Argentina: Tri-partite approach to politics

 Argentina: the two party system comes to an end?

For decades, Argentina has been about Peronistas (Justicialistas) and Radicales, not that the names actually represent what both Justicialistas and Radicales used to represent. Argentina has gone from crisis to crisis, from military regimes to military regimes, from debt to even bigger debt and now faces inflation rates of more than 115 percent with massive levels poverty.

A newcomer in Argentine politics manage to reach levels of support of 30% leaving both Justicialistas and Radicales behind. In October 2023, Argentina faces the first round of elections and there could be a second round of elections (ballotage) if no candidate reaches the minimum required for an outright result.

Many years ago, Argentina attempted to maintain the value of the Peso pegged to the US Dollar, something that ended in tears as it was practically impossible to maintain parity without massive levels of indebtedness leading to default. The newcomer proposes to replace the Peso altogether to adopt the US Dollar as currency. Why? Because he says that it will be the ultimate weapon to get rid of inflation.

If Argentina adopts the US Dollar as national currency, what happens to Mercosur? The regional block has been under enormous economic and political pressures because of both internal and external issues. Just by mentioning the names of the countries that are members of Mercosur one realizes what a complex situation this is.

MERCOSUR countries:

Full Members: Argentina, Brazil, Paraguay, and Uruguay

Associate Members: Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname

Venezuela was supposed to be full member, but has been suspended indefinitely

Trade with China has been a bone of contention. Uruguay that exports 56% of what it produces to China even threatened that if an agreement was not reached its membership of Mercosur could come to an end.

At one point, it was suggested that that Mercosur should have its own currency to challenge the US Dollar. So what happens when a major member and founding member of Mercosur playes with the idea of replacing its own national currency with the US Dollar?

If the issues concerning China would not break up Mercosur, such a currency change could certainly be the last drop.

Therefore, for Mercosur, who holds the rains of power in Argentina could be a make or break situation for the entire block.