Milei’s AI hype outpaces reality

{"text":[[{"start":6.48,"text":"A crowd of people dressed as Gandalf gathered in August outside the Buenos Aires mansion that had recently been purchased by Peter Thiel, the founder of data intelligence group Palantir, which takes its name from The Lord of the Rings."}],[{"start":20.462,"text":"Chanting and dancing, the wizards protested against the US tech billionaire’s presence and his closed-door meetings with senior government officials in a bizarre scene that reflected the fever pitch of Argentina’s debate around the tech industry."}],[{"start":33.292,"text":"Libertarian President Javier Milei has pledged to make the country a “hub for artificial intelligence”, casting the technology as a centrepiece of his free-market vision for Argentina. He has promised minimal regulation, incentives for data centre investments, and a plan to allow “non-human corporations” run by AI agents."}],[{"start":54,"text":"“Argentina will position itself at the forefront of freedom on artificial intelligence,” Milei told the UN General Assembly in September. “We aim to be the most competitive location in the world for its development.”"}],[{"start":64.16,"text":"The stance has fuelled a fierce backlash, with leftwing lawmakers and activists accusing Milei of turning the country into a “laboratory” for tech leaders."}],[{"start":null,"text":""}],[{"start":74.8,"text":"Yet Argentina’s AI firestorm is far removed from the reality of the South American economy, which is thousands of miles from the US, Asian and European cities where foundational models for the technology are being developed."}],[{"start":87.84,"text":"“These conversations don’t make sense here,” says Daniel Yankelevich, a computer scientist and researcher at local think-tank Fundar. “Milei is just jumping on hype.”"}],[{"start":97.68,"text":"Analysts argue that Milei’s ideological bluster around AI obscures genuine potential to attract investment related to the technology. Abundant energy supply has begun to lure interest in data centres, and Argentina has a thriving software industry and the highest per capita number of start-ups valued over $1bn in Latin America."}],[{"start":119.003,"text":"“If we have the capacity to be an AI hub, it’s because of that density of companies,” adds Leandro Mora Alfonsín, president of a business chamber representing the knowledge economy."}],[{"start":129.587,"text":"Only a trickle of projects are advancing, however, as severe infrastructure shortfalls and Argentina’s chronic economic instability continue to put off investors."}],[{"start":138.591,"text":"“There’s a big gap between saying you want to be a hub and that you won’t regulate anything and creating the conditions that would allow an AI ecosystem to flourish,” says Soledad Guilera, an AI policy strategist studying countries’ AI readiness for the Inter-American Development Bank."}],[{"start":155.141,"text":"“The whole approach has been very fragmented,” she adds."}],[{"start":158.32,"text":"A flurry of flashy AI-related projects has made headlines in Argentina, including plans to build a 500MW data centre to serve OpenAI, which Milei said would cost up to $25bn, and a government programme using Argentines’ data to “anticipate problems”."}],[{"start":176.224,"text":"Yet both appear to have stalled. In July officials told local media the latter initiative was “neither under way nor in the design stage”. In August, Emiliano Kargieman, a partner in Sur Energy, the Argentine digital infrastructure company that planned to build the data centre, said “the ball is in OpenAI’s court”."}],[{"start":197.354,"text":"OpenAI told the FT that it was only involved as “a potential offtaker” of compute capacity and “any eventual purchase” would depend on Sur Energy advancing development of the project, but added that “projects of this magnitude are long-term initiatives”."}],[{"start":212,"text":"Analysts said Argentina’s momentum around AI initiatives had slowed after the Milei adviser Demian Reidel, who had led the charge, quit the government amid a corruption scandal in which he denied involvement."}],[{"start":224.854,"text":"Milei’s most concrete effort to lure AI investment is a scheme offering tax breaks and other incentives for projects worth more than $1bn in “new industries”. The scheme was approved by the lower house of Congress in June and is awaiting a vote by the upper house, the Senate."}],[{"start":240.747,"text":"It is partly targeted at data centre investment, which globally is expected to reach $31.6tn by 2050, according to PwC."}],[{"start":251.36,"text":"Developers are showing increased interest in Patagonia, a region of vast, sparsely populated plains, cool temperatures and the world’s second-largest shale gas reserves."}],[{"start":259.76,"text":"“Argentina checks a lot of boxes, and it’s starting to build the path that would allow those investments to flow,” says Diego Taich, a partner at PwC."}],[{"start":269.04,"text":"Argentina’s ageing and congested electric grid may slow development, however. In the long run, experts also warned the tech sector could suffer from Milei’s steep cuts to spending on public universities and research bodies, which have underpinned its outsized growth there."}],[{"start":285.76,"text":"Milei’s blanket anti-regulation stance has left two dozen projects to regulate the technology languishing in Argentina’s Congress, according to Fundar, which Yankelevich argues “would actually be tools to give the industry the certainty it needs to grow”."}],[{"start":null,"text":""}],[{"start":301.84,"text":"Milei’s officials concede that some reforms around data privacy or intellectual property may be needed as AI rolls out, but argue that the president’s anti-regulation stance would pay off."}],[{"start":310.56,"text":"“The world may not need Argentina to figure out how to develop AI safely, but the question is whether Argentina gets AI investment or not,” says one official who is not authorised to speak publicly. “When Argentina starts to regulate, it becomes Frankenstein’s monster. We won’t shoot ourselves in the foot.”"}],[{"start":328.786,"text":"A little AI-related investment is already flowing into Argentina’s regionally large software and tech services industries. Last year ecommerce giant Mercado Libre, Latin America’s largest company, invested $3.4bn in Argentina, split between logistics and digital infrastructure. And software developer Globant partnered with state oil company YPF to incorporate AI into the country’s massive shale energy operations."}],[{"start":356.48,"text":"Foreign companies have dipped toes in the Argentine market. British cloud and cyber security group Beyond has announced plans to hire 100 engineers in Buenos Aires, while Indian tech company Mphasis is hiring 200."}],[{"start":368.16,"text":"But Mora Alfonsín argued investments were still being stifled by worries that Argentina could renege on its recent macroeconomic stabilisation and free-market reforms if Milei loses the 2027 election."}],[{"start":380.282,"text":"“Huge waves of investment don’t happen overnight in a country with our history,” he adds."}],[{"start":385.84,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792772395_1680.mp3"}