Tarifazos: How Argentina’s Population is Being Forced to Subsidize the Earnings of Multinational Companies

In light of the current economic crisis in Argentina and weeks of mobilizations against the tarifazos which are the planned increases in the tariff of basic public services, such as electricity, water, residential gas and transportation, Peoples Dispatch spoke with the assistant general secretary of CTA-Autónoma (Argentine Workers’ Central Union- Autonomous), José Rigane, who is also the general secretary of the Sindicato Luz y Fuerza Mar del Plata and was secretary general of the Energy Workers’ Federation.

Peoples Dispatch (PD): What are the tarifazos[increases in the tariffs]? When did the tarifazosstart and what is the goal?

José Rigane (JR): Tarifazos are a part of a policy that has been carried out by the government of President Mauricio Macri since he assumed office in December 2015. It is also a part of an initiative to intensify and expand the energy model of 1990s, to privatize it and hand it over for foreign investment.

The policy of tarifazos, the steady and constant increase on the tariffs of basic services, began when Macri came into power. He began executing it in 2016 and announced that its implementation will continue till the end of 2019, which does not mean that it will not continue after. It has been documented that from January 2016 till now, the cost of electricity has increased more than 3600%, gas more than 2400%, water 1118% and transportation 500%.

This policy of tariff increases is justified under the concept that energy is scarce and you have to pay for it and it tries to make the concept of energy as merchandise prevail as in Haiti. What we understand, defend and believe is that energy is a human right, a social resource and moreover is irreplaceable. Therefore, everyone should be able to access it, which does not mean that it should be free, but the reality is that energy is necessary to live a dignified life and increasing access to it helps reduce poverty.

This actually was the stated objective of this government, but according to what has been happening in the last three years and after having signed the agreement with the International Monetary Fund, it is clear that everything about reducing poverty to zero, has been nothing more than a campaign slogan and a verbal pronouncement. In the last 3 years of Macri’s administration, he executed a very severe adjustment policy, with very serious consequences, for the whole of the workers and popular sectors and with the determination to continue taking away and establishing inferior rights for the entire labor movement.

Tarifazos have become a source of an extraordinary income for the multinational groups, which are in charge of the entire energy model in Argentina. We no longer have national companies or public or society-state that respond to the interests and needs of the Argentines. At the same time, these tarifazos are a continuation of what had been done by the previous government, with the difference that, the previous government paid the multinationals through taxes and now it is being paid directly from the user’s pocket.

The subsidy policy has been modified and the users have to directly face the increases and therefore, they end up in a situation where they are unable to pay and are even forced to borrow money in order to pay for public services. This, coupled with a policy of adjustment in general, in which the purchasing power of workers is declining and and where the value of the Peso against the USD is falling.

The reason for the resistance to tarifazo also happens in a context where the government has subsidized oil and gas companies, establishing the value of a million BTU [British thermal unit] which is an English measure of gas for USD 7.50, which these multinational companies pay, when in the international market it does not exceed USD 2.50 or 4. This is the root cause, the fundamental cause for which we, the Argentinians pay what does not correspond to us and the whole world subsidizes these multinational groups that appropriate the wealth of Argentinians, the resources of the Argentinians, extract them as per their huge appetite and also export them and earn money. In other words, they make money with the Argentine resources without caring that for Argentinians this does not mean an improvement in the quality of life and much less a better price to produce, to extract more oil and more gas.

Also, these prices are linked to the central goal of this government, which is exploiting the geologic formation that exists in Argentina, the Vaca Muerta [known as the host rock for major deposits of shale oil and shale gas], and the only way the exploitation of these non-conventional hydrocarbons can be done, is that, the oil has to have a certain price that is obviously anti-economic, and no company is going to work so much at a loss.

PD: What is the relationship between the economic crisis and the 50% devaluation of the Argentine peso?

JR: Well, what this government has done is to deepen the energy model of privatization and foreign investment is by dollarizing the tariff. The tariff includes a 35% of the cost of generation, 30% of the cost of distribution, there is a small percentage for the cost of transmission and then the rest is tax. In addition, the taxes are different in different provinces. They are confusing by nature because the national taxes make no sense, neither provincial, nor municipal and therefore, we end up having a different tariff in each province.

Firstly, if we take the province of Buenos Aires, we will find that we have as many prices as the number of companies existing there. The truth is that the dollarization of tariff and the development of a high inflation process are precisely the reasons that directly affect the value of the tariff and the final price of the fuel. This is also the demonstration of what the government has sought to do and permanently supports, that is, to favor the multinational groups and international or multinational companies, with rates that do not even hold in the international market, which is directly linked to the economic crisis, to devaluation of the Peso and also to the agreement with the International Monetary Fund.

Of course, one cannot fail to mention that this policy, particularly tends to favor the United States, in particular, in the agreement made by the government, when Cristina [Cristina Fernández de Kirchner, former president of Argentina] was there, evicting Repsol and incorporating Chevron, giving it primacy in a relationship that not only has to do with the energy production but also to do with the presence and development of military. Across the world, where Chevron is present, the military model of the United States is too.

PD: What are the sectors most impacted by the tarifazos?

JR: Essentially the ones with the least purchasing power, the most poor and impoverished sectors, the 33% that is below the poverty line, the people living in states of homelessness, the workers’ movement. These are the most impacted sectors, because they have the most difficulties in dealing with the payment of light, gas and water bills. And of course, there are those who have money and have no problem, and those who have money, can have a swimming pool and can pay for all the water for it. The issue is that there are those who cannot have drinking water because they are not able to pay for its consumption or those who cannot have more than one light because they cannot pay a higher consumption.

We believe that this government is eliminating the social tariff. The social tariff was a creation of the Sindicato Luz y Fuerza Mar del Plata in 1929. One should take a look at our website, the website of the Energy Workers’ Federation of the Republic of Argentina (FeTERA) to find out about the history of social tariff. A social tariff aimed at 40%, was the responsibility of the company and not the state. When Macri came and Juan José Aranguren became the energy minister, the first thing he did was to take back the responsibility from the private company of lowering the tariff [or providing subsidy] for those who cannot pay for it and gave it to the state, so that the Argentinians have to pay for it. And now he took a step further and finally is eliminating the social tariff at the national level and is passing this responsibility to the provinces, municipalities, which in practice means that the social tariff will cease to exist.

In summary, whom do they hit? Whom do they harm? The tarifazos harm the middle-class sectors, the poorest sectors, the most precarious, the retirees, the pensioners, the ones who have a minimum wage, who cannot even afford the one-third of the basic food basket. This is the reality of Argentina, at a time when the energy [electricity] is out of the reach of more than 40% of the population in general terms.

PD: What has been the response of trade unions and social movements? What the action plan are you carrying out to fight these tarifazos?

JR: As a matter of fact, the focus has been to be on the streets and the mobilization. We are carrying out mobilizations across the country and trying to have one every week. The plan to carry out mobilizations began in January and now the mobilizations and demonstrations are developing throughout the country, in every province, in every city with dissatisfaction against the tarifazos.

Of course, we understand that in order to tackle the fundamental issue, we must change the energy model. In other words, the CTA-Autonomous’ campaign “yo no llego” “I don’t have enough”, is a campaign that deals with a specific situation. It is trying to group and mobilize those who are not in a position to pay their electricity, gas or water bills and ask them to publicly condemn the debt. This does not solve the fundamental issue, but it allows confronting the situation in a unified way. The initiative that there be differentiated tariffs also does not solve the problem nor does extending the term to pay solve the problem. The fundamental problem is only solved if we, the Argentinians have the necessary unity to confront this government and regain sovereignty and change the energy model that is based on privatization and foreign investment.

This requires a great unity and clarity, so that we get out of this situation which we are in. We have to be sovereign again, so that, we, the Argentinians be the ones who decide: what we produce, for whom we produce, that we establish, what will be the cost, taking into account the cost of production and of course the essential profit necessary for a company. But not an extraordinary income that the multinational groups are earning now, which the Argentine people end up paying. This is what is happening in our country, which is why we find it impossible to pay.

It is necessary to execute the plan and be convinced and have essential argument to confront the liberal, neoliberal policy, especially this policy which claims that the energy remains as a commodity that we must pay for, because it is scarce. Moreover, they invent reasons and supposed necessities such as, make efficient use, save energy, etc. What is the point of all this? For example, we can extract oil and export it as crude oil, as raw material, without incorporating the added value, but in Argentina, it is a business and we end up buying refined oil from outside.

Well, this shows an important and profound degree of the dependence of Argentina, a subordination to international capital and the lack of self-determination, the lack of sovereignty, which we understand needs to be resolved. It is only possible if we are able to understand that energy is a human right, that energy is a social good, that it is irreplaceable and that it obviously has to be in the hand of the state, with the development of a social policy, which is led by the representatives of the companies, of the state, of the workers, of the organizations that defends the interests of the consumers, of the users and also of the environment. This will allow us to have a management and administration of companies with a great level of social participation. This way, we will be able to make rational use of energy, we would know how to save energy in the present and obviously for the future generations.

Having energy as a geopolitical value, where countries like the United States are able to destabilize the Venezuelan government to keep possession of its oil and invade others and develop warlike conflict to keep possession of their oil, it is clear that we, in Argentina, have a battle of high cultural content. In Argentina, energy is not a sufficient motive to call mass mobilizations, as in the case of, for example, defending public school, public health, the childhood and the old age. Well, it’s a very hard battle and it’s a battle that is obviously happening in the field of ideas.