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Update: Macri Visits Spain to Boost Investor Confidence

Argentina President Mauricio Macri and Spain Prime Minister Mariano Rajoy

Mauricio Macri and Mariano Rajoy. (Macri Twitter)

February 22, 2017

Argentina is back on tour. Mauricio Macri is in Spain to rebuild a relationship that cooled under the Kirchners.
Spain fell to Argentina's #2 source for FDI (after the US). Mauricio Macri wants to boost that with trip to Spain.

Argentina is back on tour. The country’s president, Mauricio Macri, arrived in Madrid on February 21, marking the first official state visit to Spain by an Argentine president since 2009. Macri hopes to strengthen commercial and diplomatic ties with a trip that embodies his effort to promote his reformist agenda and show that the country is open for business. As he meets with Spanish Prime Minister Mariano Rajoy, Macri seeks to build confidence in a more favorable investment environment for Spanish companies who remain wary of Argentina’s history of financial instability, as well as prove his mandate in upcoming October midterm elections.

An agenda covering culture, economics, and politics

Macri, who leads a delegation of 200 business representatives and several members of his cabinet, kicks off a packed agenda on February 22 by addressing a joint session of both chambers of Congress, and then was formally received at the Zarzuela Palace by King Felipe VI and Queen Letizia Ortiz.

He closes the day by meeting with the Madrid Mayor Manuela Carmena.

The president will hold a meeting and press conference on February 23 with Rajoy. The two leaders are expected to present and sign a bilateral plan that will include investment initiatives in infrastructure, transport, energy, agriculture, technology, and communications. The Spanish Confederation of Business Organizations and the Chamber of Commerce will also host an Argentina-Spain business forum. Macri will inaugurate the International Fair of Contemporary Art and participate in a public event with Peruvian writer Mario Vargas Llosa at the Casa de América.

On Friday, Macri participates in an investment forum, where Spanish and Argentine business representatives will participate in industry-specific working groups. The Argentine president wraps up his trip on Saturday with meetings with former Prime Minister José María Aznar and Galicia President Alberto Núñez Feijóo, and will visit the new Atlético de Madrid Football Club stadium.

A crucial visit to solidify Argentina’s return

The visit confirms Macri and Rajoy’s desire to rebuild a relationship that cooled during the period in which the Kirchners—first Néstor Kirchner and then his wife Cristina Fernández de Kirchner—controlled the Argentine presidency from 2003 to 2015. Spain used to be Argentina’s largest foreign investor, but was fell to second place behind the United States’ 25 percent of foreign direct investment (FDI), or $19.8 billion, due to the Fernández de Kirchner government’s perceived animosity toward Spanish investors and the effects of the 2009 global financial crisis. The 2012 nationalization of the operations of Spanish-owned energy company Repsol-YPF struck a blow to an already delicate relationship. Macri, who last year described Fernández de Kirchner’s Repsol move as “unconstitutional,” has worked hard to rebuild faith in the government’s guarantee that Argentina offers a safe environment on investments.

Despite such difficulties, the economic relationship between Spain and Argentina remains strong. In 2015, Spain accounted for 16 percent of FDI, totalling $12.7 billion, in Argentina and remains the top foreign investor in the financial sector. Spanish companies have displayed confidence in Macri’s reforms with concrete investments in 2016, such as from firms Isolux Corsán and Fieldfare, which in 2016 were jointly awarded a renewable energy contract. Santander Bank also acquired Citibank Argentina’s operations as it searches for new markets following Britain’s vote to leave the EU.

A strategic partnership between Spain and Argentina will help a renewed push for an EU-Mercosur trade deal. The rise of pro-market presidencies in Latin America, Venezuela’s economic crisis, and U.S. protectionism have renewed interest in a deal 16 years in the making. The next phase of the negotiations takes place in March in Buenos Aires.

Macri has a busy year ahead, with planned state visits to China, various other European countries, Japan, and the United States. But, as the famous tourism slogan tells us, Spain is different. Spain will play a key role in Argentina’s future, thanks to its economic recovery, historical and cultural affinities, and Rajoy and Macri’s close relationship.