The exodus from Argentina

The hard truth of the “Europe from South America”

Being from the Brazilian state of Santa Catarina, which borders Argentina in the south, I have been seeing a gradual increase of Argentinians arriving here since 2001, when the country experienced one of its countless economic crisis with a default in foreign debt as bonus. Since the number of Brazilians moving abroad in the last 20 years has also skyrocketed due to economic crisis and instability, it’s quite normal to ask “Why come to Brazil?”. It wasn’t different when I was living in Europe between 2015 and 2017, when I also noticed the influx of Argentinians, especially in Spain. Wherever I walked in Barcelona, I used to hear the Argentinian accent. Shops selling typical products from yerba mate to dulce de leche started to pop up to cater to the newly arrived immigrants.

Once a country that used to be the destination of Italians, Spanish and millions of Europeans from all the corners of the Old Continent until the World War II, Argentina has become a place of exodus. Collapsing economy, businesses shutting down, increasing unemployment, high taxes, skyrocketing inflation, endemic corruption, rising crime rates – this is real life that contrasts with the tourism campaigns portraying the country as “Europe from South America”. Seeing no future in their homeland, emigrating has been the best alternative for the middle-class to flee the ongoing economic hardship followed by political instability and social tensions. Not to mention the young population that are unable to make life plans in such a scenario of uncertainties, seeing their parents and grandparents unmotivated by one crisis after another. Even the Venezuelan immigrants who ran away from socialism in their own country want to leave, recognizing the same patterns that took their country to famine and chaos.

Young adults who see their purchase power decreasing or without any improvement perspective say that “the only way out is Ezeiza”, in reference to the main international airport located in greater Buenos Aires. Living for Argentinian middle-class means no money to go out or eat out, taking a summer vacation, let alone buying a house or a car, or saving money. Proper eating has become a luxury for the low middle-class and the poor and when the situation gets tough, the way to drink mate is to recycle the used yerba to dry under the sun. Forty percent of Argentinians are currently living in poverty.Where are Argentinians emigrating to?

According to UN DESA (United Nations Department of Economic and Social Affairs), 1.1 million Argentinians were living abroad in 2020 but the numbers are not likely to be accurate since a large number of Argentinians hold another nationality due to ancestral ties, and many young people have been unaccounted as they left the country under a tourist or a student visa and have never returned. The fact that many Argentinians can apply for a second citizenship – Spanish and Italian in most cases – makes it easier to emigrate compared to other nationalities in Latin America, where many migrate illegally to North America and Western Europe. The Italian Consulate has issued over 78,000 citizenship requests in Argentina from 2010 to 2020, and high demand serves as a thermometer of hopelessness and unconformity with local politics. This is a pattern also observed in the Spanish Consulate. Data from Taquion Research Strategy point out that five out of ten Argentinians plan to emigrate, and eight out of 10 would leave if they could. Overall, the ongoing economic crisis, criminality, political instability, lack of career opportunities and long-term life plans are the core motivations to leave. Imagine yourself raising a family and buying a house while earning a low salary in an increasingly weakening currency, if not unemployed.Spain is the main destination for 25,65% of the Argentinian emigrants, followed by the United States (21,24%), Chile (7,18%). Italy, Uruguay, Bolivia, Paraguay, Brazil and Canada are also popular destinations, as well as Israel since Argentina houses one of the largest Jewish communities in the world. Other countries concentrating Argentinians in smaller numbers include Australia, New Zealand, Peru, Mexico, France, UK, Germany, Switzerland, Netherlands, and South Africa.

Under all the uncertainties, a corporate career in Argentina is out of the question. For the affluent Argentinians, an MBA in the USA has become a popular path to an international career for those with management and technology backgrounds. Meanwhile, for those who neither get a working visa to the US nor hold a European passport, the alternative has been to take regional positions in neighboring countries. Among students, a working holiday has also been a popular option to get into Australia and New Zealand.

Wealth tax and company exodus

Despite its abundant natural resources and a highly educated population in comparison to the rest of Latin America, the private sector in Argentina is eroding after decades of populism guided by Marxist ideologies that have infiltrated local culture, politics, and all aspects of social life. As it happens all over Latin America, a hostile environment to business, private property and free market has become mainstream. As a result, government controlled prices, obstacles on importation and rotation of utilities, predatory taxes, outdated labor laws, trade unions acting like mafias, legal uncertainty, ever-changing regulations and a lot of corruption.

In addition to brain drain, Argentina also faces an exodus of companies fed up with excessive regulations and costs while infrastructure all over the country has been stuck in the 1990s, 1980s, even in 1970s. Not only small and medium businesses are closing the doors, but also the big companies and multinationals are giving up after sales decline, consumption decline, import restrictions and exchange regulations that complicate international payments. The list of companies that have canceled their operations in Argentina include LATAM, Emirates, Qatar Airways, Norwegian, BASF, AXALTA, Saint Gobain, Nike, Falabella, Walmart, and Mercado Libre.

To bring more insecurity in the private sector, in June 2020 the Argentinian government expropriated the agribusiness conglomerate Vicentín, the main producer of biodiesel and an important exporter of grains, among other segments it is involved. In August 2020, president Alberto Fernández announced that mobile phone, internet, and cable TV providers would be expropriated. Who is going to invest in a country like this?

In 2000, Argentina used to receive 20% of all the foreign investments in Latin America; in 2010, it decreased to 5%; and in 2020, it was only 3%. By 2020, wealth taxation law was also approved, instantly pushing 25,765 Argentinians to apply for permanent residence in Uruguay, where immigration laws targeting foreign investments have reduced the minimum amount for a property from USD 1,7 million to USD 380,000 under a minimum stay of 60 days a year.This is neither the first nor it will be the last Argentinian exodus, but the difference now is that the feeling of hopelessness is so strong that it has stripped off the mask of “the most European nation of South America”. The economic, social, and political indicators show that Argentina is closer to countries such as Greece, Egypt, and other nations synonymous with political unrest, stagnant economy and massive poverty. Underneath the surface of tango, wine, steaks and soccer, a list of all the political unrest, massacres, state coupes and foreign investment defaults in Argentina along the 20th century requires an encyclopedia.

Will Argentina implode as Venezuela?