Boric’s triumph 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 awakens several unknowns in Argentina on the future of the economic relationship between both countries and the South American regional integration process.

The victory of Boric, who will succeed the conservative Sebastián Piñera in the Presidency of Chile from March, was greeted with enthusiasm by the Government of the Peronist Alberto Fernández, who invited the newly elected president to “strengthen the ties of brotherhood” between Argentina and Chile. “Work together with the region to end inequality in Latin America.”

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 9 months of 2021 amounted to US $ 2,869 million, representing a year-on-year increase of 31%.

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

Trade closing or more exchanges?

For the international trade expert Marcelo Elizondo, despite Boric’s “ideological substrate”, a “trade closure” on the part of Chile is not expected, a country with a model of economic openness and which, furthermore, due to its productive structure, needs import many goods.

“Therefore, I cannot imagine a scenario of greater protectionism. I imagine yes, in principle, a more interventionist government, especially through fiscal means, not so much through international trade, ”Elizondo, general director of the DNI consulting firm, told Efe.

For Lisandro Mogliati, international business consultant and foreign trade expert, 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 “a greater flow of trade” bilateral.

Mogliati told Efe 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 Government of Argentina approved new export contracts to Chile, increasing the volume of shipments authorized for the first four months of 2022 by 70%.

Regional risks and effects

Although there are still many doubts 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 “Because of mistrust.”

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 don’t see problems in the rest of the region, “said Elizondo.

For Mogliati, on the other hand, if Chile has “a more Latin American look at trade relations, which are also political relations,” it could be “absolutely positive” for South America, “helping to promote regional integration.”