After years of confronting its own cattle and grain producers, the Argentinan government went on to limit beef exports, which are now on a near-terminal decline. More recently a badly timed spat with Spain over YPF has quickly brought about retaliatory measures from its largest biodiesel client: Spain, and threatens to derail Mercosur-EU talks (which were difficult). The populist president says the country will have no problem "absorbing" the unsold biofuel by raising mandatory blending to a reported 10%, but in reality that means exporters won't be paid in USD or EUR but in Pesos and at government set rates, hereby impacting their LT profits and making them unappealing to foreign investors. Meanwhile neighbour Brazil has started to complain about Argentina's protectionist measures, which have cut its exports, and Brazil says Argentina breaks agreements.
Investors and companies are watching such news closely, if only because troubled Argentina is having an indirect impact on the region's attractiveness as an investment opportunity. Argentina has very competitive export industry and a very efficient infrastructure; Brazil has large and powerful agricultural & mining sectors but highly inefficient infrastructure, which make exporters increasingly less competitive than Argentinans, Americans or Canadians. In both South American countries, many problems originate from meddling, corrupt (and inefficient) governements. But Argentina's president is not helping the region with her populist and confrontational agenda.
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