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Wednesday, August 4, 2021
BUENOS AIRES, Apr 20 2012 (IPS) - Hundreds of Spanish companies continue to do business in Argentina, despite Madrid’s campaign in defence of Repsol, which controls YPF – the oil company that the government of Cristina Fernández plans to renationalise.
Fernández sent Congress a bill on Monday Apr. 16 to seize 89 percent of Repsol’s shares in YPF, Argentina’s largest oil company, which would give the Argentine state a 51 percent stake.
In response, the centre-right government of Spanish Prime Minister Mariano Rajoy launched a diplomatic offensive in search of international allies against the move.
The chief interest of Spain, the fifth biggest importer of Argentine products in 2011, is biofuels, of which it imports 800 million dollars worth a year, representing 68 percent of total imports from this country, according to the Abeceb consultancy.
But on Friday, the Spanish government decided to limit its imports of biofuels from Argentina, by applying a measure approved in October 2010 that favours companies located in Europe.
However, the tension between the two governments contrasts with the business-as-usual attitude among Spanish companies of all sizes that operate in Argentina, and among investors as well, as capital continues to flow in, according to the Spanish chamber of commerce in Argentina (CECRA).
Figures from the Spanish Embassy in Argentina indicate that 28 percent of foreign investment in this South American country in 2009 was from Spain.
The Argentine branch of the Spanish telecoms company Telefónica reported earnings of 4.16 billion dollars in 2011, which represented five percent of the global business of the transnational corporation, 63 percent of whose clients are in Latin America.
Another big Spanish company with a large presence in Argentina is the power utility Endesa: 4.7 percent of its assets in Latin America are in Argentina. The Santander and BBVA banks are also active here.
“One way or another, this will affect the Spanish economy,” Juan Benítez, a professor of applied economics in the southern Spanish city of Málaga, told IPS.
A decline in the performance of a company like Repsol affects not only the shareholders, but also the company’s workers, suppliers and firms with which it has trade ties, he said.
Repsol had just over 36,300 employees in 2010, distributed among more than 30 countries. But 46 percent were in Spain and 37 percent in Argentina.
Less than a month ago, CECRA received a delegation of representatives of 22 small and medium businesses who came from Madrid in search of opportunities that could be provided by becoming suppliers to large Spanish companies that are already established here.
The president of CECRA, Guillermo Ambrogi, told the press in February that Argentina “will continue to be the third biggest recipient in Latin America of foreign direct investment from Spain, after Mexico and Brazil.”
CECRA, which works with the ministries of foreign relations and industry of Spain, has 830 members in Argentina, which are Spanish companies or joint ventures of different sizes.
Ambrogi, who also represents the federation of Spain’s chambers of commerce in this region, reported that Spanish investment in Argentina has totalled 60 billion dollars over the past 17 years.
Taking a cautious stance in the wake of the announcement of Argentina’s seizure of a majority stake in YPF, CECRA refused to talk to journalists, and only held meetings with the Spanish Embassy, to reach a consensus before taking a stance.
Although this silence may indicate concern among Spanish businesses, activity has continued as usual.
And while tension had already built up long before between Repsol and the Argentine government, due to a fall in production and a lack of investment by the Spanish company, other Spanish firms described their ties with the centre-left Fernández administration in positive terms ahead of this week’s decision involving YPF.
“Our relationship with the government is good, we haven’t had any problems,” the spokeswoman for Gas Natural BAN, Betina Llapur, told IPS just before the Argentine president made her announcement.
The Spanish firm Gas Natural Fenosa owns 50.4 percent of the shares in that company, and the state National Social Security Administration (ANSES), which administers Argentina’s pension funds, owns a 25 percent stake.
At the end of 2010, Gas Natural BAN had nearly 1.5 million clients and a 23,000-km distribution network in greater Buenos Aires.
“The demand for more investment doesn’t apply to us, because we have expanded our networks and added 30,000 new clients per year,” in areas with low purchasing power, Llapur said.
She also stressed that the company has “a very good relationship” with the representative of ANSES on the board of directors. “We regard him highly, and he works for the company,” she said.
In Spain, the impact could also be more limited than expected, to judge by the movements of Spanish officials abroad.
Spanish economist Jesús Carrión, a researcher with the Observatory on Debt and Globalisation (ODG), told IPS that moves like the expropriation of Repsol’s shares in YPF hurt “the economic elites, but don’t hurt us as a society.”
According to Repsol’s figures, Spain does not hold a controlling stake in the company: 42 percent of the shares are held by foreign investment funds and 9.49 percent belong to Pemex, Mexico’s state-owned oil company.
The rest belongs to Spanish investors: the CaixaBank (12.8 percent), the Sacyr construction company (10 percent), local investment funds (9.9 percent), minority investors (a combined total of 10.8 percent), and Repsol.
Héctor Valle, an Argentine economist with the private Foundation for Export Research and Development (FIDE), described the re-nationalisation of YPF – which was privatised in 1993 and purchased by Repsol in 1999 – as “a positive step” and “the most important energy-related decision in the last 20 years” in this country.
He told IPS that “the relationship between the Spanish investment group and the government hit bottom a long time ago” due to widely divergent needs and interests between the company and the Argentine state.
He said that Repsol saw its participation in YPF from the viewpoint of a multinational, which invests where profits are highest, and that this vision clashed with Argentina’s development needs.
Valle does not see the decision as part of a broader move by the Argentine government against Spanish companies. But he conceded that the Spanish economy, which is suffering a severe crisis, could be indirectly affected by the decision to expropriate a majority stake in YPF.
“They have fiscal deficit problems, and multinationals are helping them get into the black by channelling the profits they are making in their subsidiaries back to the parent company,” he said.
The expropriation of Repsol’s shares in YPF could thus represent an inconvenience, but not of the magnitude expressed by Spanish government officials, Valle said.
Carrión concurred that the earnings of Spain’s companies “depend enormously” on their subsidiaries in Latin America. But at the same time, he said, the corporations do not take into account the environmental impacts of their activities, on indigenous communities, for example.
* With reporting by Inés Benítez in Málaga, Spain.
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