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Interview

with Dario Alessandro, Ambassador, Embassy of Argentina in Peru

15.04.2011 / Energyboardroom

In the early 2000s both Argentina and Peru underwent major political and economic transformations which impacted on their international and regional diplomatic relations. How have these major changes affected the way that Peru and Argentina relate to one another?

This is a very good time for the relationship between Argentina and Peru. President Cristina Fernández de Kirchner’s visit to Peru last year was a very important event in the development of the relationship. This year both governments have continued good approaches to diplomatic relations. Previously, there had been 15 years without the visit of an Argentine President to Peru. I believe that in 2 months President Alan Garcia of Peru will make a reciprocal visit to Argentina. Both visits indicate the strong state of the relationship between the Argentine and Peruvian governments.
For Argentina the relationship with all the countries of the region is very important for political and economic reasons. We believe regional integration is good for consolidating democracy and economic growth. Indeed there is a strong relationship between democratic consolidation and economic growth.
South America is one of the regions which is leading international growth. All the countries are growing above 5% and for example, Argentina has grown at 7-8% over the last 8 years following the Argentine economic crisis. It is a good time for the region. Companies and governments need to engage in active dialogue to make the most of this emerging opportunity. Investment in energy is important to support this growth.

There are major Argentine multinationals invested in Peruvian infrastructure, energy and technology. How would you define the economic relations of these countries?

This is an economic relationship which is growing. Trade between these countries is three times what it was 6-7 years ago and valued at US$ 1 billion. However the trade is one-sided. Exports from Argentina are US$ 900 million and Peruvian exports account for US$200 million. Nevertheless, it is now possible to observe reciprocal investment of Peruvian companies in Argentina. This was not the case 4-5 years ago when it was only Argentine companies investing in Peru. Significant Peruvian companies such as Gloria Group in foods, Alicorp in consumer goods and Hoschild in mining have all set up in Argentina. Mutual investment is increasing because of GDP per capita growth in both countries which serves to expand the market.
In terms of the dynamics of trade, it is mainly food from Argentina to Peru and Peru to Argentina in terms of mining. There is currently a lot of interest in developing trade between these in manufactured products. This is a new element in the relationship. We are observing increased textile products from being exported from Peru to Argentina, with machinery and cars from Argentina to Peru. This diversification of trade should also contribute to addressing the imbalance of trade in favour of Argentina.

How are the two governments trying to promote mutual investment in each other from their companies?

Argentina and Peru do not have a border which is a factor inhibiting trade relations. The relationship has grown with the start of a strategic accord between the two countries. Now the ministries of the two countries in different sectors, such as transport and infrastructure, can have meetings with each other. In the energy sector the ministries are due to meet for the first time next month. This agreement is still new and the government is energetically working with the privates sector. The Argentine President’s visit last year was in accompaniment with private companies in order to grow the commercial relationships between the two countries.
The private sector and governments need to discuss the initiatives which have largely been thought up by the private companies. The government must now work to make these initiatives concrete.

Peru and Argentina appear to have taken longer than other countries to make integration institutionally possible and companies have needed to take the lead. Would you agree with this analysis?

We recognise that this is the case and that the present deepening of the relationship between Argentina and Peru is on the back of private sector initiatives. The government clearly wants to support these efforts and the embassy and government are working towards this.
The embassy has organised different missions including economic, commercial and investment-based missions with many Argentine companies to Peru. When the Argentine President visited Peru more than 100 Argentine companies came to Peru and conducted more than 1,000 meetings with Peruvian companies. The Embassy organises 4-5 sector-based missions each year and is also organising seminars to explain the possibilities within the economic situation in Argentina and Peru with different chambers of commerce. Furthermore the embassy is working to overcome some of the past problems in the investment and commercial climate.

How does the Argentine government see projects to further integrate the energy sector either in gas pipelines, oil and gas, or electric?

The Argentine government works with the other governments of the region. There are evidently geographical and political problems which need to be resolved. The countries are working with the Initiative for the Integration of Regional Infrastructure in South America- IIRSA. The institution is formed from all the governments in the South American region and is conducting many projects. This type of integration is very interesting but needs investment. It is also important that countries work in a good atmosphere setting aside any political problems. Political, economic and social stability is required for these projects to pass from ideas to reality.

What would you be your message to Argentine businesses seeking to expand overseas and see Peru as an opportunity?

My message would be that Peru is growing significantly and has good opportunities for investment. It offers many possibilities in infrastructure, energy, industry. In addition, the domestic market is growing a lot. Some Argentine companies saw the opportunities in Peru 8-10 years ago and invested in the country during a difficult time. They invested a lot of money and are now seeing good returns. The Argentine investment in Peru is almost US$3 billion, mostly in the Energy sector. Some Argentine companies are now investing in the infrastructure of the country including in Airports in the south of the country to capture the rise in tourism to the country. There are therefore examples of success stories in the past for Argentine investments in Peru and examples of current investment across a range of sectors.

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