August 23, 2022

Argentina: economic recovery must pair with environmental protection

topic:	Climate action
located:	Argentina
editor:	Ellen Nemitz

Argentina is once again facing a deep economic crisis, with another cycle of rampant inflation, unpaid international debts and a decrease in overall quality of life. On 17 August, citizens of capital Buenos Aires went to the streets to demand that the government provide unemployment assistance and salary increases in order to help people live as they face 70 percent annual inflation rate. The macroeconomic scenario that feeds this gloomy reality is challenging. 

Earlier this year, Alberto Fernandez's administration dealt with the International Monetary Fund (IMF) to pay $44 billion in debts. In the following months, the president rearranged ministries under one super-ministry of economy, headed by the politician Sergio Massa, and the Central Bank increased the country's interest rate to almost 70 percent. Moreover, specialists say that honouring the deal with the IMF will require unpopular macroeconomic reforms, including cuts to social welfare policies, pension systems, energy subsidies and state employment. 

In this context, resorting to the exploitation of rare natural assets may seem a good way of quickly restoring the economy. Argentina, along with Bolivia and Chile, hosts the world's largest lithium reserve, a metal widely used in batteries for cell phones and electric vehicles. Its demand is accelerating and boosting prices by up to 750 percent on the global market. In a coordinated effort to deliver lithium supplies, the Argentinian government has been negotiating with several multinational companies, despite the huge damages caused by this activity in South America. 

Not even the natural haven of Patagonia seems to be safe from the rampant appetite for exploitation. This month, as reported by Mercopress, Argentina collaborated with large oil and gas companies to install offshore bases near Tierra del Fuego - a place of unique biodiversity on Earth - to operate a potential of 10 million cubic-metres-per-day of gas. Although self-sufficiency in energy production may offer a good chance of overcoming the economic crisis, offshore platforms represent a danger to marine life. 

In Patagonia, scientists demonstrated the risks of exploitation and transport of oil, as the wind pattern in the region "acts as a dispersing and advection agent" in case of an accident. Earlier this year, another offshore project, close to the touristic region of Mar del Plata, divided opinions in Argentina and raised concerns about possible oil spills, the elimination of toxic waste at sea and possible accidents which put human lives in danger.

The 2022 Environmental Report from the national NGO Environment and Natural Resources Foundation tries to find the right balance between economic development and environmental protection. In the chapter "The need to rethink the orientation of development in Argentina" (La necesidad de repensar la orientación del desarrollo en la Argentina), the authors assess that there must be "a profound debate, as a basis for the construction of certain social and political agreements on what activities to promote, in a macro-context characterised by the external vulnerability of the Argentine economy, but also by global processes associated with climate change." 

In summary, overcoming a long-lasting economic crisis in Argentina will require much more than investing in profitable activities, by actually discussing with society the consequences of each choice, in order to achieve sustainable development. 

Photo by Fermin Rodriguez Penelas 

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