Berlin Argentina’s hopes of overcoming its own economic crisis and establishing itself as an energy supplier for the European continent lie deeply buried under the dead cow. The “vaca muerta”, a rock formation in the southeast of the country, is considered the second largest shale gas deposit in the world. The war in Ukraine and the discussions about the future of European energy supply are now raising hopes in Argentina of being able to sell this gas worldwide.
To this end, the Argentine President went on a tour from Spain via Germany to France. The Handelsblatt spoke to him in Berlin. Fernández explains the purpose of his trip with the words: “Due to the war in Ukraine, the world market is missing an important player in Russia.” Argentina could be a good alternative.
“We will build gas liquefaction plants in order to be able to export the gas in the future,” the president promised. He spoke to Chancellor Olaf Scholz about the fact that Germany could participate in the construction of these plants. For example, co-financing via a public-private partnership with one of the Argentine companies is conceivable. The chancellor was very interested, said Fernández.
However, it does not look as if Germany could plan to use Argentine gas anytime soon. In Argentina, there are protests against the project due to concerns about the impact on the environment and climate.
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In addition, Fernández estimates that the construction of the liquefaction plants will take at least two to three years. “This must now be pushed ahead quickly,” he demands – also in the hope of German support.
Europe’s competitor is China
In his search for investors in new energy projects, however, Fernández had recently turned his attention to Beijing. The result was a cooperation in the energy sector that includes a total of 17 infrastructure projects and for which China is providing US$23.7 billion. The agreement is part of a plan to integrate Argentina into China’s New Silk Road.
China has long since become Europe’s biggest economic competitor in Latin America. Trade between China and Latin America has grown from $18 billion in 2002 to about $400 billion last year.
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In an interview with the Handelsblatt, however, Alberto Fernández emphasizes the difference between his country’s bilateral relationship with China and with the Europeans. “There are European companies in Argentina that have been there for over 100 years – there is a symbiosis there,” he says. China, on the other hand, would only invest in Argentina’s infrastructure – and drive up food prices through massive purchases of meat, for example.
France is about protecting its own economic sectors.
(Photo: IMAGO/IP3press)
Rising prices in Argentina have traditionally been a big problem. Since 2010, the inflation rate there has been constantly in the double-digit range. For 2022, the International Monetary Fund (IMF) expects inflation to be around 50 percent. At the same time, there is a lack of access to American dollars. This is another reason why Fernández is making every effort to ramp up Argentine exports.
However, the Argentine President is also considered a major skeptic with regard to the planned free trade agreement between the Mercosur countries and the European Union. The EU’s negotiations with the member states of the Mercosur economic area, Argentina, Brazil, Paraguay, Uruguay and Venezuela, were concluded in 2019 after two decades. So far, however, the agreement has not been ratified, because the Europeans express concerns about the deforestation of the Amazon rainforest by Brazilian President Jair Bolsonaro.
One of the major issues is deforestation
According to Alberto Fernández, however, this is primarily about a completely different topic. “It’s not true to claim that you can’t sign the agreement because of climate change.” Rather, the European side is blocking the agreement because many countries want to protect certain sectors of their economy.
Fernández criticizes that the main focus is on the areas in which the Mercosur countries are particularly strong. France, for example, wants to protect its farmers who would be affected by the agreement.
Nevertheless, Latin America must generally orient itself more towards Europe again – because that is where the most important investments in “productive projects” come from. If Fernández has his way, this “important connection” should be improved and deepened.
But he also demands: “We have to make the discussion about the agreement more honest.” It’s not about the Amazon, it’s about protectionism.
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