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Argentina’s Oil-Producing Provinces Threaten Supply Cuts Amid Financial Tension with President Milei

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Oil-rich Argentine Provinces Vow Supply Cuts in Dispute with Milei

Argentina’s major oil-producing regions are threatening to impose supply cuts across the country in response to reduced funding, a move dictated by President Javier Milei. This dramatic announcement underscores a growing tension between the central government and the provinces over financial matters.

Speaking to C5N television on Saturday, Governor Ignacio Torres of Chubut province in the south made the provinces’ stance clear, stating, “Not a drop of oil will come out on Wednesday if they don’t respect the provinces once and for all and take their foot off our back.” Torres, along with leaders from five other Patagonian provinces, issued a warning on Friday indicating a potential halt in oil and gas deliveries stemming from financial grievances with the Economy Ministry.

The contention emerged following President Milei’s decision to withhold approximately 13.5 billion pesos ($15.3 million) in federal tax revenue transfers to Chubut, a move that sparked significant anger amongst the provincial leaders. Economy Minister Luis Caputo defended the action on social media, explaining that the cutback was a measure to address Chubut’s outstanding debt to the federal government—a scenario not exclusive to Chubut, as ten other provinces reportedly owe money as well.

Reacting to the situation, President Milei labeled the southern provincial leaders as “fiscal degenerates” in a message on social media. The exchange of harsh words highlights the depth of the rift between the central and provincial governments.

Insights into the conflict are provided by Artemio Lopez, a prominent analyst and pollster, who believes that President Milei underestimated the situation. “This is an unprecedented conflict due to its reach,” Lopez said. “There is a rebellion in the provinces, and a mistaken assessment by Milei about the level of conflict the central government can engage in with various political actors.” Lopez further contrasted Milei’s confrontation with the unpopular Congress to the current scenario involving the governors, noting the latter received a higher vote percentage in the last election than the president.

Argentina, ranked as the world’s 39th largest exporter of crude oil and the 20th largest of gas, relies on imports for its refined fuel needs. Amidst this backdrop, President Milei’s recent trip to the United States to attend a conservative gathering and his vocal criticisms of provincial leaders on social media have ignited further controversy.

Following a public denouncement of the provincial opposition as akin to a “Chavista threat” by the president’s office, Governor Torres expressed hope for dialogue while highlighting communication challenges with the central government. This dispute comes at a time when Argentina is facing mounting protests over price and fee hikes, as President Milei embarks on an agenda of deregulations and fiscal adjustments that significantly impact the nation’s socio-economic landscape.

The conflict underscores not only the strained relationship between Argentina’s central and provincial governments but also poses significant questions regarding the future of the country’s oil and gas supply, as well as broader economic stability.

Alexandra Bennett
Alexandra Bennetthttps://www.businessorbital.com/
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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