Argentina nationalizes Spain-based oil monopoly

When Argentine President Cristina Fernández de Kirchner abruptly left the Summit of the Americas (Cuba was pointedly excluded), it was reportedly to protest lack of unanimous support for her country’s claim to the British-controlled Malvinas Islands.

On April 16, President Kirchner revealed another reason she returned to Buenos Aires: to announce the nationalization of the Argentine oil and gas company, YPF, whose majority stakeholder is the ­Spanish-based energy monopoly, Repsol.

The international corporate media greeted Kirchner’s decision to renationalize YPF with outrage, threats, forecasts of ruin and much name calling. Such ranting has all been heard before.

When Argentina repudiated its foreign debt at the end of 2001 and then devalued its currency a few weeks later, those actions were met with doom mongering in the corporate media.

However, between 2002 and 2011, Argentina’s real gross domestic product grew by about 90 percent, the fastest in the hemisphere. Employment is now at record levels, and both poverty and extreme poverty have been reduced by two-thirds. Social spending, adjusted for inflation, has nearly tripled. Kirchner was reelected last October in a landslide victory.

Of course this side of Argentina’s story is rarely told, mostly because it involved reversing many of the policies backed by Washington and the International Monetary Fund — which brought the country to ruin in its worst recession of 1998-2002.

Argentina is far from being a socialist country. Its government is not even considered leftist. This latest action is simply the reestablishment of what had been the national oil company of Argentina since 1920. Under International Monetary Fund pressure, the Argentine government sold off YPF in the 1990s. Now it has renationalized it and postponed payment to Repsol.

Why renationalization needed

There are practical, pressing reasons for the current renationalization. Writing in Spero News, Mark Weisbrot, co-director of the Center for Economic Policy and Research, points out that during the time Repsol owned 57 percent of YPF, Argentina’s oil production has declined from 2004 to 2011 by almost 20 percent and its gas production by 13 percent. YPF accounted for much of this drop. Instead of developing the Argentine fields, Repsol preferred to invest in other, more profitable regions of the world. (April 19)

Weisbrot asks: “So why the outrage against Argentina’s decision to take — through forced purchase — a controlling interest in what for most of the enterprise’s history was the national oil company?” He notes that Mexico and many members of the Organization of Petroleum Exporting Countries don’t even allow foreign investment in oil. “The privatisations of oil and gas in the 1990s were an aberration; neoliberalism gone wild.”

Nevertheless, ranting against Argentina came from the European Union, of course from Spain and from the U.S. They’re all complaining that nationalization is illegal — it isn’t — that it damages confidence of investors, etc.

Kirchner says her aim is simply to recover her country’s sovereignty. Argentina’s population seems to agree, as do most Latin American left organizations. Cuba’s Foreign Ministry issued a statement April 20 affirming that Agentina has the “right to exercise permanent sovereignty over all its natural resources.” (xinhua.com, April 20)

Crowds in Argentina turned out to cheer the move, including a group that briefly invaded a YPF plant in La Plata and replaced a Repsol flag with Argentina’s. Then they stomped on the Spanish banner and drove a car over it for good measure.