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OPINION AND ANALYSIS | 10-06-2022 20:40

The Kulfas saga and the never-ending Néstor Kirchner pipeline

Kulfas was a thorny character for the Kirchnerites within the ruling Frente de Todos coalition from day one. One of the few 'Albertistas' in the Cabinet, he is said to have expressed President Fernández’s own view of the economy.

It isn’t entirely clear why he did it, but a plausible explanation is that he was sick and tired of being treated like a traitor in public by the vice-president. Or maybe he was just incapable of containing his anger, having finally reached his limit and decided to come out swinging against Cristina Fernández de Kirchner, blinded by passion and not really conscious of the impact of his words. Whatever the reasons, which we’ll explore further below, Productive Development Minister Matías Kulfas’ “resignation” reads as a cautionary tale as to how not to conduct a coalition government, proving once again that the Argentine political system suffers from systemic failures that are self-inflicted and cause very real damage – in this case the incapacity to take advantage of the extraordinary opportunity that is Vaca Muerta. It will feed further dollar demand to cover for energy imports, increasing the deficit and ultimately fuelling inflation all around.

Kulfas was a thorny character for the Kirchnerites within the ruling Frente de Todos coalition from day one. One of the few “Albertistas” in the Cabinet, he is said to have expressed President Alberto Fernández’s own view of the economy and reports suggest the Peronist leader tried to avoid having to ask Kulfas to tender his resignation before he realised there was no turning back. Cristina had referred to him in one of her first bombshell letters to the president where she wrote about “officials that aren’t working” playing on the phrase in Spanish (“funcionarios que no funcionan”). Fernández de Kirchner went after the now former official again in Chaco last month, in one of her first public appearances in a while (she hadn’t spoken to Alberto in months either), revealing that she knew the then-productive development minister had “written a book against us” and didn’t object, though she warned the president to be wary given the critical importance of said ministry in terms of managing scarce hard currency resources. In his best-seller Los Tres Kirchnerismos (“The Three Kirchnerisms”) published in 2016, Kulfas, who held government posts under Néstor and Cristina Kirchner until 2013, criticised the management of the economy under the current vice-president, when Axel Kicillof was in charge of the Economy Ministry.

The straw that broke the camel’s back came during Fernández de Kirchner’s speech for the 100th anniversary of energy oil company YPF. After some three months she decided to meet Alberto Fernández in person and potentially bury the hatchet, but only after making her opinions known to the world. One of the most poisonous darts she shot at the government of which she forms part of, had to do with a supposed proximity between the Alberto Fernández administration and billionaire Paolo Rocca, the head of the Italian-Argentine multinational engineering firm Techint. Alberto, who along with Economy Minister Martín Guzmán had recently dined with Rocca and his lieutenant Luis Betnaza, had been easy on Techint in the tendering process for the metal tubes that are an integral part of the long delayed Néstor Kirchner gas pipeline, she alleged, allowing the company to earn some US$200 million in order to make the product in its factory in Brazil rather than producing it in Argentina. The pipeline would allow Argentina to substitute costly energy imports by connecting the Vaca Muerta shale basin to the Buenos Aires region, possibly even allowing the country to become a net energy exporter in the near term. In a world of high energy prices as a consequence of the Russian invasion of Ukraine, it represents a golden opportunity worth many billions, as explained previously in this column.

According to Noticias’ reporter Juan Luis González, the president quickly texted his minister to ask him not to pick up the glove, but it was too late. First via a radio interview and later through an “off-the-record” comment circulated to journalists, Kulfas’ team accused the Kirchnerites of putting together a tender offer that was “tailored for Techint.” (The proper journalistic term should have been “on background” rather than “off-the-record,” a distinction that isn’t common in Argentine journalism). Officials within the Energy Secretariat, which responds politically to the vice-president, had put together the technical documentation and they had even been moved from Kulfas’ Productive Development portfolio to Guzmán’s Economy Ministry. Kulfas was effectively turning the tables on Cristina – it wasn’t the Alberto Fernández administration that was cozying up to Techint, rather it was Cristina’s own team in control of energy policy that was corruptly favouring their supposed antagonist. While Alberto’s initial reaction was to preserve one of his closest Cabinet allies, he ultimately folded when he acknowledged that an accusation of corruption within the ruling coalition went too far. Kulfas showed up to the Casa Rosada over the weekend accompanied by his son, accepted he would resign, and then sent a 14-page letter lambasting the Kirchnerites as he left the government with a bang.

Everyone’s got some dirt on them in this story, starting with Kulfas. The Energy Secretariat was formally under Guzmán’s portfolio, so why did he decide to pick up the glove? Also, why did he accuse the Kirchnerite officials of corruption when he should know all too well that a combination of absolute incompetence, along with a limited number of players in the market, essentially meant Techint was the only choice? Finally, if indeed he is a pure “Albertista,” why did he decide to make his resignation opus public, leaving the head of state with an absolute mess to clear up, including a judicial investigation into accusations of corruption? Kulfas, more of a technocrat than a political character, did consolidate his position as a sort of anti-Kirchnerite maverick, particularly among non-Peronists. Sales of his book have gone through the roof, and he’ll be able to have more time for his musical projects with his partner, feminist artist, sexologist and sociologist Yamina del Real. A future consulting business is probably already taking shape.

Alberto seems to be on the losing end of the stick here, having sacrificed one of his closest ministers while having to deal with the collateral damage. He reportedly offered the Productive Development Ministry to Sergio Massa – currently Congress Speaker – who rejected the offer but agreed to fly with him to Los Angeles for the Summit of the Americas. In comes Daniel Scioli, recently fronting the Embassy in Brazil and a potential contender to succeed Alberto next year. This could be read as another defeat for Cristina – who’s recently lost influence after the resignation of Commerce Secretary Roberto Feletti and the replacement of AFI intelligence agency chief Cristina Caamaño by Agustin Rossi, another former Kirchnerite who’s had his public battles with Cristina. And then there’s Techint, which has faced allegations of foul play before and has thrust into the middle of the scene unexpectedly.

Ultimately, these shenanigans could also further delay the construction of that much-needed pipeline from Vaca Muerta. There are reports that public officials, particularly third and fourth lines, remain fearful of signing public resolutions given the potential of future judicial investigations. As usual, this all means more pain for the general population.

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Agustino Fontevecchia

Agustino Fontevecchia

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