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(Bloomberg) — Prime Minister Pedro Sanchez said his government will get more engaged with Spain’s most important companies to help create new opportunities in industries like cyber security, artificial intelligence and defense. 

Speaking in an interview with Bloomberg Television’s Francine Lacqua, Sanchez, 51, said he wants to beef up cooperation with the private sector, citing a state investment in telecoms operator Telefonica SA and plans to build up the defense company Indra SA as examples. 

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“It’s important that we build up this public and private relation in order to face these common challenges,” Sanchez told Bloomberg Television at the World Economic Forum in Davos, ahead of a meeting later Wednesday with Spanish executives attending the conference. 

Sanchez’s relationship with the corporate sector has been plagued by controversy since he came to power five years ago due to his alliance with the far-left group Sumar and his latest government has again antagonized executives. 

Spain’s biggest business lobby group lambasted the prime minister for granting an amnesty to hundreds of Catalan separatists in order to secure their support after an inconclusive July election. His plan to extend windfall taxes on banks and energy firms is also likely to irritate corporate leaders.

“That was a concrete response to a concrete crisis that we suffered because of Putin’s war in Ukraine,” he said Wednesday, adding that his relationship with the business world is “very positive.”

Sanchez will meet with business leaders including Banco Santander SA’s Chairman Ana Botin and Repsol SA’s Chief Executive Officer Josu Jon Imaz in Davos after his keynote speech. Ferrovial SA’s Chairman Rafael del Pino, Naturgy SA’s Chairman Francisco Reynes and Iberdrola SA’s Executive Chairman Ignacio Sanchez Galan are also expected to attend.

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The push to cooperate with business leaders comes just a month after the government announced it will buy a stake in Telefonica SA to counter Saudi Arabia’s plans to build a position. Sepi, the government’s investment vehicle, will buy as much as 10% of the carrier’s shares and could become the company’s largest shareholder.

“We have extraordinary relations with the Saudi authorities and we’re looking forward to strengthening that cooperation,” Sanchez said. 

The Telefonica move signals that the state has a “greater willingness to intervene in cases of foreign direct investment, in certain sectors that are seen as strategic, from countries that are perceived to be less aligned with Spain,” said Federico Santi, a senior analyst at Eurasia Group.

All the same, Sanchez and his administration have tussled repeatedly with big business. It clashed with Ferrovial SA over the company’s decision to move its legal domicile to the Netherlands. Nadia Calvino, the economy minister at the time, called the plan “a mistake” while Sanchez questioned chairman del Pino’s commitment to Spain.

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Sanchez’s decision in 2022 to impose windfall taxes on banks and energy companies to help fund the government’s response to the cost-of-living crisis sparked tensions with the country’s largest firms. 

The chairman of Iberdrola, Spain’s largest utility, said the levy was unfair for targeting electricity companies while Banco Santander’s former Chief Executive Officer José Antonio Álvarez said it would stigmatize the banking industry. Repsol’s CEO Imaz also slammed the tax in a rare opinion column in which he called it “discriminatory” and said the government should instead tax the rich. 

At the time, Sanchez said business leaders’ disapproval of the plan was a sign that he was headed “in the right direction.”

Last year Repsol threatened to relocate clean hydrogen investment projects worth €1.5 billion ($1.6 billion) outside Spain after the government decided to extend the tax for another two years.

Sanchez has also received criticism from businesses recently for raising the minimum wage by a further 5% in 2024. The CEOE confederation walked away from the negotiations, claiming that the government was blackmailing industry groups to push the increase through.

—With assistance from Macarena Muñoz and Isobel Finkel.

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