Javier Milei's electoral victory in Argentina also has business resonance in Spain, the second largest international investor in the southern country in accumulated terms, only behind the United States. Among the corporations and experts consulted, the attitude is expectant in the face of electoral promises that are difficult to achieve, sometimes because they are unrealistic and other times because they lack parliamentary support.
According to the latest data from Icex, Spain accumulates investments of 15,321 million euros in Argentina. This investment stock is what remains of an effort of more than 40,000 million euros since the nineties that has been progressively decreasing. In the last decade, 7,216 million have been dedicated to the country, but the figure has been decreasing and has barely exceeded 200 million euros annually after the pandemic, according to the Secretary of State for Commerce.
136 Spanish companies operate in Argentina, including corporations such as Telefónica, Santander, BBVA, Inditex, Iberdrola, Naturgy, Acerinox, CAF, Dia, Mapfre or Indra, as well as Catalan companies such as Grifols, Puig, Freixenet or Codorníu.
The Argentine market has gone from being a natural destination in the nineties for Spanish companies to becoming a trap for some of them. Aside from Repsol's traumatic experience in 2012, when it suffered the expropriation of YPF by the government of Cristina Fernández de Kirchner, Argentina's big problem now is inflation. In their annual reports, the large Spanish listed companies, including Telefónica, Santander and Prosegur, calculate their business in Argentina in accordance with the accounting standards of a hyperinflationary economy, with price increases of around 180% annually.
The companies consulted agree in cautiously welcoming Milei's arrival to power. It is necessary, they comment, to evaluate the specific measures and have legal certainty.
“Investment has been stopped for some time due to the uncertainty in the country” and what is foreseeable is that “companies will take some time, until the economic policy is settled,” says Carlos Malamud, principal researcher for Latin America at the Elcano Royal Institute. There are messages from Milei, such as “guaranteeing the rules of the game” and “reducing the role of the State”, which are “heavenly music for foreign investors”, but the normal thing is that they choose to wait. Malamud wonders which company may be interested in the privatization of YPF, defended by Milei, after what happened a decade ago with Repsol.
“Argentina is an economy in the ICU. We must intervene, and the alternatives are to do it with a scalpel or a chainsaw, which can cause economic and social bankruptcy," warns José Manuel Corrales, professor of Economics and Business at the European University, who describes projects like the to end the central bank and dollarize the economy. “Spanish companies are going to suffer if insecurity, uncertainty and cuts are added to autarkic measures that attack their interests,” he says.
Alejandro Varela, manager of the Renta 4 Latin America fund, sees it as “risky” to make predictions, but believes that “music sounds good” for companies. Dollarization is "delicate", although any measure to "control hyperinflation" would be positive for Spanish companies, which "historically have had difficulties and the impossibility of repatriating profits in the country."