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The triumph of Gabriel Boric opens a new scenario in the relationship between Chile and Argentina

The triumph of the leftist Gabriel Boric in the recent presidential elections in Chile generates expectations in Argentina about the future of the economic relationship between the two countries and the process of regional integration. The victory of the former student leader, who will succeed the conservative Sebastián Piñera in the presidency of Chile from March, was enthusiastically greeted by the government of Alberto Fernández, who invited the brand new president-elect to “strengthen the ties of brotherhood” between Argentina and Chile and to “work together with the region to end inequality in Latin America.” So far Boric has not confirmed whether his first visit as president-elect will be to Buenos Aires, as has been traditional for Chilean rulers at the beginning of their term.

In addition to sharing a very long border, the two countries maintain commercial ties whose fluidity has not been altered at all by the lack of political harmony between Fernández and Piñera. According to official data, Chile is the fifth main destination for Argentine exports, with shipments that in the first nine months of 2021 amounted to 2,869 million dollars, which represents a year-on-year increase of 31 percent.

Conversely, Argentine imports from Chile totaled 486 million dollars last September (a rise of 32.3 percent year-on-year), leaving a positive balance for Argentina of 2,381 million dollars, the largest surplus volume that Argentina has in the balance with the different countries with which it trades.

Protectionism or more exchanges?

For the international trade expert Marcelo elizondo, despite Boric’s “ideological substrate”, a “trade closure” by Chile is not expected, a country with a model of economic openness and that, in addition, due to its productive structure, needs to import many goods. “Therefore, I do not imagine a scenario of greater protectionism. I imagine yes, in principle, a more interventionist government, especially through taxation, not so much through international trade, “Elizondo, general director of the consulting firm DNI, told the EFE agency.

For Lisandro Mogliati, a consultant in international business and an expert in foreign trade, the “better political harmony” that is expected between the governments of Argentina and Chile from the arrival of Boric to La Moneda could even encourage bilateral “increased flow of trade”. Mogliati said that issues such as Argentine natural gas exports to Chile and the completion of border infrastructure works to improve land connectivity are issues that depend on understanding between governments and that have a direct impact on trade.

In the case of gas, a few days after Boric’s electoral victory, the Argentine government approved new export contracts to Chile, increasing the volume of shipments authorized for the first four months of 2022 by 70 percent.

Regional risks and effects

Although there are still questions about the policies that Boric will adopt, and despite the fact that, a priori, a better economic relationship with Argentina is expected given the affinity with Fernández, the future scenario is not free of risks and potential adverse impacts.

For Elizondo, the “main problem that Boric has” is his “reputation as a radical leftist” and, “if he takes a wrong step”, this can affect the behavior of the markets, generate capital outflows and lead to an exchange rate adjustment in Chile. . In that case, the expert pointed out, the risk for Argentina would be a loss of competitiveness of its exports due to a possible depreciation of the Chilean peso.

“Perhaps the main problem is the contagion effect. But it is a risk, not a certainty. If Boric has a center-left policy focused on the Chilean domestic agenda, I do not see problems in the rest of the region,” Elizondo said. For Mogliati, However, if Chile has “a more Latin American look in what it does to trade relations, which are also political relations “, could be “absolutely positive” for South America, “helping to enhance regional integration”.

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