Since taking office, President Macri has rapidly implemented reforms to help integrate Argentina into the global economy with a particular focus on improving trade relations with the United States. What does “the new era of Macri” mean to bilateral relations between the United States and Argentina?
We have a long history of doing business with and in Argentina. We have over 500 American companies located here in Argentina – in fact, many iconic companies have been here for about 100 years, including Ford, Citibank and GE. There have been American companies here during the best of times and during difficult times and it’s true that many of them have done well overall in Argentina over the past few years. The problem was that dividend repatriation was a real issue. It wasn’t the most ideal business climate, but with this new administration, many companies are experiencing a breath of fresh air and increasing optimism. Many American companies have wanted to expand here but were waiting for a better climate and the right moment.
Not only was President Obama here very recently, but the American Chamber of Commerce also recently hosted an event with American Secretary of Commerce, Penny Pritzker. There were some 1000 people at the La Rural venue when 3.5 billion dollars of new investment from current U.S. companies was announced; this number could ultimately grow to be over 16 billion dollars based on an on-going, positive business climate. There is a lot of enthusiasm and optimism that this new direction in Argentina is a positive direction – not just for business but for the country in general.
You have repeatedly stressed the importance of the United States and Argentina strengthening their relationship through academic exchanges. To what extent do you believe that these exchanges foster economic development and progress in Argentina?
We are very focused on dramatically increasing these educational exchange programs. We created a new program last year called Friends of Fulbright. This program is unique in that it is the only public-private partnership in the world that is led by a U.S. Embassy focused on undergraduate, short-term educational exchanges funded largely by the private sector. Argentine companies, many of them U.S. brands, along with a some other companies are partnering up to make this program possible. Together with the Embassy, they sponsor students to go to the United States for a span of six to eight weeks.
I actually just got off the phone with someone about an hour ago who had sent me an amazing letter saying that this program changed her life. She had the opportunity to study at the University of Texas where she met both U.S. students and other international students from all over the world while living in the dorms. While she was there, she had the opportunity to rent a car and drive to New Orleans. She returned from her time abroad with a totally different view of the United States. That is the goal of this program – to challenge any anti-American feelings that could exist. The best way to paint an accurate picture is through people-to-people exchanges. Educational exchanges, in the long run, are the best way to make powerful, lasting connections.
Another example of the impact of educational exchanges is a young man named Gino Tubaro. President Obama actually mentioned him at the town hall we hosted here during his visit. I had the opportunity to meet this young man over a year ago, when I first came to Argentina. He had recently returned from the National Youth Science Camp in West Virginia as a State Department-sponsored participant. In his time there, he learned about 3D printing. He returned to Argentina with new knowledge and with the idea of making prosthetic hands through 3D printing. By doing so, he lowered the cost of prosthetic hands from over 10,000 USD to less than 100 USD. This innovative solution has been incredibly helpful to people. He is applying these skills that he learned abroad to do all kinds of amazing things. These types of programs have the potential to be a big part of the economy going forward.
Upon your arrival to Argentina, you identified three priorities. The first of which was this focus on educational exchanges that we have talked about, a second is renewable energy, and a third is a general focus on a stronger connection between the two societies. How have your priorities shifted over the past year and what are your current priorities?
The portfolio is bigger now than it was then. Initially, yes, our focus was on science, technology, energy, and educational exchanges. We are now doing more with general foreign policy – everything from global security to climate change to peace keeping. The spectrum of issues is wider. We really have good working partnerships – not just with the foreign ministry – but with each of the different ministries under this government and Casa Rosada in general.
The world saw the kind of chemistry that President Obama had with President Macri during his visit to the country. I think that dynamic is really indicative of the new relationship between the countries, which is much more positive than it has been in the recent past.
We are still focused on energy – conventional, non-convectional, and also renewable energy. By law, the consumers of energy in Argentina need to have 8% of their energy coming from renewables by the end of next year. It’s a very ambitious goal because right now that number is less than 1%. But I do think this goal shows that there will be big growth in renewables, especially wind and solar. I’m fond of saying that Argentina has the best wind in the world in the South and the best sun in the world in the North. Argentina just needs to figure out how to harness these resources and put them on the grid. This, however, is something that I believe U.S. companies can really help with.
Operating in any foreign country can present challenges. In your time in Argentina, what has been the most difficult obstacle that you have faced and how have you successfully overcome it?
It’s challenging for any embassy to operate freely in an election year in another country, but that’s what we tried to do last year. Our job is to build bridges to all political parties and reach out to the private sector as well. Last year was a bit challenging in that we were in the middle of a very hotly contested presidential campaign. I think we did a good job of reaching out to all political parties and saying that we wanted to work with whoever wins.
We’re here for the long term and this is much bigger than any one political party or one president. This challenge exists not just on the federal level, but applies to governors as well. There are a lot of provinces that we work with in addition to the federal government. Right now things are very positive. We are even seeing opposition figures working with president Marci. People are reaching across the aisle. As Vice-President Biden has said, the United States could really learn from this.
Where do you believe are the key investment opportunities for American businessmen and businesswomen that are looking to expand their businesses abroad? Can you point to examples of American companies operating in Argentina that you would consider particularly interesting success stories?
First of all, we have to remember that we’re just at the hundred-day mark of the new administration. But I will say that there has been a lot of interest in a handful of sectors. One sector is energy, especially renewable energy projects. Agriculture is a second opportunity. The new administration eliminated virtually all export taxes on agriculture and reduced taxes on soy. There is interest in more technology being applied to the farming sector. Technology in general is another really interesting area for future growth. Within technology, there are already many U.S. companies here, but their presence is going to grow. Technology hasn’t really taken root in the economy yet, but I believe it will over the next couple years.
When it comes to smartphones, technology, apps and generally incorporating that technology into the economy, I think that Argentina is on the verge of seeing big things happen. It’s going to be a big growth area.
One other area that I would mention is mining. As President Macri has said a few times, there are about 150 mining companies in Chile but only around 40 companies in Argentina. He said surely not all of the minerals are only on one side of the Andes. For Argentina, this difference could have been because of the difficult business environment and some of the regulations in the past. This administration is looking to change these things and U.S., Canadian, and Australian companies are very interested the shifts in the mining industry here.
In addition to holding the title of U.S. Ambassador to Argentina, you are also the founder of your own company, with extensive experience advising private sector businesses. Given your wealth of knowledge of and the situation in Argentina, what message would you like to send to the readers of Harvard Business Review that may be interested in growing their businesses in Argentina?
This is a great place to consider doing business. This administration is really interested in creating a better business climate to interact with the business community. They are willing to listen.
Listening is one of the most important aspects of creating a business-friendly environment. But with that said, I would mention that nothing is completely guaranteed. There are still real challenges here. Inflation is a challenge for the country. However, now that Argentina has gotten the bond hold-out dispute behind them, they can enter international financial markets for the first time in over a decade. Argentina can now finance larger infrastructure projects such as roads, bridges, and electrical plants. These things that have been lacking for a decade are now coming. I want potential investors to know that the future is positive.
Yes, there are challenges in Argentina just as there are unique challenges everywhere. However, there are smart people here that are making smart choices. I truly believe Argentina is a good place to consider doing business now.