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Argentina and the IMF: Negotiations begin for a new $44bn agreement

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Argentina is pursuing a new agreement with the International Monetary Fund (IMF) to replace its current $44 billion arrangement. The effort signals a significant shift in the country’s financial strategy under President Javier Milei’s administration.

IMF Chief Spokesperson Julie Kozack confirmed on Thursday that the Milei government is prioritizing the establishment of a new programme over completing the final reviews of the existing deal inherited from the previous administration. According to a Bloomberg report, Kozack stated, “The authorities have formally expressed their desire to move to a new programme, and negotiations are now underway.”

The discussions intensified following a visit earlier this month by officials from Economy Minister Luis Caputo’s office and the central bank to Washington, where they engaged with IMF representatives.

The central question in the negotiations revolves around whether the IMF will extend additional financing beyond the $44 billion already allocated to Argentina. Milei had previously suggested an additional $15 billion, although he has not reiterated this figure recently. However, Caputo indicated this week that new funding could be included as part of the prospective programme.

If the parties reach an agreement, it would mark Argentina’s 23rd programme with the IMF since 1958 and its third since 2018. Historically, the IMF’s interventions in Argentina have faced criticism, as many past agreements failed to stabilize the economy. Successive governments often violated programme objectives, raising doubts about the effectiveness of IMF support in the country.

President Milei and his chief negotiator, Caputo, have a history of strained relations with the IMF. Earlier this year, Milei publicly criticized Rodrigo Valdes, one of the IMF’s senior officials, leading to Valdes stepping back from negotiations. Similarly, Caputo clashed with the IMF during his tenure as finance minister in 2018, particularly over exchange rate policies, which eventually prompted his resignation after a short stint as central bank governor.

Despite these tensions, the IMF has commended the Milei administration for implementing measures to cut spending, reduce inflation, and narrow gaps between the country’s various exchange rates.

DIPLOMACY

NATO demands investigation into Azerbaijani plane crash amid Russian missile allegations

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NATO has urged a comprehensive investigation into the crash of an Azerbaijan Airlines plane on Wednesday morning, which resulted in the tragic loss of 38 lives. Suspicion is growing that Russian air defense systems may have been involved in the incident.

The Embraer E190 passenger aircraft was en route from Baku, the Azerbaijani capital, to Grozny, the Chechen capital, when passengers reportedly heard an explosion. The plane was diverted hundreds of kilometers off course before crashing near the Kazakh city of Aktau. Miraculously, 29 people survived the crash.

“Our thoughts and prayers are with the families and victims of Azerbaijan Airlines flight J28243,” NATO spokeswoman Farah Dakhlallah said in a statement on X (formerly Twitter) on Thursday. “We wish a speedy recovery to those injured in the crash and call for a thorough investigation.”

Kremlin spokesman Dmitry Peskov echoed the call for patience, stating on Thursday, “We need to wait for the conclusion of the investigation,” while cautioning against premature assumptions.

Russia’s aviation watchdog attributed the crash to a collision with a flock of birds, which allegedly forced the aircraft to divert to Aktau. However, competing theories have emerged.

Media outlets including Reuters and Azerbaijan’s Caliber have speculated that the passenger plane was struck by a Russian air defense missile. These reports suggest the incident occurred in an area where Moscow has been actively targeting Ukrainian drones in recent weeks.

According to Caliber, citing Azerbaijani officials, the aircraft’s emergency request to land at three nearby Russian airports was denied. Instead, the plane was directed to fly over the Caspian Sea, exacerbating its perilous situation.

Further fueling these suspicions are reports of a simultaneous drone strike on Grozny. In a now-deleted Instagram post, Chechen Security Council Secretary Khamzat Kadyrov claimed that a drone attack on Grozny had been successfully neutralized.

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Brazil-Britain relations strengthen amid global challenges

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As Donald Trump’s second term looms and European allies like France and Germany grapple with political instability, the United Kingdom is seeking new allies on the global stage, POLITICO reports.

In this context, Keir Starmer’s administration has been cultivating strong ties with Brazil and the Lula government. Since Starmer assumed office as Prime Minister in July, at least 12 British ministers have traveled to Brazil, signaling a deepening partnership.

This intensified engagement coincides with Brazil hosting this year’s G20 summit, but it also highlights shared priorities in addressing the global climate crisis. Since November, the UK and Brazil have collaborated on launching a multilateral clean energy agreement, setting ambitious new climate targets, and laying groundwork for the next major United Nations Climate Summit in Belém, Brazil, in 2025.

According to Robin Niblett, former director general of the British think tank Chatham House, these are precisely the types of “coalitions of the willing” that leaders with a “green conscience” must forge amid global uncertainty.

However, bilateral ties are not without challenges. Disagreements over Russia and Ukraine represent a major foreign policy hurdle for both nations. To strengthen their alliance, Brazilian President Luiz Inácio Lula da Silva has invited Starmer for another visit next year, aiming to “map opportunities and economic areas for collaboration,” according to an official Brazilian statement.

The relationship between the two leaders extends beyond formal diplomacy. According to Antonio Patriota, Brazil’s ambassador to London, their shared enthusiasm for football has added a personal touch to diplomatic meetings. In fact, the initial moments of their bilateral discussions at the G20 summit were dedicated to football, POLITICO noted.

Foreign Secretary David Lammy also underscored the importance of climate issues in British foreign policy during his visit to Brazil last summer, preceding the general election. Starmer, then opposition leader, first met Lula at COP28 in 2023. This meeting laid the groundwork for the Clean Power Alliance energy agreement, which now includes 11 nations and the African Union. The alliance has pledged to triple renewable energy output by 2030, according to a British government official.

As POLITICO reports, the United Kingdom’s pivot to Brazil also reflects its need for dependable allies post-Brexit, particularly as the United States becomes less reliable under Trump. The new U.S. energy secretary, businessman Chris Wright, has accused the UK of “impoverishing people” with its green policies, further complicating transatlantic relations.

In Brazil, Starmer sees an ally capable of bridging the divide between developed nations, such as those in the G7 and NATO, and developing nations within the G20 and beyond. A UK government official described the partnership as exemplifying “cooperation between the Global North and South.”

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China’s diplomatic influence in the Middle East at risk

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Beijing’s brokering of a historic peace deal between Iran and Saudi Arabia last year marked a significant shift in China’s engagement with the Middle East. The agreement was seen as a landmark achievement, positioning China as a mediator in one of the world’s most volatile regions.

For Tehran, facing economic and geopolitical pressure from the Biden administration, the deal was a diplomatic breakthrough. It also offered a chance to reduce isolation with Beijing’s support.

However, the recent overthrow of Bashar al-Assad in Syria and the setbacks faced by Hamas and Hezbollah in their conflict with Israel have fragmented Iran’s regional influence. These developments, coupled with growing threats from Israel, pose significant challenges to Tehran’s strategic position.

Experts suggest that the return of a hawkish U.S. administration under Donald Trump could strengthen the China-Iran alliance. Shared pressures may push both nations toward closer cooperation, reshaping the region’s diplomatic dynamics.

Chinese analysts caution, however, that Beijing’s ability to sustain its mediation role may be at risk. Rising tensions between Tehran and other regional powers could jeopardize the peace China’s diplomacy has fostered. Such conflicts would not only test Beijing’s influence but also challenge its long-term strategic interests in the Middle East.

Fan Hongda, a professor at the Institute of Middle East Studies at Shanghai University of International Studies, notes that U.S. pressure on Iran is unlikely to wane. “Coupled with Israel’s strikes and the destruction of Iranian-backed forces such as Hamas and Hezbollah last year, this will compel Iran to favor closer cooperation with other powers, including China and Russia,” Fan remarked.

Iran’s economic woes date back to the Trump administration’s withdrawal from the Iran nuclear deal and the imposition of stricter sanctions under the “maximum pressure” campaign. These sanctions continue to hinder Tehran’s economy, influencing its strategic partnerships and regional policies.

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