With the financial details finalised this month, it looks increasingly likely that Argentina will have the most advanced high-speed rail service in the whole of the Americas in four years time.
For President Cristina Fernández de Kirchner, it represents a ‘leap into modernity’. Some opposition parties consider it a waste of money, others a clear opportunity for corruption.
The so called ‘tren bala’ (bullet train) will run between Buenos Aires and Córdoba, the country’s two biggest urban centres. It will also pass through third-city Rosario, whose port is the departure point for most of Argentina’s exports.
Travelling at a maximum speed of 320kph, journey times from the capital are estimated at 85 minutes to Rosario and a further 90 minutes to Córdoba, a major reduction from today’s route (four and ten hours, respectively, by road).
The new train will ‘raise the profile of the region’ according to President Kirchner, ‘and connect the country’s most important agro-industrial corridor’.
Transport Secretary Ricardo Jaime added his praise to the initiative, claiming that it is ‘thinking for the future’ and that will ‘raise the technological level’ of the country. Government officials estimate that the construction work involved should create some 5,000 jobs, while another 25,000 will be employed indirectly.
Yet the tren bala vision has not been greeted with the same enthusiasm outside of government circles. Deputies from opposition parties have criticised the lack of debate for such a major public investment. Popular daily Clarín reported in May that lawyer Ricardo Monner Sans and former member of Congress Mario Cafiero have filed a lawsuit against the cabinet members directly involved with the project. Specifically, the investigation will be based on allegations of a ‘violation of public duty and fraudulent administration of state wealth’.
Who Pays The Bills?
Most criticism of the tren bala is directed not at the train itself, but on the burden of financing its construction and maintenance, which will be carried solely by the state. Earlier this month, the government agreed financing terms with French bank Natixis for state-guaranteed debt totalling US$3.9bn. The debt will be backed up by treasury bonds, and is to be paid back over a 30-year period.
Although the government has assured the public that this financing programme is both feasible and good value, others are not so sure. A study by private consultancy Econométrica claims that the legacy of debt default in 2001 is such that raising this sort of capital is extra costly for Argentina. The report – published in La Nación – estimates a premium rate of interest at around 11%. Based on this, Econométrica calculates that as much as US$1bn is required just to cover the cost of financing the project.
The timing of the debt issuance is also a concern, say independent economists, given the current downturn in global financial markets. Argentina is already considered a high-risk country by foreign investors, an image that has been sharpened significantly by the 100-day government-farmers conflict.
A study published by London-based Financial Times this month shows that public debt has surpassed the level of 2001 (relative to national income), raising fears over another default. While the report concludes that there is little immediate risk of this happening again in the near future, taking on large sums of debt at this point is unlikely to calm investor concerns.
First Things First
With such sums of money involved, the question most people are asking is why the government is prioritising a luxurious high-speed train over other basic and essential requirements. Nowhere is this more apparent, or relevant, than in the energy sector. The country’s energy grid is already at full capacity, and as the onset of winter drives up power usage, blackouts remain a constant threat in Buenos Aires.
Meanwhile, Argentina’s existing rail network has practically been abandoned by successive governments, leaving many passengers travelling on dilapidated and insecure trains. The overcrowding is such that at peak times, many are forced to travel by clinging to the sides of the locomotive as it trundles at a restricted speed. Delays are considered the norm. Kirchner herself has acknowledged the deplorable conditions of the suburban lines that fan out from the capital, and pledged to continue modernising the system.
Critics of the tren bala proposal argue that addressing these problems could significantly improve living standards for millions of people. By contrast, given the scale and expense of the project, the price of a ticket on the tren bala will almost certainly exclude large swathes of the domestic market. If state subsidies are employed to make the journey more accessible, the burden will once again fall on the taxpayer.
Trains For All
It is the idea of regenerating the rail network for the benefit of everyone that inspired a collection of social and political organisations – led by two brothers from Rosario – to launch an internet campaign against the tren bala. Their movement ‘tren para todos’ (train for everyone) calls the tren bala project ‘elitist, anti-national and antidemocratic’. It proposes instead that the money be used to build 18,000km of track for both passenger and cargo trains, which will connect all regions of the country. Launched in May, the online petition has already accumulated in excess of 700,000 signatures.
“We are not against the tren bala, but the decision to invest in such a project now, without anyone even asking for it,” explains Angel Contestí, co-founder of the campaign. “It is purely a business deal”.
The movement is already close to achieving its objective of one million signatures, when it will present the petition and proposal to the National Congress. There are also plans for a series of demonstrations on 9th July, independence day.
“We are encouraging people to mobilise in support of the recuperation of the rail network in towns and train stations around the country”.
More information about the ‘Tren Para Todos’ campaign can be found at www.trenparatodos.com.ar