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OPINION AND ANALYSIS | 30-03-2024 06:43

Who wants to ‘exploit’ Argentina?

The business establishment, here and abroad, are keeping a close eye on whether Milei and his team can deliver on governance – and whether they can do it soon.

If the ‘Pacto de 25 de Mayo’ that President Javier Milei reluctantly offered the opposition during his March 1 State-of-the-Nation speech in Congress ever materialises, Argentina’s provinces will commit to the “exploitation of the country’s natural resources,” as mentioned in point #6 of the draft accord. Two of those resources are and will continue to be in the spotlight in the coming years: energy and minerals.

Excuse the government for picking the word “exploitation” over the more fancy and politically correct term “development.” As it is now evident in debates over gender, human rights or even the economy, the Milei administration enjoys provocation. In choosing to use the word “exploit,” the Casa Rosada’s scribes are killing two enemy birds in a row: the environmentalist who would want to block any economic activity for the sake of saving the planet, and the pro-development desarrollistas who would want a national strategy for these resources.

Even exploiters, however, seem to want some certainty before sinking in their cash. One reason why the country is moving slower than it should in key areas of economic development is the dysfunctionality of the current political system, which has not concentrated its powers on turning no-brainers like Vaca Muerta, renewable energy or mining into cross-the-aisle policies that would be beneficial for them all – and for the public as well. 

Examples abound. In 2021, during the Peronist administration of former president Alberto Fernández, the Australian firm Fortescue announced at the COP26 event an investment of US$8.4 billion to develop a green hydrogen project in the Patagonian province of Río Negro. It was one of the largest FDI announcements in years and it would have created approximately 15,000 jobs. One condition to proceed was the approval in Congress of new legislation for the sector – but with Fernández’s Frente de Todos coalition too busy settling internal problems, the bill was only eventually sent to Congress two years later. Today, it has not been approved.

So far President Milei has only added to the dysfunctionality. His anti “caste” rhetoric, which includes branding Congress “a nest of rats” who seek bribes in exchange for the passage of legislation, does not help. In his first four months in office, his chief negotiators, Interior Minister Guillermo Francos and Lower House Speaker Martín Menem, have been consistently disallowed by the Casa Rosada’s communications blitz. 

This Autumn, the government will have another chance to show that it means political business. A new, trimmed version of the so-called “omnibus” or “ley de bases” bill is ready to arrive in Congress for a second round after its bulkier namesake was abruptly withdrawn by the Executive in early February, even after having obtained a positive first reading vote in the Chamber of Deputies. The public might care little to nothing about the doing and undoing of the politicos it despises, but the business establishment, here and abroad, are keeping a close eye on whether Milei and his team can deliver on governance – and whether they can do it soon.

Two local business tycoons were clear about that in recent days. Paolo Rocca, the owner and chairman of the country’s largest manufacturing conglomerate, the Techint Group, said in a keynote conversation at one of the energy industry’s leading events, CERAWeek in Houston, that he had “a lot of hope” for the Milei administration. He then noted that a full-scale development of Vaca Muerta – where his energy division Tecpetrol has been drilling natural gas like there is no tomorrow over the last years – faces “problems above the surface, in the regulatory environment.” 

His words were echoed by Alejandro Bulgheroni, the owner and chairman of the Argentine energy company Pan American Energy (PAE), who told a business forum this week that Milei was making “many changes in the right direction,” but that he was not “getting the support from Congress” to consolidate reform. Without that, he said, Vaca Muerta could not even dream of closing the gap that separates its 300,000 barrels of oil a day of production to, he noted, over six million produced in the US Permian basin. 

Milei does not need to read between the lines to understand that these business leaders will continue to support his administration only if he is ultimately capable of doing what he was voted for: leading the country’s politics and politicians, no matter how much he hates it or them. 

The President’s constant focus on what he refers to as “the culture wars” against the political establishment drags too much energy, which is scarce given the small group of people in the his inner circle. Only this week, this line of governing included questioning the number of “disappeared” during the 1976-1983 military dictatorship, changing the name of the Kirchner Cultural Center (CCK), and boasting of the coming lay-offs of thousands of government servants whose contracts expire at the end of the month. 

Life is what happens to you while… no wonder that the Casa Rosada did not have time to organise and dispatch a government delegation to CERAWeek, nor did it even have a mining secretary (it took a month-and-a-half to name a replacement for Flavia Royón, after she was let go amid the budget tussle with governors) to send to the sector’s main international event in Toronto in early March (PDAC 2024). At least there was Elon Musk, whose Starlink satellite Internet system started to service the country, at a cost of US$500 dollars installation and US$60 a month. After all, Musk’s dishes are well above the messy Argentine surface.


* Marcelo J. García is a political analyst and Director for the Americas for the Horizon Engage risk consultancy firm.

Marcelo J. Garcia

Marcelo J. Garcia

Political analyst and Director for the Americas for the Horizon Engage political risk consultancy firm.

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