‘Mendoexit’: Argentina’s wine country wonders whether to go it alone

Argentina’s prosperous Mendoza province, renowned for its velvety Malbec wines and glorious mountain scenery, has long considered itself different from the rest of a volatile country that has been in economic decline for decades.

Now that Argentina is in default on its international debt for the ninth time and on the verge of economic collapse, many in Mendoza — the only one of the country’s 24 provinces to continue servicing its debts during the 2001 financial crisis — are wondering whether they might not be better off going it alone.

Discontent at the Peronist government’s direction intensified after Buenos Aires last month blocked the $1.2bn Portezuelo del Viento dam project, billed by local media as the “development project of the century”. The move in one of the few provinces in Argentina governed by the opposition prompted some in business and the media to float the possibility of a “Mendoexit”.

“It is obvious that [blocking the dam] is a political manoeuvre aimed at domesticating the provincial government,” said Alfredo Cornejo, governor of Mendoza until last year and who now leads Argentina’s Radical party, historically the Peronist party’s main rival.

Mr Cornejo, who has indicated he harbours presidential ambitions, has told local media that Mendoza could thrive as an independent nation. He argued that the dam decision was part of a government plan to take advantage of the coronavirus crisis. The pandemic has decimated the budgets of prosperous provinces such as Mendoza, which unlike poorer regions received little government support to combat the disease, leaving them less able to counter Buenos Aires.

“Now all the provinces depend on help from the national government so that they can be kept under permanent submission,” he said.

Unhappiness with central government among mendocinos, who are often said to have more in common with their neighbours in Chile than their overlords in Buenos Aires, runs deep.

Argentina map

Enrique Vaquié, Mendoza’s economy and energy minister, said the government had “got entangled” with four decades of resentment. The frustrated attempt to build the dam — with money the province has been owed by the state for more than 15 years — was “the straw that broke the camel’s back . . . I don’t see space for Mendoexit today, but there is a lot of anger. If the national government keeps on [persecuting] us, that will get worse, and I’m not sure how this will all end.”

Not all mendocinos are in favour of secession, which is forbidden by the country’s constitution. But a recent poll conducted by consultant Reale Dallatolle on behalf of Spanish entrepreneur José Manuel Ortega Fournier, who established a prominent winery in Mendoza, showed 35 per cent of respondents would be happy for the province to leave Argentina.

Those in favour of secession argue that the economy of Argentina’s fourth largest province, which has a population of almost 2m, is strong enough to stand alone.

Mendoza consistently runs a balanced budget and, if freed from “Argentine risk”, would pay less interest on its debt. It is self-sufficient in energy, including hydro, oil and gas, has a burgeoning tech sector and wine industry, is a hotspot for tourism as it is located at the foot of the Andes — which are themselves rich in minerals — and is strategically located at a crossroads between the Atlantic and Pacific oceans.

“There is an undercurrent of thought in the productive sector in Argentina that it gives more than it takes,” said Mr Cornejo, who argued that while Mendoexit might not be viable now, the threat could be used to pressure Buenos Aires to restructure the tax system and allow provinces to collect levies themselves — something long sought by regional politicians.

But Anabel Fernández Sagasti — a leftist senator from Mendoza who has publicly supported the Portezuelo del Viento project and recently led a botched government attempt to expropriate the bankrupt Vicentin, the country’s largest grain exporter — rejected the idea of Mendoexit.

“This is no time for absurd proposals,” she said. “Instead [we must focus on] issues that are completely viable . . . This is an exceptional moment where many mendocinos are distressed because we have spent many days in isolation and people don’t know if they will keep their jobs.”

The government’s intervention in both Vicentin and Portezuelo del Viento is a worrying signal for foreign investors, say analysts.

“There is tremendous ambiguity about Argentina’s economic direction,” said Benjamin Gedan, who leads the Argentina project at the Wilson Center in Washington, DC.

The international community was searching for clues on the new administration’s leadership style after Alberto Fernández became president in last year’s elections, he said, given fears that Cristina Fernández de Kirchner, the powerful vice-president and fiery populist who led the country from 2007-15, might play an outsized role.

The potential for the government’s economic direction to fuel separatist sentiment is adding to the concern. “Thwarting a major infrastructure project and picking a fight with one of Argentina’s most competitive provinces is not a policy designed to reassure,” said Mr Gedan. “Maybe it’s naive to think that partisan considerations would be subordinate to the national economic interest.”