Rocca gets a rocket

For a G20 country Argentine multinationals are remarkably thin on the ground but it seems that President Cristina Fernández de Kirchner would like them to be even thinner, judging from her harsh rebuke of Techint’s Paolo Rocca for his criticisms of her industrial policies. Even if Rocca did not necessarily intend his remarks — to the effect that an increasingly less competitive Argentina had lost its way and wasted its potential since 2008 — to reach the public ear, it is no accident that such criticisms should come from a multinational because a giant like Techint always has the option of shifting operations to its original Milan, Sao Paulo or Houston (as in fact seems to be happening anyway) denied to more purely local (and therefore more timid) companies. In any case the friction between Techint and the Kirchner presidencies was not born with some off-the-cuff remarks — there have been several chapters, of which Techint’s strenuous efforts last year to keep the government’s rising star, Deputy Economy Minister Axel Kicillof, off its board of directors is only one of the more recent.

While the core of Rocca’s criticisms are irrefutable, CFK’s reprimands were half-truths at best. Thus Techint is indeed almost a monopoly in its main strengths (such as tubing for the energy sector and steel plate) but look who’s talking. Along with the rest of the country, the “protected” multinational has also been favoured by utility rate and fuel subsidies but corporate bills have long been far heavier than for consumer households while taxation has reached ferocious levels and in any case these subsidies are supposedly being “fine-tuned” out of existence by a government whose fiscal deficit is increasingly hard to conceal. It is much harder to refute Rocca when he says that inflation (in dollars almost as much as pesos) makes the country less competitive (with man-hours in the steel industry over twice Brazilian levels) or that the economy lacks direction (when its minister Hernán Lorenzino seems to have far less to say in the matter than his second-in-command Kicillof, Domestic Trade Secretary Guillermo Moreno, Central Bank Governor Mercedes Marcó del Pont or AFIP tax bureau chief Ricardo Echegaray, often the authors of arbitrary improvisations, never mind CFK).

If the Techint multinational finally ends up not including Argentina among its many nations, the CFK administration might even congratulate itself but it will only have taken one more step towards isolating itself from an increasingly globalized world.