Friends will be friends

SanCor is a leading dairy producer in Argentina. It has a long history in this country and has long become a part of our culture. Moreover, SanCor is not some dark corporation owned by a million stockholders, but a cooperative, born in 1938 from the association of many smaller cooperatives in the central area of the provinces of Santa Fe and Córdoba (whence San + Cor), the "milk basin" of Argentina. Like so many other companies, it fell into the trap of getting terribly indebted during the 1990s. It was so easy to get shiny imported machines back then, at low rates propped up by the artificial "stability" caused by a low fixed exchange rate! In 1998, recession hit, and during the nightmarish years that followed, Argentina's internal market went bust and exports suffered. After the depreciation of the Argentine peso by two thirds, SanCor regained some competitivity, but it was burdened by its dollar-denominated debt. It started looking for saviours, and George Soros came into the picture.

Soros has been buying up parts of Argentina here and there for some time. It's not that we don't like him. At least he doesn't seem directly intent on screwing us up, like most of the vultures foreign investors landing here lately. But his group proposed bailing out SanCor in exchange of its majority control, turning it into one of those dark stockholder-owned corporations. Remember this is our milk, our cheese and our dulce de leche we're talking about. Our government didn't appreciate that a flagship Argentine company, made up of smaller local producers, was to be sold to some foreign guy with a strange accent, even one who hates George Bush's guts. This was perceived abroad, and voilà, along came our colourful friend Hugo Chávez.


Chávez's Venezuela is sitting on top a sea of oil, and with Chávez being all nationalist and stuff, its government is getting rich big time. Chávez is overtly conducting a peaceful Socialist revolution in his country and trying to consolidate a Latin American unity along its lines by helping other countries, especially those with left-leaning governments (e.g. Argentina, Brazil, Bolivia, and soon, we hear, Ecuador). Venezuela is the latest addition to Mercosur and already has a strong relationship with Argentina; it bought billions of dollars worth of Argentine debt bonds to ease our national debt's restructuring process, sends a lot of fuel oil at discount prices our way to contain our energy crisis (the one that doesn't exist), and has struck a lot of agreements by which Venezuela gets, for example, state-of-the-art Argentine agricultural machinery and good Argentine beef.

Last week, during a visit, Chávez spoke of a loan to bail out SanCor for 80 million USD, in exchange for a ten-year supply of milk powder and some technical how-know on dairies, which Venezuela seems to be missing. As is often the case when there's a degree of trust, things progressed fast, so Chávez and SanCor will be signing the agreement next Monday. Soros withdrew his offer to avoid further exposure.

Now of course, more than a few people have problems with Chávez. Venezuela doesn't have a very free press, the forced nationalization of some Venezuelan key private companies was not nice, and Chávez is, to say the least, a picturesque leader, resembling more a García Márquez character (or a cartoon) than the president of one of the larger countries in South America and an oil power; at the worst, he looks like a big-mouthed dictator, "Fidel Castro's pup" as some have called him. But in any case, Chávez hasn't asked for control of the company, and SanCor already exports one sixth of its total production of milk powder to Venezuela.

So yes, Chávez is not a friend, so why did I title this post like that? Countries are not friends of each other (only people are), and politicians don't have true friends among politicians. But Venezuela and Argentina, despite their differences and mainly because of this kind of gestures from Chávez, have become true allies... and I say cheers to that.