Moncloa keeps distance from Milei as it awaits signals regarding privatization or Mercosur

Compare with the congratulatory text sent to Ecuador’s new president in October: “The Government of Spain would like to extend its warm congratulations to the newly elected president of Ecuador, Daniel Noboa, and wishes him the best of success.” Or with the message Pedro Sánchez sent to the recently inaugurated Guatemalan leader Bernardo Arévalo via social networks: “I wish you success in this new legislature, which begins a promising path for the strengthening of democracy and social justice in Guatemala,” he wrote with an X. On the other hand, Sánchez remains silent Milei since last November 20th. This position is in line with what socialists say is the biggest global geopolitical risk: the rise of the far right and extremism.

Spain also reduced its government representation to the maximum for the inauguration of the Argentinian leader: it sent the then Latin American Foreign Minister Juan Fernández. Felipe VI represented the State. Prominent members such as Santiago Abascal, leader of the ultra-Spanish party Vox, and Cayetana Álvarez de Toledo of the PP attended.

Mercosur and CELAC

Since then, the Manager has been waiting to see Where is Milei going? Someone who was extremely radical during the campaign but expected a certain moderation after coming to power.

There are already some signs of this weakening in their most radical propositions. The most obvious relates to this relations with surrounding countriesMostly with left or center governments. Milei did not view the Southern Common Market (Mercosur) favorably, an economic bloc consisting of Argentina, Bolivia, Brazil, Paraguay and Uruguay. Spain made great efforts to advance the EU-Mercosur free trade agreement during the six months it presided over the Council of the European Union. It did not succeed, but it all seems to point to the protectionist reluctance of France, fearful of the vast agriculture and animal husbandry of South America rather than Buenos Aires.

“Milei was against the agreement in the campaign because he was not interested in multilateral agreements in general,” he explains to this newspaper. Anna Ayuso, senior researcher at Cidob. “But when he saw that he was serious about becoming president, he changed. Both the Minister of Economy and the Minister of Foreign Affairs began to signal that Mercosur was not a problem. In fact, Alberto Fernández was more contrary than Milei.”

Pedro Sánchez had a very good relationship with Milei’s predecessor, Alberto Fernández. This situation was also seen at the press conference held after the summit between the European Union and Latin American and Caribbean countries held at CELAC. Sánchez left him to attend an election rally in San Sebastián, and Fernández apologized to him: “He is campaigning now and does not accompany us. He knows and understands how much we love him, how much we respect him in America and the Caribbean.” the reason for his absence.” “. Such a thing was unthinkable for Milei.

Opportunities in customization

Milei wants to undertake major privatization again to raise funds. “no money. There is no alternative to regulation and there is no alternative but shock,” the president said. The doubt in the air is whether the appetite of Spanish companies to buy shares in companies at a good price will overcome the risk of a devastated country. Ayuso said: “The economic situation is not very good, bilateral trade has continued in these years but “Growth expectations are not high because the economy is not very vibrant,” he says.

Spain was one of the countries that benefited most from Carlos Menem’s wave of privatization in the 1990s. In its placeFrom “subway” (metro) to airlinesIt passed through energy and telecommunications companies and into private hands. A failed privatization in many respects because it became an oligopoly that determined the exorbitant prices that Argentines suffered. A blow to national pride and the pocketbook of Argentinians.

The reverse move was carried out first by his successors Néstor Kirchner and later by Cristina Fernández de Kirchner. The climax would come in 2012. Argentinian Government nationalizes Repsol YP subsidiaryF. After an epic international legal battle, the Argentinian State was finally ordered to pay approximately 15,000 million euros to the Bedford Capital fund for this expropriation.

In Spain, the complete liberalization of fishing proposed by the Argentinian ultra-liberal is particularly worrying and threatens the continuity of the Galician capital fleet worth 400 million euros, Faro de Vigo reports.

chinese gap

Markets did not react badly to Milei’s victory and to his plan for cuts that went beyond what the International Monetary Fund, one of the country’s biggest creditors, had asked of him. A compliance plan is starting to be implemented and exchanges and investors see this as a positive. The question is whether this will lead to a greater economic crisis or stabilize the economy.

In this context, another overlooked opportunity opens up. Milei had a strong conflict with ChinaA communist country like Brazil (despite state capitalism), which he despises as “lefty”. He even let slip that he would cut ties during the campaign. For now, Milei has refused to join the BRICS club of Russia, Brazil, China, India and South Africa, as his predecessor acknowledged. Beijing has suspended the currency agreement (yen for pesos) signed with Fernández for now. This could overwhelm the coffers of the Buenos Aires Government. Three-quarters of beef exports, almost all soybeans, go to the Asian giant. The same goes for lithium.

Europe, and especially Spain, can fill this gap. Obtain a constant supply of raw materials from Argentina. Something similar to the lithium purchase and sale agreement with Chile. This fits into the “strategic autonomy” plan set by Brussels and Madrid. One of the lessons learned from Russia after the war in Ukraine or China during the pandemic is to diversify so as not to become overly dependent on a single group of countries.