ather’s Day found tens of millions of Argentinians in the dark. Power grid connections between Argentina, Uruguay, Paraguay, Chile, and Brazil allowed the darkness to spread across Latin America; Uruguay, for example, was also left almost entirely without power.
Though the incident is still under investigation, Argentinian officials were quick to dismiss the possibility of a cyber-attack, saying that it was not likely the cause of the massive outage. Currently, Argentina’s electricity provider, Edesur, is saying that safeguard mechanisms are responsible for the blackout. When a grid failure occurred between Argentina’s Yacryeta and Salto Grande power plants, safeguard mechanisms failed to operate and provoked a blackout. Though the Argentinian power grid had recently been subject to other vulnerabilities (specifically, an April transmission failure between power plants in Colonia Elia and Nueva Campana), the grid was supposed to be able to withstand another power failure.
Argentina’s massive blackout is certainly not the first of its kind to hit South America. In 2009, Brazil faced a power outage when a hydroelectric dam suddenly went offline, leaving millions in darkness. And in March, Venezuela faced a blackout that lasted several days. In Argentina, however, the massive blackout crippled a country that had already faced years of energy concerns symptomatic of a languishing economy.
In 2015, Argentina’s former Energy and Mining Minister, Juan Jose Aranguren, announced that the country was in an energy crisis. Energy investment in the country was insufficient, and energy consumption was growing at breakneck speed. This fueled the need for increased energy imports to make up for the lack of foreign investment, changing Argentina’s energy trade relationships with several of its neighbor. Argentina had previously been a large exporter of electricity to neighboring Uruguay. Within five years, however, the energy relationship between the two countries was flip-flopped. Argentina went from importing 19 GWh of electricity from Uruguay in 2010 to importing over 1300 GWh from the tiny state in 2015. Argentina also relied on its other neighbors for energy, importing emergency electricity from Brazil in response to the heat waves that hit Buenos Aires during the summer of 2015-2016.
Reliance on foreign energy has further contributed to financial concerns for Buenos Aires. In 2016, Bolivia announced that it would halt natural gas exports to Argentina unless the country paid the $300 million it owed Bolivia for the last two months of gas supply. The embarrassment was only enough to force Argentina to make an initial payment of $50 million. The year prior, Paraguay accused Argentina of arbitraging energy from its Yacryeta dam to Brazil—an illegal maneuver made by a country in desperate economic need. For Argentina, energy concerns have only contributed to what has been a “century of poor [economic] performance”. Lack of investment in the country’s energy sector has been seen as a result of a poor investment climate, rather than a lack of Argentinian energy resources. And these economic issues have stimulated new government initiatives. When Mauricio Macri inherited an ailing Argentinian economy after he became the country’s president in 2015, he vowed to return Argentina towards a path of sustainable growth.
In 2015, Argentina’s former Energy and Mining Minister, Juan Jose Aranguren, announced that the country was in an energy crisis. Energy investment in the country was insufficient, and energy consumption was growing at breakneck speed.
But Macri’s administration has only traded Argentina’s original economic problems for new issues and a lingering recession. Upon his inauguration, Macri promised to aid Argentina’s ailing economy by cutting inflation and stimulating foreign investment. Investment in the country’s energy sector, after all, was key to reducing the country’s looming debt and improving economic growth.
In 2015, Macri began cutting the country’s deficit. His first target? The country’s generous public utility subsidies, which had been implemented during Argentina’s Great Depression in the early 2000s. Every time Macri would cut public utility subsidies, however, utility bills would skyrocket for Argentine citizens. Macri’s efforts to slash the deficit thus created new economic problems, reducing consumer spending in other sectors and increasing inflation as electricity prices increased 1,317 percent between 2015 and 2019.
Macri’s budget cuts didn’t remain isolated to government spending in the energy sector. Public transportation fares have increased alongside price hikes on gas and electricity over the course of Macri’s term. Argentinian inflation rates are currently some of the highest in the world.
As the country awaits investigation into the June 16 blackouts, Alberto Fernandez, Macri’s main rival in the upcoming presidential elections, has expressed his disdain regarding the blackout on social media. “Power rates were increased as much as his friends wanted, and they made the greatest outage in Argentine history,” Fernandez tweeted, drawing a clear linkage between Macri’s decision to slash energy subsidies and the increase in utility rates paid by the Argentinian people. Ultimately, the investigation into the incident itself will reveal the true cause of the Father’s Day blackout. However, until then, Argentina will remain in an uncertain recession caused in part by its inability to use its energy sector as an escape route for its economic woes. Perhaps this fall’s presidential elections will produce a candidate that illuminates a solution to the country’s energy and economic concerns.