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The hostile stance of the elected president of Argentina towards Lula generates uncertainty about the future of the relationship between the two countries in the gas market.
The victory of Javier Milei in the Argentine presidential election raises questions about the relationship between Brazil and Argentina and the energy integration project, especially with regard to natural gas, between the two economic powers of South America.
During the election campaign, Milei publicly expressed her opposition to the current Brazilian president, Luiz Inácio Squid da Silva (PT), and the government candidate Sergio Massa, Alberto Fernández's Finance Minister. He aligned himself with the former president Jair Bolsonaro (PL) and emphasized his hostile speech towards the Brazilian president, reinforcing his opposition to the Massa government, which this year intensified negotiations on the plan to export gas to the Brazilian market.
The impact of the new gas arrangement in the Southern Cone
The participation of the National Bank for Economic and Social Development (BNDES) in the expansion of the second section of the Nestor Kirchner gas pipeline, in Argentina, was a recurring topic in diplomatic meetings between presidents Fernández and Squid throughout this year.
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The potential of export of gas coming from Vaca Muerta, in Argentina, for Brazil has aroused the interest of Brazilian businesspeople. The possibility of Import competitive gas market for the industry has raised expectations regarding the future of the gas market between the two countries.
However, in view of Milei's government, how can this rapprochement in the gas market between Argentina and will Brazil emerge?
During the campaign period in Argentina, Milei frequently criticized the Brazilian president, calling him corrupt and a socialist with totalitarian inclinations. Furthermore, he stated that he would not negotiate with the PT member. Milei's statements generated controversy and were the subject of public debate.
Milei expressed her position against doing business with China and any communist country, claiming to defend freedom, peace and democracy. In an interview, he stated that communists and Chinese do not fit these values, and also mentioned Putin and Squid as examples.
Change of tone
However, in recent weeks, Milei has adopted a more moderate speech, especially on the eve of the presidential elections. Argentinas. He indicated that he believes in the opening of international trade and mentioned that commercial relations between the private sector of Brazil and the Argentina will continue, despite their belief that the State should not interfere in these international relations.
international trade and Diplomatic Relations
The candidate stated that he does not agree with the statements that he is against trade with China and Brazil, emphasizing that it believes it is a matter of private sector. He argued that state intervention generates corruption and harms the well-being of Argentines.
Reaction After the Election
After the election results, Squid congratulated the new Argentine government, without mentioning Milei, and expressed willingness to collaborate with the Argentina in the future.
In the presence of Squid inauguration of the new Argentine president is considered unlikely, according to Foreign Relations advisor, Celso Amorim. He stated that due to the personal offenses he Squid suffered, it is very difficult for him to attend.
According to information provided by the former president's lawyer, Fabio Wajngarten, Milei contacted Bolsonaro after the victory and invited him to the inauguration ceremony.
Integration in the gas market between Argentina and Brazil
After Milei's victory, the Brazilian ambassador in Buenos Aires, Julio Bitelli, communicated to CNN that sources linked to the new Argentine president confirmed the interest in maintaining the integration project in the gas market with Brazil. This decision represents a new step in the relationship between the two countries.
I spoke about this subject with people linked to Milei and it is clear that, due to the economic perspective of the elected president, who prioritizes economic efficiency over other aspects, it is in the interests of the Argentina that the gas can be exported to Brazil”, said the Brazilian ambassador to CNN Brazil.
In Brazil, the Ministry of Finance believes that, in the short term, Milei will adopt a more moderate and pragmatic stance in economic relations with Brazil and should not abandon the Mercosul, according to a report from The Globe.
Political challenge in Argentina for Javier Milei
Javier Milei faces the challenge of establishing political alliances in Argentine Congress to enable your governability, since his party, Liberdade Avança, is a minority in both the Chamber of Deputies and the Senate. With only 39 of the 257 deputies and 7 of the 72 senators, Milei will have to seek support from other benches to be able to approve his proposals and bills in the new composition of Congress.
A energy integration between Brazil and Argentina it is not unanimous. In August, the electoral primaries confirmed Milei's strengthening in the presidential race, and his energy advisor, Eduardo Rodríguez Chirillo, expressed some unfavorable opinions on the plan. export of gas to Brazil through the gas pipeline.
Eduardo Rodríguez Chirillo is a consultant who worked with Secretary of Energy Carlos Bastos during Carlos Menem's first government in the 90s, a period in which the sector went through a process of deregulation and Privatization.
According to Chirillo, it is the responsibility of the private sector the construction and financing of infrastructure export. He also argued that it would be more advantageous for Argentina export gas from Vaca Muerta through Natural gas liquefied gas (LNG), which would bring more flexibility due to the seasonal nature of Argentine gas, and more freedom for companies to access markets beyond Brazil.
Expressing that Brazil will acquire all the gas it needs from us is uncertain due to the construction of seven LNG terminals to transport gas, as well as Bolivia's permission to sell gas to Brazil.
Second Pedro Silva Barros, coordinator of the “Regional Integration: Brazil and South America” project at Ipea, it is premature to assert any positive or negative impact on energy integration between Brazil and Argentina, given the new political situation.
Challenges in infrastructure integration between Brazil and Argentina
The current moment is marked by a greater presence of uncertainties than certainties, which ends up making it difficult investments in infrastructure between two countries. For progress to be made in this sense, it is essential to build political conditions that provide stability and security.
Specialist Barros expresses skepticism regarding the possibility of an integration project in the Natural gas between the two countries comes to fruition quickly. Despite the foundations established by the governments of Squid e Alberto Fernández, a joint plan of this type demands long-term decisions that need to be matured in a favorable environment.
Firstly, it is essential to understand what management approach Milei will adopt. Although she adopted a stance contrary to the collaboration with the Brazilian government of Squid during his presidential campaign in Argentina, there is scope for the development of energy integration between the two countries.
It is important to consider that there is a difference between the candidate during the campaign and the government official. From December 10th, when she begins her term, Milei will begin to govern. However, the question remains as to what governance style he will adopt: the same as in the first round or a more moderate approach, similar to that of former Argentine president Mauricio Macri? This is the question raised by Barros, former director of Economic Affairs at the Union of South American Nations (Unasul).
It is indisputable that the integration between Brazil and Argentina depends on fluid dialogue and broad understanding between governments. This integration is facilitated by the extensive border, the diversity of commercial relations and the importance of the joint economic agenda. Even when faced with more complex issues, such as political differences, it is possible to establish a positive agenda in specific projects, such as the gas pipeline. The complementarity between the two countries continues to be a significant advantage for the creation of a solid economic partnership.
Barros highlights the importance of the involvement of private companies in both countries.
The decision-making responsibility now lies with the Argentine government. Barros recalls that the Brazilian government has a clear position: it wants to establish a state relationship with the neighboring country.
Source: EPBR Agency
