese banks (such as Exim Bank, CDB, and ICBC) already have a strong presence in the Argentinian provinces of Jujuy, Santa Cruz, and Cordoba. In Jujuy, China built the most important and largest solar park in Latin America as a result of a series of negotiations between the provincial bureaucracy and the Argentinian/Chinese private sectors (without the presence of the Argentinian national government).

Figure from Wise´s (2021) Going Local: An assessment of China’s Administrative Level Activity in Latin America and The Caribbean

Moreover, the emergence of these projects has been feasible due to the existence of political rigidities, in particular, projects among national governments. As a result of these tendencies, federal states, like Argentina, with three levels of power (national, provincial, and local powers) make economic and political agreements more difficult, which can lead to conflicting interests, for example, between the national and provincial governments.

In a certain way, the Chinese multi-level approach to diplomacy represents a useful tool for improving the results of economic negotiations. This is even true for Argentinian provinces that have a large amount of critical natural resources, and their strategic position can bring about important results. According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), South America and a large part of the Andean region have extraordinary wind and solar potential, which could improve its current energetic matrix, production, and research (our report explores in depth this topic). 

On the other hand, it is crucial that these countries consider the potential dangers of the internationalization of Chinese companies and banks (such as CDB, EIBC, and ICBC) and the development of a “resource-seeking” strategy. Latin America and its political sphere must be on the alert to this regional tendency. Each country and regional institution (CELAC and MERCOSUR, for example) should define a clear middle-term development plan. As Carol Wise, an expert of Sino-Latin American relations, writes: 

"The task ahead is to work smarter and more efficiently on the China relationship, while simultaneously tackling the backlog of pending reforms on the domestic front"

Wise (2021, p. 240)

The political reality of countries that rely on decentralization and fragmented federalism are easy prey for economic superpowers with a hunger for natural resources. The lack of bargaining power of the Argentinian national government makes the powerful rulers of the subnational states susceptible to the influence of foreign countries which pay very little for natural resources and have little or no environmental controls, making it very difficult for national governments to enforce a unified international approach.

Further, the key position of local governors within the exploitation of natural resources can encourage countries like China to skip negotiations with the national government and start negotiations with these often cheaper decision-makers. This is all aggravated by the lack of hard currency in Argentina due to inflation, which causes the incomes of provinces to fall every year and increases the incentive for them to negotiate internationally.   

Finally, the globalization of economic ties, both formal and informal, has resulted in deep complexities among sub-national units in federal government systems and other actors, including nation-states and multinational corporations. The economic weight of the People’s Republic of China is widely recognized, but it is important to observe how this multi-level approach to diplomacy can shape national territories, political dynamics, and political economy. The Argentine experience clearly demonstrates that this can result in over-dependence on larger state actors as well as a poor democracy.


Sources

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