Prospects for Closer German–Argentine Cooperation in an Era of Global Diversification

When a gaucho reins in his horse on the vast Argentine Pampas, lets his gaze wander across the seemingly endless horizon, and calmly extends his hand in greeting, the gesture embodies more than folklore. Indeed, it symbolises trust, self-reliance, and the ability to forge partnerships in a rugged and often-unpredictable environment. The gaucho tradition – defined by freedom, adaptability, and loyalty – emerged in a region that has long balanced external influences with a strong sense of distinctive identity, which offers a striking parallel with today’s geopolitical landscape.

Few countries in Latin America illustrate this balancing act as clearly as Argentina – a country that has historically been closely linked to Europe, is culturally distinctive, and is repeatedly compelled by economic circumstances to seek out new paths and new partners. From the formative influence of Europe in the 19th century to the country’s present-day role as a major agricultural producer and supplier of raw materials, Argentina demonstrates that cooperation is not a static relationship, but a dynamic process.

At a time when Germany and Europe are redefining their international relationships between transatlantic ties, greater strategic autonomy, and global diversification, countries such as Argentina deserve closer attention. After all, they embody precisely the combination of shared values, complementary interests, and pragmatic openness that is likely to underpin successful partnerships in the future. Like the gaucho on the Pampas, Germany and Europe today must also learn to navigate confidently through changing terrain by preserving established alliances, forging new partnerships, and shaping their external relations over the long term based on shared values, common interests, and mutual reliability.

Reform agenda creates new investment opportunities

Whether speaking to government representatives, business leaders, academics, or members of civil society in Buenos Aires or elsewhere in the country, there is a widespread sense that a favourable window of opportunity has opened up – one that Germany and Europe should not allow to pass unused. Conversations with stakeholders from across Argentine society suggest that after decades of economic volatility and political swings, the country may once again have reached a point at which fundamental strategic choices can be made. The deep-rooted cultural, social, and economic ties that have developed with Europe over many generations provide a valuable foundation for this development. Under the presidency of Javier Milei, these longstanding links are being complemented by a markedly market-oriented reform agenda focused on deregulation, fiscal consolidation, and the targeted promotion of foreign investment. While these policies have contributed to greater macroeconomic stability and have improved Argentina’s standing among investors as well as with the International Monetary Fund and particularly also with libertarian and economically liberal circles, their negative social side effects and microeconomic consequences – including sector-specific business closures, job losses, and rising informal employment – remain the subject of considerable debate and criticism. Structural challenges also persist, not least the continued prevalence of corruption in the public sector. Although the government came to power on an anti-corruption platform directed against the so-called casta – that is, Argentina’s entrenched political establishment – there has thus far been little evidence of comprehensive institutional reforms designed to strengthen transparency and oversight bodies, nor does Transparency International’s Corruption Perceptions Index indicate any significant improvement. The extent to which clientelist structures within the public sector have actually been dismantled also remains disputed. In addition, the government and its wider political environment are currently facing several allegations, scandals, and corruption investigations – including the LIBRA, ANDIS, and Adorni cases – that have raised serious doubts as to whether long-standing structural problems in areas such as public procurement, subsidy programmes, and taxation have genuinely improved. Any assessment of Argentina’s suitability as a strategic partner should therefore consider not only macroeconomic indicators, but also legal certainty, planning reliability, transparency, and the dependability of public institutions.

A central instrument of the current reform agenda – and one intended specifically to address long-standing planning uncertainty – is the Incentive Regime for Large Investments (RIGI – Régimen de Incentivo para Grandes Inversiones). Through long-term stability guarantees, tax incentives, and clear regulatory frameworks, the scheme aims to channel capital into strategic sectors including mining, energy, and technology. This could prove particularly attractive to German and European companies, which traditionally rely on long-term investment horizons and predictable framework conditions. In a country where changes in government have frequently been accompanied by abrupt regulatory shifts, such stability mechanisms carry particular weight. At the same time, investment decisions will continue to require careful consideration, particularly in light of ongoing macroeconomic and political risks.¹

Although there is currently no obvious Peronist challenger for the 2027 presidential election, the volatility of Argentina’s political system means that it remains uncertain whether the reforms achieved thus far will prove durable or whether a future change in government could reverse them, at least in part. Moreover, the impact of social tensions and public dissatisfaction is not to be underestimated should the economic situation deteriorate. Even ahead of the 2025 mid-term elections, doubts about Argentina’s political and economic stability caused considerable nervousness on the financial markets. The situation was stabilised in particular by support from the United States in the form of a currency swap arrangement that reduced the risk of another currency and confidence crisis. From the German perspective, a continuation of the current reform agenda would therefore be preferable over the medium to long term provided that it be accompanied by effective social safeguards, a strengthening of the rule of law, and respect for the separation of powers and that it also be pursued by a centrist government free of right-wing populist tendencies and rhetoric.

Strategic diversification as an opportunity

Despite these reservations, Argentina’s long-term strategic potential should not be overlooked. Indeed, the country possesses abundant natural resources, including fertile agricultural land, substantial energy, and mineral reserves (e.g. lithium, copper, silver, gold, and shale gas), considerable potential for renewable energy, and a highly skilled workforce. Germany and Europe – for their part – bring industrial strength, technological innovation, and access to capital. At a time when global supply chains are being reconfigured and geopolitical tensions are driving a strategic realignment of economic relationships, de-risking is becoming increasingly important. The objective is not decoupling, but rather the diversification of dependencies, particularly in the fields of energy and critical raw materials.

In this context, Argentina has the potential to become a key partner. The country offers not only access to strategically important resources, but also political compatibility with Western values and institutions. Despite repeated crises and periods of upheaval, Argentina has maintained a democratic constitutional order since the end of military rule in 1983 that remains broadly compatible with core European principles. Precisely due to this compatibility, however, recent political developments require a nuanced assessment. While Argentina’s market-oriented reforms and economic liberalisation are widely regarded as creating new opportunities for deeper cooperation, the social consequences of its austerity policies, its approach to multilateral institutions, and President Milei’s confrontational political style have attracted close – and at times critical – international scrutiny. Cuts to funding for education, research, and healthcare; repeated confrontations with journalists; and scepticism towards climate change reflect a style of governance that is often perceived as short-termist, polarising, and driven by culture-war politics. Government by decree and the politicisation of judicial appointments have also raised concerns over the separation of powers and the rule of law.

For Germany, this presents a mixed picture. On the one hand, new opportunities for cooperation are emerging; on the other, political and societal tensions require considerable sensitivity and strategic judgement.

At the same time, trade integration is gathering momentum. The government is pursuing a pro-market foreign economic policy aimed at concluding and deepening international trade agreements. One key milestone in this regard is the EU–Mercosur Agreement, the trade pillar of which entered into provisional application in May 2026. The agreement secured a clear majority when it was ratified by the Argentine Congress. The elimination of tariffs on around 90 per cent of goods traded between the two economic areas not only created one of the world’s largest free trade areas, but also opened up new export markets and strengthened economic integration.²

For Germany, this offers an opportunity to establish a stronger presence in a region that has often been overshadowed by other global markets. At the same time, Argentina’s proactive trade policy signals its determination to integrate itself reliably into the international economic order and to build confidence in its programme of economic reform.

The resources sector as a gateway

The potential for a strategic partnership is particularly evident in the energy and raw materials sectors. Argentina possesses a unique combination of conventional and renewable energy resources. The Vaca Muerta formation – located primarily in the province of Neuquén – contains the world’s second-largest shale gas reserves and the fourth-largest shale oil reserves, which offer considerable short-term export potential.³ According to experts, however, only around five per cent of these reserves have been developed thus far. Infrastructure bottlenecks remain a limiting factor, while environmental and social conflicts continue to pose challenges.

At the same time, the share of renewable energy in the country’s energy mix continues to grow steadily – driven in particular by Patagonia’s consistently strong winds and the high levels of solar radiation on the northern plateau. Legislative frameworks for renewable energy – together with government support programmes such as RenovAr – have actively promoted this expansion.⁴ In mid-May 2026, the first project implemented under the RIGI regime – a solar park in Mendoza – was officially inaugurated.⁵

This combination makes Argentina a potentially attractive partner for a diversified energy partnership that encompasses both transition technologies and long-term decarbonisation strategies. One tangible example of this cooperation is already emerging in the liquefied natural gas (LNG) sector. From the end of 2027 onwards, under an agreement between Germany’s state-owned energy company, SEFE, and the Argentine consortium Southern Energy, up to two million tonnes of LNG per year are to be exported to Germany over a period of eight years. Although this is only a small proportion of Germany’s current natural gas consumption, it contributes to the geographical diversification of the country’s energy supply. At the same time, it will generate valuable foreign currency earnings for Argentina and help establish the country as an LNG exporter on international markets.⁶

Even more promising is the field of green hydrogen. Thanks to its consistently strong winds – particularly in Patagonia – as well as to its abundant solar resources and extensive areas of largely undeveloped land, Argentina possesses ideal natural conditions for the cost-efficient production of green hydrogen over the long term. This potential can only be realised, however, if a number of additional conditions are met, including the modernisation of energy infrastructure, sufficient investment, the availability of adequate supplies of (desalinated) water, and the successful reduction of economic policy and regulatory uncertainty. Through its Global Gateway initiative,⁷ the EU is already supporting a number of concrete projects and regards Argentina as a potential key player in the global hydrogen economy. For its part, Germany will depend on imports of green hydrogen and its derivatives over the coming decades if it is to achieve its climate targets while also safeguarding its industrial base. This complementary area of cooperation allows German companies to contribute technology, infrastructure expertise, financing, and long-term off-take agreements while Argentina provides the production capacity. Germany is already supporting the development of green hydrogen and its derivatives – as well as the establishment of appropriate regulatory frameworks – through five dedicated programmes and funding initiatives, including the PtX Hub. In the long term, this could develop into an integrated value chain ranging from production in Argentina and transport solutions for export to the use of hydrogen derivatives in German industry.⁸

Together with Bolivia and Chile, Argentina also forms part of the so-called “Lithium Triangle”, which contains more than half of the world’s known lithium reserves, with the country now filling the role of the world’s third-largest producer. According to current projections, mining operations in the northern provinces of Salta, Jujuy, and Catamarca could account for around 20 per cent of the global lithium supply by 2033. At the same time, demand for this essential raw material for the energy transition – not least for high-performance batteries – is expected to continue rising significantly. Copper projects – particularly in the Cuyo region along the Chilean border – are also gaining in importance. Although this sector is only just beginning to recover – given that no copper has been mined in any significant quantities since the closure of the Alumbrera mine in 2018 – experts believe that copper will become a key driver of growth for the Argentine mining industry. Since copper is indispensable for a wide range of clean energy technologies – including wind turbines, electric vehicles, and smart electricity grids – many other countries in addition to Germany will depend on secure supplies if they are to achieve their long-term climate neutrality objectives. For this reason, experts also anticipate increasing shortages of both lithium and copper, with significant structural supply deficits likely to emerge by 2040. Unlike many other resource-rich countries, however, the majority of Argentina’s nearly 120 mining projects remain in the exploration or advanced planning stages.⁹ This situation creates opportunities for German companies to enter the market – not only in extraction, but above all in upstream and downstream activities, such as processing, technology, and sustainable production methods. It is precisely in these areas that Germany’s strengths lie. While the country does not possess globally dominant mining companies, it does have highly advanced technologies and industrial expertise.

For Germany, whose industrial base depends on resilient supply chains, this situation presents an opportunity to build partnerships not merely in raw material extraction, but across the entire value chain. This is where a key opportunity lies. Argentina and its provinces hold the rights to mineral resources and are increasingly seeking to retain more value creation within the country, while Germany can contribute the technology and expertise needed to support sustainable and efficient production processes.

At the same time, mining and energy projects are often accompanied by social and environmental tensions. The recently adopted reform of Argentina’s Glacier Protection Law subjects certain economic activities to greater case-by-case assessment while granting the provinces broader powers to define and assess periglacial areas. This situation has attracted considerable criticism from environmental organisations as well as from individuals in the scientific community and civil society who fear that the reform could make it easier to pursue mining and energy projects in areas that had previously enjoyed stronger environmental protection, thereby putting strategically important freshwater reserves at risk.¹⁰ Against this backdrop in particular, Germany and Europe have an opportunity to distinguish themselves from other major investors – such as China – by consistently adhering to high social, environmental, and transparency standards.

Science and innovation as a bridge

Scientific cooperation between Germany and Argentina is one of the cornerstones of the bilateral relationship. The intensity of these links is demonstrated by more than 300 institutional partnerships between universities along with programmes run by the German Academic Exchange Service (DAAD) and the German-Argentine University Centre (CUAA/DAHZ). The cooperation focuses on future-oriented fields, including energy research, marine and climate science, the bioeconomy, resource use, and digitalisation. Prominent examples include the close collaboration between Argentina’s leading research organisation, CONICET, and the Max Planck Society as well as the Argentine-German Geodetic Observatory (AGGO), which provides globally important geodetic and climate data. Overall, scientific cooperation is characterised not only by the breadth of its thematic focus, but also by the depth of its institutional links, thereby providing an important foundation for broader economic and technological partnerships.

However, this potential is being undermined by the continuing crisis affecting Argentina’s education, higher education, and research system. Budget cuts affecting research institutions and universities, uncertainty over future funding, and declining real incomes for researchers are reducing the country’s attractiveness as a location for science and innovation. Actual or anticipated declines in the quality of research and teaching, the increasing emigration of highly qualified specialists, and a more difficult environment for international cooperation could all have lasting adverse effects on German–Argentine collaboration. Short-term budgetary savings in these areas are therefore likely to prove far more costly in the long run, thereby weakening Argentina’s knowledge base and human capital and – in turn – also its capacity for innovation and competitiveness.¹¹

Alongside this situation, the knowledge economy is another important pillar of bilateral cooperation. Argentina has a highly skilled workforce and a dynamic start-up ecosystem. In particular, it has established itself in recent years as an emerging centre for software development, fintech, and artificial intelligence. Initiatives such as the German Accelerator in Buenos Aires serve as a bridge by supporting German companies in entering South American markets, Argentine firms in expanding into Europe, and the exchange of talent and technology between the two.¹²

The agricultural sector likewise offers promising opportunities for cooperation. Together with financial services and mining, agriculture accounted for the majority of Argentina’s economic growth last year.¹³ Historically – and still today – Argentina is one of the world’s leading exporters of agricultural products and food. At the same time, however, it also faces significant challenges in the areas of sustainability, resource efficiency, and the impacts of climate-related risks. German agricultural technologies and Argentine agri-tech solutions could complement one another effectively, thereby contributing to a more sustainable and productive agricultural sector.¹⁴

A partnership with considerable potential

Alongside economic and scientific cooperation, changing geopolitical circumstances are also increasingly bringing security cooperation to the fore. The South Atlantic and Antarctica in particular are becoming strategically more important in the context of shifting global power dynamics – not least with regard to safeguarding vital shipping routes, securing access to natural resources, and supporting scientific research – while competing powers continue to expand their presence in the region. At the same time, Argentina is also seeking closer integration with the West in foreign and security policy, which includes its interest in obtaining NATO Global Partner status as well as the ongoing modernisation of its armed forces, with the acquisition of German defence equipment also being considered in this context.¹⁵ Beyond the defence sector, further opportunities for cooperation exist in the fields of space and satellite technology, particularly through European programmes involving German participation.

Nevertheless, significant challenges remain across these potential areas of cooperation. Although the government has succeeded in significantly reducing inflation, gradually improving access to foreign exchange and taking initial steps towards stabilisation, the inflation rate remains at a relatively high level, whilst the exchange rate system is still partially managed and remains vulnerable to adjustments. It therefore remains to be seen whether and to what extent the current reforms will deliver lasting macroeconomic stability. Structural shortcomings in the regulatory environment also persist. Bureaucratic obstacles, complex approval procedures, and differences between the provinces can delay projects and make investment more difficult.

Although the Milei government’s reforms seek to remove many of these obstacles and are based on a deregulation programme developed before it took office, it is difficult to assess whether these reforms have yet produced lasting changes in practice given the limited empirical evidence available even though the government points to successes such as faster import procedures resulting from the adoption of international standards and the elimination of redundant requirements. Nevertheless, the pace of reform is noteworthy from a German perspective and offers valuable food for thought. The speed and determination with which processes are being redesigned – together with the willingness to tackle politically difficult reforms and to challenge established structures – could provide valuable impetus for debates on cutting red tape and modernising public administration.

Beyond this, Argentina and Germany face similar structural challenges. Although to different degrees, both countries are confronted with demographic change, with questions surrounding pension systems, and with the consequences of a changing labour market. In Argentina, these challenges are compounded by persistent inflation and by a large informal economy. Here, too, there is scope for mutual learning. While Germany could benefit from Argentina’s current reform momentum, Argentina could draw on Germany’s institutional experience in areas such as social security systems, federalism, and public administration.

However, all of this must be viewed against the backdrop of growing geopolitical competition. Indeed, countries such as China and the United States are already heavily engaged in Argentina and are competing for influence and investment. For Germany, this means that engagement must be not only economically attractive, but also politically astute. Reliability, transparency, and flexibility will be decisive. Those who establish a presence now stand to benefit over the long term, while those who hesitate for too long risk missing valuable opportunities.

Argentina may not offer a risk-free environment, but it does offer promising prospects and the potential for a strategic partnership provided that cooperation continues to be based on shared values and complementary strengths in an increasingly fragmented world.

– translated from German –

Carmen Dragon is Trainee at the Konrad-Adenauer-Stiftung’s Argentina Office based in Buenos Aires.

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