Buenos Aires Times

Op-Ed G20 Presidency

Mainstream policy and the fractured being

Cambiemos’ top brass is ideologically convinced of the perils of climate change and the unfairness of the global tax system. Yet, Argentina’s biggest bet in its search for an economically viable energy system is Vaca Muerta, the world’s second largest field of shale gas.

Saturday 3 February, 2018
 “We don’t need more fracking, we don’t need more shale, nor oil and gas,” Macri said in a speech.
“We don’t need more fracking, we don’t need more shale, nor oil and gas,” Macri said in a speech. Foto:Cedoc

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There is an inherent contradiction in Argentina’s position leading the G20 and many of the public policies championed by the Mauricio Macri administration. It’s crystal clear that the president and his reform agenda are better liked abroad than at home, and a big part of that has to do with Macri’s outsized efforts at fitting in. To the world, Argentina is a free-market champion focused on green energy and inclusive growth, leaving behind the animosity of the Kirchnerite decade to become a friendly member of the international community.

The obsession-necessity of attracting foreign investment along with the potential of developing Argentina’s vast reserves of natural resources, such as Vaca Muerta, translate into lower taxes for global corporations, more use of carbon fuels, open-pit mining, and juicy opportunities for the richest members of society – many of them members of the Macri family’s inner circle. In order to ensure that a social pact based on shared goals by society’s major players will allow for a mediumto-long-term national project, Macri and his Cambiemos (Let’s Change) ruling coalition must align their projected self with their underlying being, proving their intentions to be authentic and not simply the most convenient to achieve immediate goals. Both ends and means must be justified.

There are a series of concepts that have become socially acceptable by most members of the “global Circulo Rojo,” the world’s true decision makers. Despite US President Donald Trump’s suggestions to the contrary, the burning of fossil fuels is understood to exacerbate global warming, leading to extreme climate conditions that are becoming more intense and frequent. Also opposed to Trump’s worldview, a majority of global leaders are convinced that globalisation and free trade are forces for good, and that the most powerful multinational corporations pay unfairly low taxes. Among essentially all members of the G20, it’s clear that technological and demographic changes mean we have to re-think the future of work, that the “infrastructure gap” is stopping poor nations from properly developing, and that food security is an absolute priority in an increasingly crowded planet.

Arguably, Macri’s greatest political success – behind only his surprise electoral victory – was to reposition Argentina as a relevant player on the global stage. Just nine days after putting on the presidential band and dancing on the balcony of the Casa Rosada where Juan and Eva Perón famously spoke to the descamisados, Cambiemos’ foreign policy and strategy teams took Macri to the World Economic Forum in Davos, Switzerland. The objective was clear: to finance the transition out of populism through an important inflow of foreign direct investment. In other words, to make it rain.

While the elusive “lluvia de dólares” never fully materialised, their communication strategy – “fitting in” – worked. Susana Malcorra, Macri’s first Foreign minister, a United Nations veteran with high-level contacts, initially opened the doors of the world for the country. Sticking to the mainstream script, Macri convinced investors Argentina was the land of opportunity, allowing Finance Minister Luis “Toto” Caputo to sell trillions of pesos worth of bonds at rates that would have been impossible several months before. Caputo even managed to place a 100 year bond – Bono Internacional 2117 – with a 7.125-percent interest rate, while total indebtedness surged an estimated 35 basis points to approximately 60 percent of GDP. Macri’s constant roadshow has helped the Merval stock index gain nearly 210 percent since he became president, while major players like Despegar and Corporación América raised hundreds of millions of dollars on Wall Street going public, with as many as 20 Argentine companies in the IPO pipeline.

Argentina received the visits of US president Barack Obama – twice, the second as ex-president – and Vice-President Mike Pence, met Donald Trump at the White House, and held bilateral meetings with the leaders of Great Britain, Germany, France, Japan, Italy, and Canada. The whole G7, plus several visits to Russian Premier Vladimir Putin and Chinese President Xi Jinping. Macri and Argentina are clearly “in” with the global nerve centres of power: Wall Street, the G7, Moscow, and the People’s Republic.

Cambiemos’ top brass, from Macri to Marcos Peña, from María Eugenia Vidal to Horacio Rodríguez Larreta, are probably ideologically convinced of the perils of climate change and the unfairness of the global tax system and the distribution of wealth. Yet, Argentina’s biggest bet in its search for an economically viable energy system is Vaca Muerta, the world’s second largest field of shale gas. This week, economist Jeffrey Sachs blasted the government for their insistence on fossil fuels. “We don’t need more fracking, we don’t need more shale, nor oil and gas,” he said in a speech at the T20 working group in Buenos Aires – part of the G20 series of events – while asking Argentines to acknowledge their potential in renewables, particularly wind, solar, and hydropower.

At Davos a few weeks ago, Macri met with a host of business leaders and CEOs, bringing back a US$750-million commitment by Goldcorp for a mine in Santa Cruz. Mining is a big deal in Argentina, with many of the world’s main companies present in the country, with one of the largest open-pit mines in the world. As has been written in this column before, major miners like Glencore pay as little as percent in royalties, as revealed by the Paradise Papers investigation published in Perfil. Macri has also lowered export taxes on the agricultural sector, one of the most profitable in Argentina, while offering special tax treatment to companies investing in Vaca Muerta.

When it comes to income inequality, Cambiemos has set “zero poverty” as one of its pillars, and part of that strategy is based on putting the businessman at the centre of the productive process. As I argued last week, this has created incredible profit-making opportunities for those close to the government, while crippling inflation and rising costs of living have seriously impacted on the middle and lower classes. Economic growth that hasn’t been inclusive, coupled with the ethically questionable dealings of the Macri family and the president’s inner circle have damaged the government’s public standing, as the polls show. Not to talk about their overseas investments.

“Ser y parecer” is a phrase commonly used in Argentina these days, meaning that one must align who they are with how they are perceived. It could be related to Martin Heidegger’s Being and Time, where the German philosopher uses the concept of dasein to explain the tension between ourselves when exposed to the outside (being-in-theworld), and our internal “essence” which is aware of our own death. When these are not aligned, man loses his authenticity, escaping rather than facing his problems. What Macri preaches from the G20 atrium should be reflected in his government’s public policies.

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