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Argentina, Bete Noire of the G20

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I have been in Mexico City for a pre-G20 event at the Instituto Tecnológico Autónomo de México (ITAM). This conference, among many other matters, allowed me to reflect on the status of the country that has become a significant outlier at the global top table: Argentina. On top of the generalized global interest about Argentina's move to nationalize its largest energy company YPF, the majority owner of which had been the Spanish energy company Repsol, there is a special local twist as the Mexican President Felipe Calderón has been particularly critical of Argentina's move calling it "very regrettable."

In 1999, admittance into the G20, a forum of finance ministers, and central bankers, was done in a completely informal manner.

Although attention was paid to the systemic importance of the chosen countries, implicit attention was given to the sort of considerations one would expect of a country club: the reputation, and image of entrants at both the country, and individual level

Malaysia's claim for membership was certainly stymied by the imprisonment of its finance minister, Anwar Ibrahim. By this standard, even as it sunk into crisis, Argentina retained club credibility, a point reinforced by the re-appointment of the Harvard-educated Domingo Cavallo as Argentina's minister of the economy in March 2001.

Moreover, unlike other clubs, no rules were established for the temporary exit of members if and when they face some form of concerted criticism for their behaviour. The difference between the G20, and other international clubs such as the Commonwealth in this regard are striking. Unlike the G20, the Commonwealth has provisions for suspension, albeit for extremely serious offences such as the systemic abuse of human rights or military coups.

These divergences are reinforced by the existence of built-in mechanisms that accommodate change. Commonwealth countries can decide whether or not they want to stay as members as they modify their constitutions. By way of contrast the membership of the G20 was maintained in an "off the shelf" manner when the G20 was elevated in 2008 to the leaders' level. Although the L20 initiative, inspired by Canada's once-Finance Minister Paul Martin, looked at a wide variety of options in terms of members for such a forum, when the time came amid the global financial crisis, President George W.
Bush, as the host of the first summit in Washington, D.C. in November 2008, went with the status quo of the established Finance G20.

From the perspective of both members and non-members, the retention of Argentina must have seemed a puzzling choice; especially if the G20 was to perform both as a crisis, and steering committee setting the rules of global behaviour. Argentina had not only experienced a massive default, formalized in January 2002, but it was also a country that refused to submit required annual reviews of economic policies and data under IMF regulations.

Moreover, as witnessed once more in the context of the G20, Argentina was a country that possessed an idiosyncratic diplomatic style. Ready to run with ideas that had some rationale (pushing the G20 to put jobs on the agenda) it was also a country whose leader -- President Cristina Fernández de Kirchner -- has upset the host on symbolic etiquette (being late for the group photo), and substantive rules of the game. A March 2009 Wikileaks cable from the U.S. ambassador to Argentina pointed to the fact that President Fernández de Kirchner "had spoken twice as long as other leaders," and that her message had been very distinct from the other leaders, with a rhetorical and Argentine-centric bent.

In everyday life the combination of small and big offences would likely mean that Argentina would wear out its welcome. The same Wikileak cable indicated that even some officials from the Argentine government were concerned that "an Argentina perceived as politically conflictive could be thrown out of the G-20, or actions referred to address the global crisis could be transferred to another forum that specifically excludes Argentina." Certainly, prompted by the recent controversies over the Repsol YPF nationalization and accentuated forms of protectionism, many editorial writers hope so as they heap abuse on the role (or non-role) of Argentina in the G20. The Financial Times showcased "mutterings that Argentina might be kicked out of the G20." More robustly The Wall Street Journal took the line that Argentina should be suspended: "When its president wants to behave like a real head of state and not a thug, the country can be invited back into the club of serious nations."

Although several bloggers have joined in this intellectual flash mobbing, it is conceivable that an informal forum (even one with such high status as the G20) would eject Argentina on the record so far. To do so might actually put other countries on the defensive. If the US was to expend diplomatic capital on such an initiative, it would in all likelihood reinforce the notion that it was still acting on the basis of perceptions of a left-right divide in the Western Hemisphere. If the UK was to do so, speculation would increase that such a move was punishment for Argentina stirring up the Falklands-Malvinas conflict. And if Spain -- a permanent guest as opposed to a complete member of the G20 -- was to try to build a coalition in order to kick out Argentina, this approach would be viewed as self-serving both on commercial and diplomatic grounds.

Rather than pushing Argentina out, what is apparent in the build up to the mid-June Los Cabos G20 is a strategy that facilitates the marginalization of Argentina. One of the many other intriguing features about the G20, lacking in other international organizations, is the ability of the host to add a few (up to five) other countries to the summit. If originally tilted towards representatives of regional bodies such as ASEAN and the African Union, space is also given to some like-minded friends.

Instead of crying about Argentina, Mexico has gone around the issue by inviting countries to Los Cabos that, from its perspective, provide the acceptable face of the Americas. One of these is Chile, a country that could have been allowed in on merit to the original G20. Indeed, it is highly significant not only that Chile's economy minister Pablo Longueira was specially invited to the recent G20 Finance and Trade ministers meeting in Mexico, but that he was prepared to go public on Chile's ambition: "For many ministers at the meeting, it's hard to understand why Chile, such a successful country is not a member of G-20". The second is Colombia, a country that is in the process of moving beyond its image as a narco-fragile state, to a member of the so-called up and coming CIVETS countries.

From this perspective, the G20 confirms the impression that it is better understood as a network and a traditional closed club. Rather than dealing with a contentious issue in a direct zero-sum manner, the G20 host dealt with such problems by adding to the mix of actors taking part in the summit. Such an approach will not put an end to the controversy over Argentina, but it allows the G20 to live with the outlier situation without any major distraction from the G20's main game as the hub of global economic governance.