Energy crisis: what else can happen to Argentina? probably more of the same

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On Thursday, Alberto Fernández spoke from the Olivos Residence about the high temperatures and said: “I don’t know what else is going to happen to us Argentines, we had a heat wave that hadn’t been repeated for I don’t know how many years.” President’s words they tried to justify the power outages, which were repeated massively yesterday, especially in the AMBA.

Is the president seriously surprised by the rise in temperatures? All the countries of the world are suffering the consequences of climate change and are investing (sometimes not enough) to contain its harmful effects (including in their energy systems). In this sense, the exceptionality of Argentina is null.

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In fact, Alberto Fernández himself participated a few months ago in COP 26, the United Nations summit against climate change that was held in Glasgow. It is the government itself that has been placing strong emphasis on this issue, even with resounding failures such as Fernández’s proposal to exchange debt for climate action bonds.

So that he is not caught off guard next time, President Fernández should read the report of Global Risks 2022, that he World Economic Forum Posted last Tuesday. According to this work, the failure of climate action and the appearance of extreme weather represent the two greatest long-term concerns of the almost one thousand world leaders who participated in a survey (by the way, the possibility of a debt crisis appears in ninth place).

Conclusion: To avoid power outages, which have been repeated every summer for several years, a greater investment and a reorganization of the current energy system will be required. There is no chance that it will be the weather that will help. Temperatures will even continue to rise, at least for the next five years, as reflected in the study that the World Meteorological Organization did in 2021, precisely in the run-up to COP 26, in which Alberto Fernández participated along with a large delegation.

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Nor can the president be referring to the pandemic among the exceptional problems that affect Argentines. It is precisely that, a pandemic. With a peculiarity: due to the level of global interconnection that exists today and due to the level of contagiousness that Covid-19 showed, it is the first that, to a greater or lesser extent, it truly affected each and every country.

Being rigorous, Argentina was in a better position than other European nations, since, as the leaders of the government itself or the medical specialists who advise them affirmed on more than one occasion, our country could see in advance what was going to happen by attending to to what was happening on the other side of the Atlantic.

Inflation shouldn’t surprise anyone either. It is true that the injection of global liquidity, which began with the last international financial crisis more than a decade ago and deepened precisely to lessen the effect of the quarantines, is generating inflationary pressures at the international level like they haven’t been seen for a long time (The US posted 7.0% inflation in 2021, the highest since 1982.)

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But, again, it is a global phenomenon that affects all countries. The inflationary problem in Argentina is more structural and has been dragging on for much longer. In this framework, the final balance of the FDT government in 2021 was exceptionally bad: It was the fifth country in the world with the highest inflation (only behind Venezuela, Sudan, Zimbabwe and Suriname).

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In fact, the act in which Alberto Fernández said that he did not know what else was going to happen to us Argentines was held to announce the launch of the new Care Prices program. This program started in 2014 and Since then, inflation has shown a general upward trend., revealing that applied alone it is a totally ineffective tool.

World inflation at most can generate additional pressure, but it is not the underlying cause of the constant increase in prices in Argentina, a problem that remains despite changes in management.

With his words, President Fernández shows his parochial and simplistic vision of global problems. Governments around the world are addressing the same challenges. In the case of inflation, the president can hardly be surprised, since his government has refused to implement a stabilization plan to face its root causes once and for all.

On the contrary, the FDT ended up favoring the high-inflation regime, because it allowed it to implement a strong adjustment by liquidating spending (adjustment to which Cristina referred in her post PASO epistle).

The most important obstacles that Argentina is facing are the same ones that the world is facing (pandemic and appearance of new strains, extreme temperatures including droughts, inflationary pressures coming from the central countries) or are they the same domestic problems that we dragged along years (some decades ago), Like a vicious circle that we can’t break (inflation, debt, fiscal deficit, lack of investment, economic stagnation, increase in informality).

At this point no one can be surprised that yesterday the power went out in Quinta de Olivos, luckily they have had a generator for quite some time, apparently someone cautious assumed that this could happen.

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