Day: December 26, 2023

How can companies navigate the evolving geopolitical risk landscape and leverage opportunities in emerging markets? In this episode of Riskology by Infortal Worldwide, Dr. Ian Oxnevad and Chris Mason discuss the recent election of President Milei in Argentina and its potential impact on the international stage. They explore the implications of Argentina’s commitment to lean towards the US dollar and the opportunities it may present for US firms. As companies face increasing geopolitical risks, understanding the political and economic dynamics of different regions becomes crucial for effective risk management and strategic decision-making.

Infortal Worldwide is a global risk management and investigation firm that specializes in helping businesses navigate complex risk landscapes. The company’s focus extends to various areas, including economics, politics, and geopolitical risk. By delving into these interconnected realms, Infortal Worldwide aims to provide clients with comprehensive insights that empower them to make informed decisions, especially in critical areas such as mergers and acquisitions, private equity investments, and other strategic moves.

You’ll hear Chris and Ian discuss:

• Argentina’s election of a libertarian president is a break from its economic and political past. The election of President Milei represents a new direction for Argentina and a departure from traditional mainstream parties.
• The new president is implementing shock therapy measures to tackle inflation and kickstart economic growth. Milei is taking a two-pronged approach to address inflation. Firstly, he is changing the monetary policy by devaluing the currency, which incentivizes investors and businesses to switch to the US dollar. Secondly, he is implementing fiscal spending cuts and reducing corruption to eliminate inflationary pressures and reduce demand.
• The devaluation of the currency and fiscal spending cuts are aimed at reducing inflationary pressures. By devaluing the currency and encouraging the use of the US dollar, Milei hopes to create a more stable economic environment. Additionally, his efforts to cut corruption and reduce fiscal spending aim to eliminate inflationary drivers and reduce demand, ultimately stabilizing the economy.
• Argentina’s commitment to leaning towards the US dollar could be significant for US firms in the competition for a new world currency. As other countries, particularly China, seek to influence the establishment of a new world currency, Argentina’s commitment to the US dollar is a significant development. This commitment could serve as a poker chip on the international stage, potentially influencing policies and access to natural resources.
• The election in Argentina could open up opportunities for US firms in terms of exports, investment, and reshoring or nearshoring. The stabilization of Argentina’s economy and its commitment to the US dollar could create favorable conditions for US businesses; goods may become cheaper, providing better export opportunities.
• Despite Argentina’s limited financial capacity to support Ukraine, Zelensky’s presence at Milei’s inauguration suggests that the region, including Latin America, may have a greater influence on global events and conflicts.
• The impact of elections on international conflicts, commerce, and interest rates can indirectly affect US businesses. Elections around the world, including the US election in 2024, can have far-reaching impacts on various aspects of the global economy. 
• Compliance programs need to evolve to address complex geopolitical risks and should include dynamic assessment as global conditions change. This is crucial for businesses to effectively manage and mitigate risks associated with geopolitical factors such as elections, sanctions, and regulations.

Key Quotes:

“I think this is part of a global phenomenon where you have a generation now, millennials worldwide, where globalization kind of hasn’t been working or responding the way that it was expected to.” -Dr. Ian Oxvenad

“Right now, there’s competition in terms of establishing a new world currency, and the U.S. dollar is still in the leading position at the moment, but other countries are obviously trying to influence that, particularly China. I think here we have a significant South American player that’s showing a commitment to lean towards the US dollar.” – Chris Mason

“If you look at what [Milei] has done from a fiscal standpoint, he’s essentially just fired half of the government,” – Dr. Ian Oxvenad

Resources:

Infortal Worldwide 

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Dr. Ian Oxnevad on LinkedIn

Chris Mason on LinkedIn