Argentina nationalises oil firm

Even as President Cristina Fernández de Kirchner announced on television her plan to nationalise Spanish-owned YPF, her emissaries were at the oil company’s 35-storey Buenos Aires headquarters giving its Spanish directors 15 minutes to leave the building.

Coming two months after King Juan Carlos had personally phoned Fernández to lobby against such a move, the seizure enraged Madrid.

“Argentina has just shot itself in the foot in a really bad way,” said Spain’s foreign minister, José Manuel García-Margallo, warning that the takeover would hamper the country’s access to international credit and export markets. “The damage to Argentina could be irreparable,” he said.

But in Argentina, Fernández’s televised announcement that she was sending a Bill to Congress to appropriate Spanish oil firm Repsol’s majority stake in YPF was greeted with cheers of “Cris-ti-na! Cris-ti-na!” by her officials in the audience at the Casa Rosada presidential palace. Members of La Campora, the Peronist youth group founded by her son, Máximo Kirchner, are masterminding the nationalist imprint that characterises her second term after a landslide 54% victory in last year’s elections.

The tabloid Crónica headlined its front page “Dame Courage” and a crowd gathered at the Casa Rosada with banners reading “We’re going for everything”—a phrase Fernández has used to describe her “national and popular” government’s battle against the media and “corporations” that she has in the past accused of plotting her overthrow.

The YPF Bill that gives the government a 51% stake in the company is expected to pass in less than two weeks, but opponents are outraged.

“This decision is going to make things worse, rather than better, and goes totally against the interests of the Argentine people. Within a year we’re going to be in a worse situation than we are in now,” said the capital’s mayor, Mauricio Macri, of the conservative PRO party, the leading contender for 2015’s presidential election.

Fernández was motivated in part by a failing energy sector, which has been unable to meet the demand of the economic takeoff of the past nine years. Growth is also threatened by inflation and by the spending on social welfare programmes and industrial subsidies that forms the basis of Fernández’s popularity.

It is estimated that Argentina, in 2012, will import more than $12-billion of gas and oil to compensate for the failure of firms such as YPF, which produces 30% of Argentina’s oil, to meet demand. YPF was privatised and sold to Repsol by a previous Peronist administration in the 1990s.

Nationalisation is aligned in the minds of Fernández supporters with the renewed demand for sovereignty over the Falkland Islands in the South Atlantic, claimed by Argentina as “Las Malvinas”.

“The Malvinas are Argentine, so is YPF,” say posters and T-shirts backing Fernández. “This ends five centuries of white Spanish domination,” said one supporter. Argentina was ruled by Spain until independence in 1816.

But opponents blame the government’s erratic policies for the energy gap. “There is no energy plan,” said María Eugenia Estenssoro, an opposition senator of the Civic Coalition party. “How can we expect the same people responsible for this problem to fix it?”

Fernández’s government could use some distraction. Inflation, at 20%, threatens to accelerate following the removal of consumer subsidies on home utility rates and transport. The ensuing 500% increase in energy bills for some homes and hefty rises for train and bus tickets has alienated consumers who voted last year for continuation of an economic miracle that now seems endangered.

For the time being, Argentina is ignoring Madrid’s angry words about the forced takeover. “This president won’t respond to any disrespect or insolent phrases,” Fernández said. “I am a head of state, not a bully.”—

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