Argentina Caught in the Middle of the US-China 5G War

Argentina and Vaca Muerta in particular found themselves this week in the midst of the dispute between the US and China over communication technology and data control. The US ambassador to the country, Peter Lamelas, confronted the Neuquén electric distributor CALF, which had begun negotiations with Huawei, and Ámbito was able to exclusively access the latest letter sent by the cooperative. The episode exposes the tensions of a foreign policy that contradicts some central tenets of libertarian economic policy and increasingly compromises the interests of local entrepreneurs.

"The reason for my urgent request is that the US government is implementing a policy that restricts or revokes visas for executives expanding Huawei's operations in Argentina," says the message received over the weekend by a manager of the Neuquén distributor from Economic Affairs Attaché, Andrew Dills.

The cooperative interpreted the message as a threat and decided to make it public. It sent notes to the Ministry of Foreign Affairs and the US Embassy. Hours later, Lamelas stated that "this is a matter of national security for the US, Argentina, and for the energy companies investing in Vaca Muerta and Neuquén." He added: "We are willing to help identify reliable companies and suppliers.**

The restriction with which the US threatens the Argentine firm would affect 18 people. The list includes the entire Board of Directors of the cooperative and its president, Marcelo Severini.

Ámbito was able to exclusively access the latest letter sent by CALF after receiving the letter from US diplomats. In the document, the cooperative agrees to meet with the ambassador, something that, according to this media outlet, could happen next week. However, of course, this does not imply that the Neuquén firm will automatically withdraw from negotiations with Huawei.

"We appreciate that the response was formulated in writing and in an institutional manner," begins the text. It then emphasizes that the cooperative's networks are "multi-provider" and that they have equipment from various origins: American, Brazilian, European, and Asian. The distributor clarifies that the selection of equipment is based on "technical, financial, and economic" criteria.

On the Chinese diplomacy side, they went all out. "The US has deliberately stoked the 'Chinese threat theory', generalized the concept of national security, and, through visa revocation, blatantly prevented an Argentine company from having normal cooperation with Huawei," stated the embassy in a statement published on its official networks.

It continued: "These practices fully reflect the arrogance and prejudices of the US, constitute a serious disrespect towards the sovereignty of other countries, and severely undermine the principles of the free market, which China firmly opposes."

CALF plans to keep the issue on the agenda. In addition to the meeting with representatives of the US Embassy, its executives will participate at the beginning of next week in a meeting at the Permanent Commission of Cooperative, Mutual and Non-Governmental Organizations Affairs. They will also receive representatives from various cooperatives across the country who will come to show solidarity with the distributor.

So far, despite the request from the Neuquén distributor, the declaration of repudiation that entered the Argentine Congress, and the international media coverage the episode has received from outlets like Financial Times, El País, Bloomberg, Reuters, and The Washington Post, the Argentine Ministry of Foreign Affairs has not yet made any statement regarding this matter.

The Dilemma for the Government

Since the beginning of his administration, President Javier Milei has been loudly proclaiming that Argentina's foreign policy will follow the guidelines of the U.S. and Israel. However, the episode exposes a tension that is difficult to resolve.

"If the government pressures provincial companies or subnational governments in the Vaca Muerta ecosystem to pay a premium to avoid Chinese technology, it raises the cost of the project that Milei most needs to showcase as an economic success," stated Doctor of International Relations Esteban Actis.

"It is a contradiction between geopolitical alignment and a central economic objective of his administration," summarized the professor and researcher on his X account.

In response, former Vice President of the Central Bank (BCRA), Jorge Carrera, added another element: "It would be interesting to understand why 30% more would be paid to American technology firms in Vaca Muerta and not to Argentine companies to supply the pipes."

Moreover, the conflict erupted during critical hours for the government, which has faced a succession of setbacks in foreign policy and Brazil's decision to downgrade diplomatic relations to the level of chargé d'affaires for the first time in history.

A Blow to the Core of the Narrative

The discussion strikes at the core of the libertarian narrative. That which holds that "foreign policy does not influence business," that "winners should not be chosen," and that there should be no push for the development of local suppliers for the country's main oil and gas project because that would jeopardize the viability of the initiative.

Now, a foreign power appears that, under arguments of national security, seeks to condition the choice of suppliers for an Argentine company.

As if that weren't enough, the government has just lost the debate over the foreignization of land, both in parliamentary terms and in public opinion. It had to endure massive protests in various parts of the country and expressions shouting "the homeland is not for sale" from singers, actors, and football players who rarely speak politically.

The idea that the U.S., in the words of its own ambassador, intervenes in the details of the "national security" of Vaca Muerta leaves Milei in an uncomfortable position. Especially at a time when the discussion of sovereignty has unexpectedly entered the center of the public agenda.

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