VACA MUERTA DIPLOMACY

4111This time it’s not wheat, or beef or soybeans. The name of the new Argentine dream is shale oil and gas. Its surname is Vaca Muerta. And, as in the past, many heralded triumphantly that — finally — the time of Argentina’s well-deserved grandeur has come. While even more sober local and foreign experts have a very optimistic view, cynical pessimists point out to the difficulties ahead. And one definition says that a pessimist is nothing more than a well informed (or experienced?) optimist.

Fracking — the technique used to obtain the hydrocarbons by injecting high pressure water mixed with other elements — makes it possible for gas and oil to be obtained from certain geological formations. Vaca Muerta is one of them and is quite huge, given that it covers an area of approximately 30,000 square kilometres. The average depth of this particular formation is 2,900 metres. A technically — and thus financially — challenging project. But by no means daunting, given the amount of expertise and financing to be found out there, in the world.

What the cynical pessimists find really daunting is the kind of local troubles likely to be triggered by such a project in view of past experiences. A short — and of necessity incomplete — list would start with the difficulty in finding willing foreign investors. The optimist will immediate argue that the recent contract with Chevron proves that they are out there, ready, willing and able to come in. The pessimist will remind everybody that something might be amiss, given the fact that the government has kept some clauses of the contract under a shroud of secrecy.

Then the pessimists will point to other conflicts waiting to happen. Fracking has environmental effects. For starters, the great amounts of water it uses and the amount of carbon dioxide it releases. Inevitably, the environmentalists will oppose. Some will — albeit grudgingly — accept mitigating measures for the sake of the greater good of jobs and wealth for Argentina. The fundamentalists will close ranks and take extreme positions. We have seen this happen. Just ask our Uruguayan neighbours about Botnia and blocked bridges. True, in that case, there was political manipulation totally unrelated to the issue. Something that could repeat itself in the case of Vaca Muerta, especially if you think that the project involves a list of “Argentine irritants” which includes foreign investment — a normal target of choice — as well as power and financial relations between the federal government and the provinces and, possibly, politicians from opposition parties who could well use the project to make their competitors’ lives difficult. Especially because — to make matters worse — developments on Vaca Muerta coincide with a presidential election period (that for all intents and purposes has already started) and with what looks as a non-Queensbury political fight.

Now for the good news. Vaca Muerta is in its early days. It is not yet a hot, politicized issue. Perhaps it is not a dream to think that politicians might find a way to agree to keep it out of the electoral agenda. And, in an excess of idealism, they might agree to offer the electorate proof of maturity and — in parallel with political campaigning — create a cross-party setting in which to agree on a series of rules and policies which maximize the benefits and minimize the damages of the project. After all, other countries — like Australia — seem to be managing the balance quite well. In all likelihood, Argentina could benefit from such experiences. And friendly advice from them is likely to be available, at very low cost or no cost at all. And much less controversial than, say, advice on financial matters from the IMF. A win-win situation because a clear show of willingness to improve local standards and transparency in terms of the environmental game, might be as attractive to some as is financial predictability. Thus, no need for shrouded clauses. There are many out there willing to cooperate and Argentina should grab the chance.

Moreover, one of the cross-party decisions could be to leave the whole regulatory operation in the hands of expert civil servants who would do their job in line with the policy of the government of the day. After all — and quoting a local oil engineer — to fight cancer you get a medical specialist, not a shareholder of the clinic. The latter might set the price of the treatment service, but the actual medical practice needs a specialist.

So, with some luck, the country could go into the depths of Vaca Muerta with international support and respect. The final objective should be — to use the words of the Australian Centre for Sustainable Mining Practices — to ensure “recognizing that environmental accountability, social responsibility and commercial success are now inseparable concepts.” Too dreamy? perhaps. But to quote Raymond Aron, we have the duty of hope.

@andresfederman

CREDITS: BUENOS AIRES HERALD