MercoPress. South Atlantic News Agency

Spain warns Argentina

With the prodding of Spain, the European Union demanded from Argentina a “reliable, dialogued and coherent budget, capable of generating confidence among investors”.

Spanish investors in Argentina are expected to loose several billion dollars as a direct consequence of the recent announcements of the new Argentina government capping utilities rates, taxing oil exports and severely limiting banking operations. Spain is taking advantage of the fact that for the next six months it will be holding the temporary chair of the European Union together with president Romano Prodi. "A return to protectionism in Argentina would be a tragedy", said Mr. Prodi after meeting with Spanish president José Aznar in Madrid, adding that "we're going to follow closely events because it's clear we can't leave Argentina on its own". However the spokesman for the Spanish presidency was more vehement and warned that "we're going to defend the interests of the Spanish society". "It's essential as a token of trust, and in the interest of Argentina, that the country continues to receive foreign investments and becomes once again reliable", said Mr. Juan José Lucas. The coming budget must be agreed and convened in dialogue "with the main economic agents", insisted Mr. Lucas in direct reference to the 40 billion US dollars Spain has invested in Argentine oil, banking and privatised utilities. But Spanish officials are also cautious of not generating hate campaigns at either end. Some yellow press Spanish newspapers had front page pictures of Argentine graffiti saying "Spaniards go home" and reported that "Peronists are planning to burn Spanish companies headquarters if they don't accept the new financial rules". Last Monday the Madrid stock exchange suffered a strong drop, particularly the shares of those companies highly involved in Argentina.