Argentina, Bolsonaro, and the Turkish Lira Making Moves and the Week in Review
Not much preamble today. We’ll have some exciting stuff to announce next week. Don’t forget to listen to our latest podcast. E-mail us at email@example.com if you need help with geopolitics. Happy Friday!
Argentina making moves. Argentina’s Minister of Transportation of the Nation, Mario Meoni, held the first meeting of the Federal Hidrovía Council (CFH) this week. It was the first meeting of the CFH since it was established by Argentina government decree 949/2020 in November. The CFH’s purpose is to launch public tenders for the modernization of the Paraná-Paraguay waterway. Meoni also specifically mentioned the importance of the Magdalena Canal, which is being tendered separately. 70% of Argentine exports pass through the Río de la Plata, as well as more than 100 million tons in local cargo and shipments come from Brazil, Bolivia, Uruguay, and Paraguay, worth roughly $70 billion.
What it means: First rule of geopolitics: Rivers are important. Indeed, most of the world’s great civilizations, powers, and cities owe their existence to the rivers upon which they are founded. China’s long history is intertwined with the Yellow and Yangtze Rivers. The ancient Egyptian pharaohs were Kings of the Nile; Rome was built on the shores of the Tiber; the British Empire was born at the mouth of the River Thames; the Mississippi River is a big part of the reason a power as strong as today’s United States rose in North America. Latin America has a river to rival them all: the Río de la Plata. Argentina is behaving like a country that wants to (finally) cash in on the immense advantages that Buenos Aires’s position on the Río de la Plata can offer. Argentina has been punching below its geopolitical weight for literally centuries. Following through on these plans would be a major shift.
Bolsonaro making moves. Brazilian President Jair Bolsonaro, angry over Petrobras raising fuel prices for a fourth time this year, sacked Roberto Castello Branco, the CEO of Petrobras, Brazil’s state-owned oil giant. Bolsonaro replaced Castello Branco with former Defense Minister Joaquim Silva e Luna. Ominously, Bolsonaro has already threatened more to come. In his words: “If the press is concerned about [this], next week we will have more. What I need is the courage to decide with the greatest good of our nation in mind.”
What it means: Bolsonaro the populist-focused-on-reelection will govern differently than Bolsonaro the self-professed free-market crusader. In recent weeks, Bolsonaro has watched his approval ratings begin to fall. Bolsonaro is also dealing with the specter of yet another Brazilian truckers’ strike. Brazil’s next general election is now less than 2 years away and Bolsonaro does not want to end up like his predecessors. That means more intervention, more bread and circuses, and less free-market talking points.
The Turkish lira making moves. Turkish President Recep Tayyip Erdogan publicly defended the performance of his son-in-law, Berat Albayrak, who resigned after an abysmal stint as Finance Minister last November. An official from Erdogan’s AK Party even told Reuters Erdogan was considering reappointing Albayrak as a cabinet minister. The Turkish lira promptly lost nearly half of its 2021 gains against the U.S. dollar in the span of three days.
What it means: First of all, don’t believe everything you read in The Financial Times or Fitch Ratings! (Sorry guys.) Last week, the FT had this as a headline: “Turkey’s Lira Leads Emerging Markets This Year After Dour 2020.” Fitch even upgraded its outlook on Turkey from negative to stable. What a difference a week makes!
Second of all: Turkey’s situation, while not great, is actually not that bad, i.e., it is not out of the realm of fairly simple monetary policy to handle. (Raise interest rates!) There’s just one problem: Turkish politics and sound monetary policy don’t go hand in hand right now…and haven’t for years. Erdogan doesn’t like high interest rates. He likes economic growth because it allows him to solidify his political power. That has locked Turkey into a pernicious cycle of debt-fueled growth. Turkey’s new Finance Minister and central bank governor are doing all the right things from an economics standpoint to attack this problem, but as long as Erdogan lets politics dictate his moods, the Turkish lira, and the Turkish economy in general, are in for a volatile ride.
Saudi Arabia will allow women to join the armed forces. But will they allow women to drive tanks without a man by their side? Stay tuned.
Poland will introduce retirement benefits for dogs and horses that have served in the Polish police. Be like Poland.
Nicaragua’s National Assembly created a new National Ministry for Extraterrestrial Space Affairs, The Moon, and Other Celestial Bodies. It is getting crowded up there, no?
Pakistan is training an armed rollerblading police unit. What could go wrong?
Vladimir Putin and Belarus president Alexander Lukashenko like to ride snowmobiles in Russia together.
China’s Foreign Ministry denied that it had forced U.S. diplomats to take COVID-19 anal swab tests. It’s been a weird week in the world y’all.
Indian Finance Minister Nirmala Sitharaman said the Indian government would divest from all non-strategic sectors and maintain a “bare minimum” presence in four strategic sectors: “atomic energy, space and defense; transport and telecommunications; power, petroleum, coal, and other minerals; banking, insurance, and financial services.” That’s more than four sectors.
India and Pakistan announced an unexpected ceasefire along the Line of Control, effective at midnight on February 24th.
U.S. President Joe Biden signed an executive order on U.S. supply chains.
Argentina’s National Secretariat of Internal Trade accused a number of companies, including Unilever, Proctor & Gamble, and Bunge of limiting production and withholding deliveries of food, creating shortages and forcing a rise in consumer prices.
The Dominican Republic, one of four Latin American countries that ban abortion in all cases, is considering revising its laws to allow abortion if a woman’s life is in danger or in cases of rape or incest. (Honduras, Nicaragua, and El Salvador are the other three countries that currently ban abortion.)
Japan will ratify the Regional Comprehensive Economic Partnership (RCEP).