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  HOME | Argentina

Argentina Expropriation of Spanish Owned Aerolineas Argentina Figures in Relations

MADRID -- Argentine President Cristina Fernandez and Spanish Prime Minister Jose Luis Rodriguez Zapatero on Monday backed an increase in Spanish investment in the South American country, although they did not lay to rest the contention surrounding Buenos Aires' expropriation of Spanish-owned Aerolineas Argentinas.

"We have disagreements on the Aerolineas matter. I hope that they will be worked out, but that doesn't tarnish (our) bilateral relations at all. They are very much above any company and any conflict," Zapatero said.

He gave that assessment during the press conference he held after his meeting in Madrid with Fernandez, who was received earlier Monday by King Juan Carlos and Queen Sofia and will later be their guest for a gala dinner at the royal palace.

Despite the controversy, Zapatero confirmed that "of course" his government "will foster and will support investments by Spanish firms in Argentina" and that things are going "positively in 99 percent" of all bilateral isues.

Fernandez alluded to the other 1 percent, Aerolineas Argentinas, and said that the expropriation is intended to guarantee "an essential public service for all Argentines."

Argentine lawmakers approved in December a measure authorizing the government to seize Aerolineas Argentinas from the Spanish tourism group Marsans after the breakdown of talks on the sale of the troubled carrier.

Despite the fact that speculation arose about the possibility that during Fernandez's visit to Madrid an agreement might be reached on the subject, the president said that the process is in the hands of the Argentine Congress, and she added that she is not scheduled to meet with Marsans CEO Gonzalo Pascual.

She will meet, however, with the top leaders of other firms with important investments in Argentina, like Telefonica, Repsol YPF, Abertis, Banco Santander and Gas Natural.

Zapatero emphasized that in the last five years Spain has been the main country to have invested in Argentina, where there are 600 Spanish firms that "are there to stay."

Fernandez said that, once the serious crisis her country went through in 2001-2002 was overcome, a new model was needed in which Argentine stockholders could work with Spaniards to create companies that would be well regarded by Argentines.

Originally state-owned Aerolineas Argentinas and subsidiary Austral were privatized in 1990 through a sale to Spain's Iberia.

Spanish government holding company SEPI took over management of Aerolineas in 2001 as the carrier was on the verge of collapse, and later sold it to a group led by Marsans, which acknowledges the airline now has nearly $1 billion in debt.

The Fernandez government and Marsans last July signed an agreement to initiate negotiations for the sale of the airline to the state, but the talks failed due to differences in the two parties' valuations of the firm.

Argentina's National Valuation Court says Aerolineas has a negative net worth of $832 million and that the government need pay only 1 peso to Marsans, while Fernandez's administration notes that it has already provided $222 million to keep the airline operating.

The Spanish company, however, points to an estimate by its financial adviser, Credit Suisse bank, valuing Aerolineas Argentinas at between $330 million and $546 million.

Marsans has threatened to haul the Argentine government before the World Bank's International Center for Settlement of Investment Disputes. EFE


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