The incoming US Ambassador to Buenos Aires, Peter Lamelas, could not make up his mind in his Senate testimony this week whether it was “a problem” or “an opportunity” for Argentina that provincial governors wielded power allowing them, if they wanted, to seek agreements over natural resources with “foreign powers.” But he knew for sure that once he arrives in Argentina, he will have to travel to the 23 provinces outside the city of Buenos Aires to advance Washington’s agenda, especially the one related to energy and mining.
By the Constitution since the 1994 reform, the provinces own the natural resources. They are the ones who grant the permits and receive the royalties. A foreign company setting foot in the country barely needs to knock on the doors of the Casa Rosada in Buenos Aires – they can go straight to a provincial capital to discuss terms.
Almost 30 years ago, the place now known as Vaca Muerta was very different from now. It was giving birth to the country’s picket movement, with unemployed workers blocking roads in the towns of Cutral Có and Plaza Huincul because the newly privatised YPF was cutting jobs in the region.
Now Neuquén is booming. It is one of only six provinces with more jobs now than when President Javier Milei took office in December, 2023. Neuquén is, in fact, the province that has gained the most jobs, 7,106 of them, under Milei. This week, the powerful oil and gas workers’ union in Vaca Muerta re-elected its leader Marcelo Rucci for another four-year term. His union is now three times bigger than it was when the picket demonstrations started.
Rucci is growing to become a national union figure. Right after getting re-elected, he lashed out at the leadership of the General Labour Confederation (CGT) and said they should resign for “not representing anybody.” He speaks, of course, with the bravado of leading a growing workforce, capable of going on the offensive and demanding terms, while other sectors like manufacturing or retail brace for increasing unemployment.
With people like Rucci, the country Lamelas will find when he tours provincial capitals is very different from what it was a few years ago. Governors and other local leaders who used to oversee economic no-go areas, whose only hope used to be getting assistance or even charity, are now empowered by growing national and international business interest in their regions. Lamelas said in his testimony that one of his goals would be to block the advance of “malign adversarial forces” like China, implying anybody engaging with the Chinese would be associated with corruption which needed to be “weeded out.”
At first glance, Milei would welcome Lamelas’ bold stance, which included an explicit mention of supporting him to win the midterms and a re-election in 2027, plus making sure that former president Cristina Kirchner “receives the justice that she well deserves.” But Milei himself got into trouble during the campaign when he promised never to do business with “corrupt Communists” like the Chinese, something he had to tone down once in office for the simple reason that China is Argentina’s second-largest trade partner, well above the United States.
If it is ever going to happen, Argentina’s economic recovery – and eventual renascence – will need everybody’s contribution, whether “benign” or “malign,” if those categories even make sense in today’s global economy. Provincial governors know that well, and in some cases use it to their benefit. In Vaca Muerta, for example, Rucci sits on an equal footing with US companies but also French, Norwegian, German and, until recently, Qatari and Malaysian ones. Chinese companies have not yet shown much interest in Argentine shale but they might at any minute, as they are showing in mining, especially lithium. They would be welcome.
Milei’s gut is to govern under a “good vs evil” narrative. This week at the niche ultra-right meeting called “La Derecha Fest” in Córdoba, he said: “We are at war, and the only way of defeating evil is for good to be well organised.” It is a dangerous bet: what is good today may become evil tomorrow – and vice versa. It is well known how anti-US sentiment was instrumental for Juan Perón to first land in office in 1946, right at the peak of post-war US popularity, thanks to the services of a Lamelas-type ambassador, Spruille Braden. A quick read of the Chinese strategist Sun Tzu’s Art of War might help: “He will win who knows when to fight and when not to fight.”
* Marcelo J. García is an Argentina political analyst and Director for the Americas for the Horizon Engage political risk consultancy firm.
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by Marcelo García
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